UNIVERSITY OF SAN CARLOS

School of Engineering
Department of Mechanical and Manufacturing Engineering

PREDICTING ELECTRICITY DEMAND BASED ON SELECTED SOCIO-ECONOMIC

INDICATORS IN THE PHILIPPINES

In Partial Fulfillment of the Requirement for

ME 424M: Methods of Research
F 8:30-9:30 AM

Submitted to:
Dr. Lanndon Ocampo, PhD.

Submitted by:
De Guzman, Johannes Bruce L.
Roma, Allcris
Saut, Bonifacio R.

March 2017

1
 Table of Contents
ABSTRACT ......................................................................................................................... 4
CHAPTER 1 ........................................................................................................................ 5
THE PROBLEM AND ITS SCOPE ......................................................................................... 5
INTRODUCTION........................................................................................................... 5
RATIONALE .............................................................................................................. 5
THEORETICAL BACKGROUND .................................................................................... 7
Regression Analysis ............................................................................................... 7
Simple Linear Regression Model ............................................................................. 7
Multiple Linear Regression Model .......................................................................... 8
Coefficient of Determination ................................................................................. 8
Interpreting p-Values ............................................................................................ 9
REVIEW OF RELATED LITERATURE ............................................................................ 10
Forecasting Electricity Demand ............................................................................ 12
Regression Analysis ............................................................................................. 13
THE PROBLEM ........................................................................................................... 15
STATEMENT OF THE PROBLEM ................................................................................ 15
SIGNIFICANCE OF THE STUDY .................................................................................. 16
RESEARCH METHODOLOGY ........................................................................................ 17
Research Design .................................................................................................... 17
Research Environment ........................................................................................... 17
Research Participants ............................................................................................. 18
Research Procedures .............................................................................................. 18
DEFINITION OF TERMS ............................................................................................... 19
CHAPTER 2 ...................................................................................................................... 21
PRESENTATION, INTERPETATION AND ANALYSIS OF DATA ................................................ 21
CHAPTER 3 ...................................................................................................................... 31
SUMMARY OF FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS ................................ 31
SUMMARY OF FINDINGS ............................................................................................ 31
CONCLUSIONS .......................................................................................................... 31
2
 RECOMMENDATIONS ................................................................................................ 32
REFERENCES .................................................................................................................... 33

3
 ABSTRACT

In this study, the annual gross electricity demand of the Philippines was modeled

using multiple linear regression with the aid of Microsoft Excel as a function of three

chosen socio-economic factors namely, population, gross domestic product and inflation

rate. Among these three socio-economic factors, the inflation rate was found to be the

least statistically significant variable with a confidence interval of 72.8 percent while

population was found out to be the most statistically significant descriptor variable with a

confidence interval of 98.9 percent affecting the electricity demand for future predictions.

Next, the future values of the three chosen socio-economic factors were predicted using

the GMDH Shell DS software to forecast the future annual electricity demand up to the

year 2025. It was found that the electricity demand will increase up to 90,000 GWh from

the year 2014 to 2025.

4
 CHAPTER 1

THE PROBLEM AND ITS SCOPE

INTRODUCTION

RATIONALE

Electricity surrounds us, running technology like the cellphones we are using, computers,

lights and any other devices that needs electricity in order for it to function. Electricity

plays a vital role to the advancement of technology and to the betterment of peoples way

of living around the world.

Electricity is most often generated at power station by electromechanical

generators, primarily driven by heat engines fuelled by combustion or nuclear fission but

also by other means such as kinetic energy of flowing water and wind. Other energy

sources include solar photovoltaic and geothermal power. The electricity that we use is a

secondary energy source because it is produced by converting primary sources of energy

such as coal, natural gas, nuclear energy solar energy and wind energy into electrical

power. It also referred to as energy carrier which means it can be converted to other forms

of energy such as mechanical energy or heat. Humans have an intimate relationship with

electricity to the point that it's virtually impossible to separate their lives from it. As the

world is evolving humans tend to nurture this intimate relationship thereby increasing the

amount of electricity demand for the following years to come.

