Electrical energy generation and demand forecasting of Bangladesh by econometric modelling

Abstract

Bangladesh is a developing country with large population of more than 145 million in a total area of 147,570 sq. km. Population is increasing exponentially but generation of power is not increasing accordingly. About 47% [1] of the country’s population has access to electricity, which is very low compared to many developing countries of the world. And per capita electricity generation is 182 kWh per annum which is still among the lowest in the world. The principal economic factor driving the electrical energy generation and demand is the income of a nation’s population which is typically reflected by GDP of the nation. GDP often indicates the growth of national economy. From the basic economic theory, everyone is quite familiar to the fact that an increase in income leads to higher purchasing power. Higher purchasing power drives an economic entity (An individual or an industry or a firm, etc.) to the consumption of more commodities. Therefore, the electricity demand and generation are expected to increase with the growth of economy. Based on these phenomena, the possible econometric models have been developed in this work for estimating, analysis and forecasting the electrical energy generation and demand served in Bangladesh by using ‘Stata’ software. ‘Stata’ is a data analysis and statistical software. It is a tool for researchers in applied economics. ‘MINITAB’ software is also used for time trend analysis. This research uses time series data and employs auto regressive econometric modeling technique for modeling and forecasting. In this study, no significant impact of price on electricity demand and generation has been found. Moreover, the forecast obtained from the research shows that the electricity demand and generation are increasing rapidly with the advancement of time. This research is forecasted that the electricity demand served in year 2020 will be 13,916 MW and the net energy generation in year 2020 will be 102,017 GWh.