Analysis of the Effects of Temperature Fluctuations on Monthly Electricity Demand : The Korean Case

n this article, we focus only on the SR component of demand, and our main aim is to address the third deficiency in addition to the first two. In place of a TRF, we introduce a new concept : the cross-temperature response function (CTRF). The CTRF employs economic covariates directly in the component temperature response functions, both allowing the seasonal demand component to respond to non-climate variables and allowing the effects of non-climate variables to affect the response of the SR component of demand to temperature.We decompose the effect of temperature on the SR component of electricity demand into three different components : a pure temperature effect, a price-temperature effect, and a time-temperature effect. We investigate the effect of temperature conditional on price and other factors proxied by time, so that the pure temperature effect can be identified.We apply our model to Korean commercial electricity demand, finding that non-climate variables have particularly substantial effects on changes in the temperature response function of the commercial sector