This study can be a great help to the Philippines because the researchers want to

foresee on what will happen to the electricity demand in the Philippines for the following

years to come until 2025. The researchers also want to know what will be the worst case
5
scenario or best case scenario that will happen to the electricity consumption on the said

years to come. The aims of the researchers on forecasting the electricity demand will be

done by establishing a model using multiple linear regression analysis with the

consideration of the socio-economic factors that affect the electricity demand namely the

population, gross domestic product and inflation rate.

6
 THEORETICAL BACKGROUND

Regression Analysis

Regression analysis is a conceptually simple method for investigating functional

relationships among variables. The relationship is expressed in the form of an equation

or a model connecting the response or dependent variable and one or more explanatory

or predictor variables. The response variable is denoted by Y and the set of predictor

variables by 1, 2, . . ., , where p denotes the number of predictor variables. The true

relationship between Y and 1, 2, . . ., , can be approximated by the regression model

= (1 , 2 , , ) + , (1)

where E is assumed to be a random error representing the discrepancy in the

approximation. It accounts for the failure of the model to fit the data exactly. The function

f(1, 2, . . ., ) describes the relationship between Y and 1, 2, . . ., .

The predictor or explanatory variables are also called by other names such as
(2)
independent variables, covariates, regressors, factors, and carriers. The name

independent variable, though commonly used, is the least preferred, because in practice

the predictor variables are rarely independent of each other.

Simple Linear Regression Model

The simple linear regression model is a module with a simple regressor x that has a

relationship with a response y that is a straight line. The simple linear regression model

is given by (Montgomery et. al. 2013)

= 0 + 1 + (2)

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where the intercept 0 and the slope 1 are known constants with is a random error

component. The errors are assumed to have mean zero and unknown variance 2 .

Additionally the errors are assumed to be uncorrelated. This means that the value of one

error does not depend on the value of any other error. The parameters 0 and 1 are

usually called regression coefficients. These coefficients have a simple and often useful

interpretation. The slope 1 is the change in the mean of the distribution of y produced by

a unit change in x.

Multiple Linear Regression Model

A regression model that involves more than one regressor variable is called a multiple

regression model. The multiple linear regression model is (Montgomery et. al. 2013)

= 0 + 1 1 + 2 2 + + + , (3)

where y denotes the dependent variable, denotes the regression coefficients and is

the random error component. The term linear is used because equation 3 is a linear

function of the unknown parameters .

Coefficient of Determination

The coefficient of determination 2 is given by

2 = = 1 (4)

where is a measure of the variability in y without considering the effect of the

regressor variable x and is a measure of the variability in y remaining after x has been

considered, 2 is often called the proportion of variation explained by the regressor x.

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Values of 2 that are close to 1 imply that most of the variability in y is explained by the

regression model. The magnitude of 2 also depends on the range of variability in the

regressor variable. Generally 2 will increase as the spread of the xs increases and

decrease as the spread of the xs decreases provided the assumed model form is correct.

Interpreting p-Values

Under the appropriate assumptions, the p-value is the conditional probability of observing

a value of the computed statistic. In some research areas, it has become traditional to

adopt a fixed significance level when examining p-values. The most common choice for

is 0.05. Acceptreject rules like this are generally unnecessary for reasonable scientific

inquiry. Simply reporting p-values and allowing readers to decide on significance seems

a better approach.

There is an important distinction between statistical significance, the observation

of a sufficiently small p-value, and scientific significance, observing an effect of sufficient

magnitude to be meaningful. Judgment of the latter usually will require examination of

more than just the p-value.

