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Determinants of Electricity Demand in Libya: An Empirical Study for the Period 1980-2010

El sahati, KA (2014) Determinants of Electricity Demand in Libya: An Empirical Study for the Period 1980-2010. Doctoral thesis, Liverpool John Moores University.

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Energy is one of the main and most important elements for achieving social and economic development throughout the world. Electricity is one of the most essential sources of energy. The importance stems from the role of electric power in fulfilling the main consumption needs for basic energy as one of the inputs to the production process. To date, the focus of the research in the field of the demand for electricity has been mainly on developed economies. Adding to the few studies carried out in the developing economies, this study has investigated the issue in the Libyan context.

This study aimed to analyse and identify the determinants or factors affecting the demand for electricity in Libya during the period 1980-2010. The study focused on the use of ordinary least square techniques, test for co-integration and Granger Causality in constructing an empirical model of the demand function for electricity. Furthermore, there was a discussion on the external and internal determinants of projects that produce electricity in Libya as examined and analysed through a questionnaire and case study method. It also adopted a validation process achieved through focus group discussion to discuss and validate the proposed framework for the organisation of electricity.

The regressions results showed that the variables the average real price of electricity demand, the real value of the imported electrical appliances, GDP, population, the temperature difference and the lagged electricity demand explained 99 per cent of the total variation in electricity demand. The price elasticity of demand and income elasticity of demand are inelastic, that means that the Libyan economy now consumes the highest amount of electricity, and electric energy in Libya is a real necessity. Noting that the price elasticity of demand and income elasticity of demand in the long run are greater than elasticities in the short run, this means that these variables have a significant impact on the long term. According to the proposed model, the average price of electricity and the population are significant determinants of electricity demand, therefore, it implies that individuals are likely to demand electricity when the prices of electric are low, this result is confirmed from the Granger Causality results, in which it was established that a bilateral causality also exists from real values of imported electrical appliances to electricity demand and from population to electricity demand.

In regard to the supply side of electricity, the questionnaire results show that the internal determinants of electricity projects in Libya are electricity demand and political effects. The external determinants are recession, oil prices and development of other infrastructure. The development of other infrastructure was the most effective factor regarding the external determinants on the electricity projects in Libya, where the development in the residential sector has had a greater impact in increasing electricity projects during the last four decades. It is worth mentioning that the deregulation of the economy at the beginning of the nineties led to the development of the commercial sector and this in turn led to an increase in demand for electricity.

The main outcome of the validation was that the proposed framework was found practical and provided a methodology for solutions that can be taken up by the electric sector and for the government to adopt regular mechanisms to deal with the consistent upsurge in the demand and provide the basis for stable supply of electricity. The four focus groups of participants believed that energy firms in Libya and the Libyan state should take action and integrate the proposed framework. The actions are: economic planning, socio-economic development policy, development of new power plants and the expansion of the existing capacity; and improved development of other infrastructure. The increased demand of electricity in Libya compels the government, the electricity company and the other sectors of the economy to come up with a sustainable framework to meet the energy demands of the country. As established in this research, the construction of new power projects is the only long-term solution that will address the present and future energy needs.

Item Type: Thesis (Doctoral)
Subjects: H Social Sciences > HD Industries. Land use. Labor
Divisions: Civil Engineering & Built Environment
Date Deposited: 20 Oct 2016 14:10
Last Modified: 03 Sep 2021 23:27
DOI or ID number: 10.24377/LJMU.t.00004561
Supervisors: Ochieng, EG
URI: https://researchonline.ljmu.ac.uk/id/eprint/4561
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