Exploring Economies of Scale in Household Energy Consumption across Seasons and Uses

Abstract

The implementation of carbon pricing, without accounting for economies of scale in household energy consumption, may disproportionately impact smaller households. This study utilizes data from a survey of Japanese households to investigate variance in energy consumption patterns in response to household composition, energy source combinations, and weather conditions. First, we define the minimum energy requirement (MER) as the energy consumed during the month of lowest usage and analyze the influence of household consumption on the MER. Our findings indicate a notable economy of scale in household energy consumption; however, the extent of this effect varies across households utilizing different energy source combinations. Next, we examine how household composition impacts winter energy usage (WEU) by analyzing the energy consumption growth rate, expressed as the ratio of the WEU to MER. The results demonstrate a higher growth rate among lower-income households. Additionally, household composition and the choice of energy sources significantly influence the energy consumption growth rate. Households use energy for various purposes, and economies of scale are likely to differ across these uses. We classify the purposes of energy use into five categories, namely space heating, space cooling, hot water supply, cooking, and appliance use, and estimate the economies of scale for each. The results suggest that per capita energy consumption for space heating, cooking, and appliance use decreases significantly as the number of household members increases.