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 REVIEW OF RELATED LITERATURE

According to Suhono and Sarjiya (2015) energy has significant role in the human

life. All of human actions need energy. Based on the fuel type, electricity has been the

most used after the oil. One of many reasons because of the electricity does not produce

emission when it used. Other advantages of electricity are easy to transmit, easy to use

and a lot of devices on earth need electricity as power source. Electricity power, as a

clean and efficient energy, is essential in our daily life. Compared with traditional energy,

electricity power is more suitable for the requirement of environment friendly society. The

electricity power system has played a key role in the economy sector of a country (Wang

et al. 2017). According to Vilar et al. (2009), nowadays, in many countries all over the

world, the production and sale of electricity is traded under competitive rules in free

markets. The agents involved in this market: system operators, regulatory agencies,

producers and consumers have a great interest in the study of electricity load and price.

Since electricity cannot be stored, the demand must be satisfied instantaneously and

producers need to anticipate to future demands to avoid overproduction. Good

forecasting of electricity demand is then very important for the agents in the market.

According to Gnay (2016) the world electricity demand has increased extremely

in the recent years as the world has become more populated and as the electricity

consuming devices and appliances have become more common in the daily lives of

people. It is vital for a country to be able to supply the electricity exactly equal to the

demand. If the electricity generation capacity of a country is lower than the gross demand,

electricity dependent industry is affected negatively and blackouts occur; on the other

hand, a higher electricity generation capacity than the demand leads for the power plants
10
to work with idle capacity, which is a waste in economic resources. Hence, accurate

prediction of the electricity demand for the future is very important to correctly plan and

develop new electricity generation investments for maintaining the electricity demand

supply balance. In order to forecast the electricity demand with a good precision, one

must correctly determine the variables which may influence the electricity demand in that

country. Population is one of the key factors that are highly correlated with the electricity

demand (more people consume more electricity). However, population alone is not

sufficient to explain the changes in the electricity demand through years. It is also quite

common to consider some economic indicators in correlation with the electricity demand

(Askarzadeh, 2014); one factor that can be used for this purpose is the gross domestic

product (GDP) per capita, which is an indicator of the wealth of the people living in a

country (Kucukali and Baris, 2010). As the GDP per capita increases the living standards

of people get better and their lifestyles become more dependent on energy consuming

devices and appliances. In addition to GDP per capita, employment and the inflation rates

are two other economic factors that may affect the electricity demand (Zehadi et al. 2013).

However, in this study only three selected socio economic factors that affect electricity

demand were considered namely the population, gross domestic product and inflation

rate. According to Chang et. al (2016) several methods have been used to forecast

electricity consumption over the last few decades. These forecasting methods can be

approximately classified into three categories: causal models, time series analysis, and

artificial intelligence approaches. Causal models probe the relationships among multiple

variables and assume that the variations in dependent variables can be explained by

independent variables; specifically, historical data are used to establish a multivariate

11
model for dependent variable forecasting (Hair, 2010). The forecasting accuracy of a

causal model depends on the selection of independent variables. If the selected

independent variables cannot effectively explain the variation in the dependent variables,

an inaccurate forecast is produced.

According to Bisgaard et. al (2011) time series models include linear regression

and autoregressive integrated moving average analysis, time series models require only

historical observations to construct a model for forecasting the development of data

trends and are commonly used in forecasting energy demand. However, they require high

quantities of samples for accurate forecasting. For many years, many different forecasting

tools based on data mining were applied to predict the future electricity or energy demand.

Multiple linear regressions (MLR), methodologies based on fuzzy logic, autoregressive

forecasting methods, support vector regression models, and artificial neural network

(ANN) based models have been widely applied for these purposes. On the other hand

only one approach was considered in this study which is only the multiple linear

regression analysis.

Forecasting Electricity Demand

According to Boroojeni et al. (2017) electricity demand forecasting plays a pivotal

role in power systems management, especially for operation and maintenance purposes.

It is particularly more important for deregulated power systems, where the forecast

inaccuracies have significant implications for market operators, transmission owners, and

market participants. Forecasting demand is both a science and an art. Econometric

methods of forecasting, in the context of energy demand forecasting, can be described

12
as the science and art of specification, estimation, testing and evaluation of models of

economic processes that drive the demand for fuels. The need and relevance of

forecasting demand for an electric utility has become a much-discussed issue in the

recent past. This has led to the development of various new tools and methods for

forecasting in the last two decades.

