The Impact of Subsidies Reform on Electricity Consumption: A Data-Driven Province Selected in Iran (Dynamic Panel Data Approach)
Abstract
The initial study examines how subsidies impact electricity consumption in 15 selective Iranian provinces from 2012 to 2023. The model was estimated using a dynamic panel data approach and generalized method of moment estimator. The variables, including household electricity consumption, and gas prices, demonstrate a positive influence according to the results. The provinces experience a significant decrease in electricity consumption due to variables like household electricity prices. Therefore, it is advised that energy policymakers implement suitable policies to regulate prices, particularly energy prices, in order to facilitate improvements in energy efficiency. Additionally, due to the positive effect of subscriber count on electricity usage, it is recommended to implement policies for a moderate increase in subscribers to enhance energy efficiency.
Keywords: household electricity consumption, provinces of the country, dynamic panel data approach, price subsidies.
Acharya, R.H, & Sadath A.C (2017). Implications of energy subsidy reform in India. Energy Policy 102:453–462.
Alipourian, M. , samadi, A. H. , Hadian, E. , Safavi, A. A. & Ostovar, F. (2024). Factors Affecting Electricity Generation from Renewables Energies in Iran. International Journal of New Political Economy, 5(2), 87-114.
Avagyan A.B. & Singh B. (2019). Biodiesel: feed stocks, technologies, economics and barriers assessment of environmental impact in producing and using chains.
· Barkhordar, Z., Habibzadeh, A., Alizadeh, N., (2022). Deriving electricity consumption patterns using a decomposition approach. Result in engineering. Volume 16. 2022, 100628.
Barkhordar, ZA, Samaneh F. & Siamak S (2018) The role of energy subsidy reform in energy efficiency enhancement: lessons learnt and future potential for Iranian industries. J Clean Prod 197(1):542–550.
Chen, X., & Qian, W., (2020). Effect of marine environmental regulation on the industrial structure adjustment of manufacturing industry: an empirical analysis of China’s eleven coastal provinces. Mar. Policy 113, 103797. https://doi.org/10.1016/j. marpol.2019.103797.
· Chien, C., Lee. & Jafar, H., (2023). Energy sustainability under the COVID-19 outbreak: Electricity break-off policy to minimize electricity market crises. Energy Economics. Volume 125, 106870.
· Hou, Peng., (2020). Energy Price and Energy Efficiency in China: A Linear and Nonlinear Empirical Investigation. Energies. 13(16), 4068. https://doi.org/10.3390/en13164068.
· Jafari, M . & Stern, David I., (2021). How large is the economy-wide rebound effect in middle income countries? Evidence from Iran. Ecological Economics. Volume 193. 107325.
Khalid S. & Salman V. (2020). Welfare impact of electricity subsidy reforms in Pakistan: a micro model study. Energy Policy 137:111097.
Lin, J.Y., (2012). The Quest for Prosperity: How Developing Economics Can Take off. Peking University Press, Beijing, p. 39.
Liu, J., Zhao, M. & Wang, Y, (2020). Impacts of government subsidies and environmental regulations on green process innovation: A nonlinear approach. Technology in Society. Volume 63. 101417.
· Maldonado, D., Mónica., A. & Llongo, V. (2021). A Panel Data Estimation of Domestic Water Demand with IRT Tariff Structure: The Case of the City of Valencia (Spain). Sustainability. 13(3), 1414. https://doi.org/10.3390/su13031414.
· Mamipour, S., Ghahramani, M., Malfuzi, A. & Motahar, S.A. (2025), Analyzing the consequences of postponing electricity subsidy reforms in Iran: A retrospective study, Energy Strategy Reviews, 62, 101889.
· Monjazeb, M.R., Ganbari, S.H. & Movahed, A. (2025). The Estimation of Gap Consumption of Domestic Electricity Power in High Consumption Provinces. Industrial Economics Researches, 9(31), 93-112.
Pan, X., Uddin, Md, Han, C. & Pan, X., (2019). Dynamics of financial development, trade openness, technological innovation, and energy intensity: evidence from Bangladesh. Energy
· Ren, X. Tong, Z., Sun, X. & Yan, C. (2022). Dynamic impacts of energy consumption on economic growth in China: Evidence from a non-parametric panel data model. Energy Economics. Volume 107. 105855.
Ribeiro, F.D.M. & Kruglianskas, I., (2015). Principles of environmental regulatory quality: a synthesis from literature review. J. Clean. Prod. 96, 58–76. https://doi.org/10.1016/j. jclepro.2014.03.047.
Roos, EL, & Adams P.D (2020). The economy‑wide impact of subsidy reform: a CGE analysis 19(S1):s18–s38.
Sarrakh R, Suresh R, Subashini S. & Sabah M. (2020). Impact of subsidy reform on the kingdom of Saudi Arabia’s economy and Carbon emissions. Energy Strategy Rev 28:100465.
Shehabi, M., (2020). Diversification effects of energy subsidy reform in oil exporters: illustrations from Kuwait. Energy Policy 138, 110966. https://doi.org/10.1016/j. enpol.2019.110966.
· Sinha, A., Mehta, T., Kumar, S. & Sarangi, S. (2026). Effect of open access reform on electricity prices and labor market: Plant-level evidence from India. Economic Modelling, 60(3), 120-135.
Timilsina GR. & Pargal S .(2020) Economics of energy subsidy reforms in Bangladesh. Energy Policy 142:111539.
· Zarepour, Z. & Wagner, N., (2023). How manufacturing firms respond to energy subsidy reforms? An impact assessment of the Iranian Energy Subsidy Reform. Energy economics. Volume 124.2023.106762.
Hosseinzadeh, H. (2026). The Impact of Subsidies Reform on Consumption: A Data-Driven Province Selected in Iran (Dynamic Panel Data Approach). International Journal of New Political Economy, 7(1), -. doi: 10.48308/jep.2026.242814.1256
MLA
Hosseinzadeh, H. . "The Impact of Subsidies Reform on Consumption: A Data-Driven Province Selected in Iran (Dynamic Panel Data Approach)", International Journal of New Political Economy, 7, 1, 2026, -. doi: 10.48308/jep.2026.242814.1256
HARVARD
Hosseinzadeh, H. (2026). 'The Impact of Subsidies Reform on Consumption: A Data-Driven Province Selected in Iran (Dynamic Panel Data Approach)', International Journal of New Political Economy, 7(1), pp. -. doi: 10.48308/jep.2026.242814.1256
CHICAGO
H. Hosseinzadeh, "The Impact of Subsidies Reform on Consumption: A Data-Driven Province Selected in Iran (Dynamic Panel Data Approach)," International Journal of New Political Economy, 7 1 (2026): -, doi: 10.48308/jep.2026.242814.1256
VANCOUVER
Hosseinzadeh, H. The Impact of Subsidies Reform on Consumption: A Data-Driven Province Selected in Iran (Dynamic Panel Data Approach). International Journal of New Political Economy, 2026; 7(1): -. doi: 10.48308/jep.2026.242814.1256