Determinants of Household Energy Demand in Ethiopia: The Case Study of Addis Ababa City

Abstract

This paper analyzes the household energy demand in Ethiopia: the case study of Addis Ababa City. The weighted average income of energy is used to estimate the energy demand in the city, using cross sectional data from 466 households in 2012/13. The result indicates that each household spends on average 14.7% or 376.98 birr per month of its expenditure for energy purchase from their total expenditure is 2760.84 birr. Household energy demand is estimated by the share of energy expenditure from total household expenditure. Energy is a necessity good for city households and has positive income elasticity (+0.61). And, household size, the proportion of women in households, household head level of education, owning of dwelling and electric appliance (electric meter and refrigerator) are important underpinning factors that affect the decision to use a particular energy type. Thus, improving access to different energy sources especially the modern ones are essential to increase household modern energy demand and reduce energy poverty in city.