According to de Castro and Cramton (2009), an essential step of resource planning

in electricity markets is assuring that there will be sufficient resources to meet future

demand. Building capacity is costly and takes time. However, the economic

consequences of an electricity shortage may be severe. Thus, when setting capacity

targets the regulator must balance the cost of excess capacity against the cost of

shortage. The question we address here is how we can get an accurate prediction of the

future demand.

Regression Analysis

According to Yukseltan et al. (2017) regression methods that are quite convenient

and easy to implement have been applied widely for electricity demand forecasting. Since

the early 1970s, several studies on energy demand have been performed using various

estimation methods. Many studies have aimed to evaluate the impact of economic activity

and energy planning on energy demand. In recent years, because predictive models are

of vital importance for policymakers, they have used these models to forecast and model

energy consumption and demand (Tutun et al. 2015). According to Fan et al. (2017)

multiple studies have highlighted the key role of modeling and hence forecasts of future

electricity demand, and particularly peak demand play in grid planning and generation
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investment. A subset of this work focuses on modeling and forecasting residential peak

demand, and a related area of forecasting involves assessing the potential impact of

different types of interventions on this peak. However, much of this work has been forced

to utilize less than ideal approaches due to the limitations of available data, particularly

temporal and geographical data resolution. In turn, this has limited the work assessing

possible peak demand interventions and highlights the potential value of demand models

based on fundamental household interval metering and survey data to simulate different

possible interventions. There are varied objectives and hence approaches to demand

forecasting. Short-term electricity demand forecasting is the key to generation and

network operation, whilst longer-term fore-casts serve various planning roles.

Geographically limited forecasts primarily serve network decision making whilst system-

wide fore-casts have both network and generation adequacy roles. Finally, there are

sectorial studies focused on peak demand estimation broken down by residential,

commercial and industrial end-users. In this study long-term forecasting electricity

demand will be the one to be focused on since it is essential to know what will happen to

the future electricity demand in order to be prepared for what will be the best case

scenario and worst case scenario that might happen.

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 THE PROBLEM
STATEMENT OF THE PROBLEM

This study aims to predict the electricity demand in the Philippines several years

from now.

This study specifically answers to the following questions:

1. In the over-all electricity demand, how much comes from the industrial and the

private sectors?

2. Up to what quantified extent will be the electricity demand in the Philippines several

years from now?

3. What possible actions can be done to address the increasing electricity demand

here in the Philippines?

4. With the forecasting models presented, what should be the course of policy making

with regards to the aggregate energy demand?

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 SIGNIFICANCE OF THE STUDY

The results of this research study will greatly contribute to address the issue of

increasing electricity demand in the Philippines. Forecasting the electricity demand will

not just simply show results, but will also give us an implication on what course of action

should be taken up to meet the increasing demands. Given the limited studies with

regards to electricity demand forecasting, this study will give the possible best and worst

case scenarios particularly in the energy crisis that we might experience in the future.

As population density increases over a period of time, energy demand

consequently, also increases. Predicting the electricity demand would therefore be a

useful tool in devising specific strategies to counter the adverse effects increasing human

population. Moreover, having a data on electricity demand will be crucial especially to

sectors involved in the production of such, regardless of the method of producing

electricity.

The results of this study will also be an important asset to the Philippine

government particularly the department of energy as they should also know the prospect

of electricity demand here in the Philippines in order to ensure stability in the industry

since electricity is known vital key to industry operation. The number of investors planning

to establish an electricity-producing firm here in the country must also be at par with

electricity demand.

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 RESEARCH METHODOLOGY

Research Design

The quantitative approach of research was applied in this study. In order to predict

the electricity demand with a good precision, one must correctly determine the key

variables which may give a significant impact on the electricity demand in the country.

Since this paper focuses on predicting the electricity demand in the Philippine setting, it

is necessary to acquire data in the Philippines itself. Population is known to be one of the

key factors that is highly correlated with electricity demand, by the simple fact that the

more people living in a country, the more the consumption of electricity. However,

population alone is inadequate to provide and explain the changes in the electricity

demand through the years. Due to this, other factors are to be considered. As for this

research paper, socio-economic key indicators are correlated with the electricity demand.

One factor that was used for the purpose of predicting electricity demand is the Gross

Domestic Product (GDP) per capita, which is an indicator of fortune of the people living

in a country. Another factor, the inflation rate, defined as the percentage rate of change

of a price index over time which might also influence the electricity demand is also

considered in this study.

Research Environment

This research focuses on predicting the electricity demand in the Philippines years

from now. Hence, having Philippines as the research locale.

17
Research Participants

The people within Philippine territory was the participants. Data of the past

electricity demand, population, GDP and the inflation were acquired from World Bank

Open Data, an online database giving free access to information such as those that were

aforementioned.

Research Procedures

After obtaining past data from the online database (World Bank Open Data),

GMDH Shell DS version 3.8.6, a software used for predicting the future values of the

selected socio-economic indicators; population, Gross Domestic Product (GDP) and

inflation rate was utilized. Afterwards, the data acquired was employed for the multiple

regression analysis, creating a correlation of the three socio-economic key factors to the

electricity demand. Microsoft Excel spreadsheet was used to analyze the data acquired

(Data Analysis tool). A model equation was attained after the multiple regression analysis

and by using this equation, a prediction of the electricity demand was established until

the year 2025.

18
 DEFINITION OF TERMS

1. Data Mining refers to the computational process of discovering patterns in large

data sets involving methods at the intersection of artificial intelligence, machine

learning, statistics, and database system.

2. Dependent Variable - represent the output or outcome whose variation is being

studied; a symbol that stands for an arbitrary output.

3. Electricity refers to the form of energy that drives the technology.

4. Electric Demand - refers to the maximum amount of electrical energy that is being

consumed at a given time. It is measured in both kilowatts and kilovolt amperes,

depending on the rate tariff.

5. Electromechanical Generators relates to mechanical human motion energy

converter to electrical energy that operates on the principle of electromagnetic

induction.

6. Forecasting process of making predictions of the future based on past and

present data and most commonly by analysis of trends.

7. Gross Domestic Product (GDP) - is the monetary value of all the finished goods

and services produced within a country's borders in a specific time period.

8. Heat Engines a system that converts thermal energy thermal energy and

chemical energy to mechanical energy, which can be used to do mechanical

work. It includes all private and public consumption, government outlays,

investments and exports minus imports that occur within a defined territory.

9. Independent Variable - is a variable that is being manipulated in an experiment in

order to observe the effect on a dependent variable.

19
10. Inflation - is the rate at which the general level of prices for goods and services is

rising and, consequently, the purchasing power of currency is falling.

11. Peak Demand refers to the period in which electrical power is expected to be

provided for a sustained period at a significantly higher than average supply level.

12. Population - is the number of all the organisms of the same group or species, which

live in a particular geographical area.

13. Power Station refers to the place where electricity is being generated.

14. Prediction - is the process of determining the magnitude of statistical variates at

some future point of time, sometimes called an outcome variable.

15. R-squared Coefficient - is a statistical measure of how close the data are to the

fitted regression line. It is also known as the coefficient of determination, or the

coefficient of multiple determination for multiple regression.

16. Regression Analysis refers to the statistical process for estimating the

relationships among variables. It includes many techniques for modeling and

analyzing several variables, when the focus is on the relationship between a

dependent variable and one or more independent variables (or predictors).

17. Regression Coefficient - is the constant that represents the rate of change of one

variable as a function of changes in the other variable; it is the slope of

the regression line.

18. Socio-economic indicator are factors that affect the social and economic

development in a society.

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 CHAPTER 2
PRESENTATION, INTERPETATION AND ANALYSIS OF DATA

Table 1. Electricity demand in the Philippines by sector (Philippine Power Statistics

2014).

Electricity Demand
Year
Residential Commercial Industrial Others Total

2001 13,547 10,098 14,452 1,042 39140

2002 13,715 10,109 13,628 1,172 38624

2003 15357 11,106 15,188 1,069 42720

2004 15920 11,785 15,012 1,359 44076

2005 16,031 12,245 15,705 1,177 45159

2006 15,830 12,679 15,888 1,275 45672

2007 16,376 13,470 16,522 1,641 48009

2008 16,644 14,136 17,031 1,395 49206

2009 17,504 14,756 17,084 1,523 50868

2010 18,833 16,261 18,576 1,596 55266

2011 18,694 16,624 19,334 1,446 56098

2012 19,695 17,777 20,071 1,668 59211

2013 20,614 18,304 20,677 1,971 61566

2014 20,969 18,761 21,429 2,186 63345

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 Figure 1. Plot of actual electricity demand in the Philippines.

Table 2. Selected socio-economic indicators in the Philippines (IEA Statistics 2014).

Description
Year
Population GDP per Capita Inflation (%)
2001 79604541 958.01 5.35

2002 81294378 1000.78 2.72

2003 82971734 1011.29 2.29

2004 84596249 1080.09 4.83

2005 86141373 1196.54 6.52

2006 87592899 1395.21 5.49

2007 88965508 1678.85 2.90

2008 90297115 1929.13 8.26

22
 2009 91641881 1836.87 4.22

2010 93038902 2145.24 3.79

2011 94501233 2371.85 4.65

2012 96017322 2604.66 3.17

2013 97571676 2786.01 3.00

2014 99138690 2873.09 4.10

Figure 2. Actual data of gross domestic product (GDP) per capita in the Philippines.

23
 Figure 3. Actual data of inflation rate in percentage.

Table 3. Regression statistics.

Variables Value
Multiple R -29778.87
2 0.983762564
2
Adjusted 0.978891333
Standard Error 1171.006542
Observations 14

The goodness of fit of a multiple linear regression model is measured by its

coefficient of determination. Referring to the data obtained shown in table 3, the

coefficient of determination 2 obtained after the regression analysis is 0.983762564.

24
The value of coefficient of determination which is close to 1 implies that the percentage

of variation of electricity demand is explained by the regression model. It should also be

noted that the value of coefficient of determination 2 depends on the range of variability

in the regressor variable.

Table 4. Parameters for estimating annual electricity demand.

Variables Standard Error t Value p Value

Intercept -29764.75488 19465.754467 -1.529 0.157

Population 0.000816775 0.000264 3.095 0.011
GDP per Capita 4.273671147 2.344909 1.823 0.098
Inflation -233.9007207 201.234507 -1.162 0.272

The data between the years 2001 and 2014 were used for multiple regression

analysis to construct an equation in order to relate the dependent variable to independent

(descriptor) variables, where electricity demand is the dependent variable, while

population , gross domestic product (GDP) per capita and inflation rate were the

independent variables. The regression coefficients are shown in table 4 which is used in

constructing the equation to be used in predicting the future values of electricity demand.

The equation obtained using the collected data through multiple regression is given in

equation 5.

= 29764.75488 + 0.0008167751 + 4.2736711472 233.90072073 (5)

where:

= electricity demand

1 = population

25
 2 = gross domestic product (GDP)

3 = Inflation rate

By examining the regression coefficients in table 2, the results show that population and

the gross domestic product (GDP) is directly proportional with electricity demand since

the coefficients are positive while the inflation rate is inversely proportional with the

electricity demand since it has a negative regression coefficient.

The statistical implication of each variable was determined by examining their

respective p values. It is evident by examining the p values of each variable that the least

statistically significant descriptor variable in performing future prediction of electricity

demand is the inflation rate with a confidence interval of 72.8 percent while the most

statistically significant variable is the population with a confidence interval of 98.9 percent.

Table 5. Predicted values of selected socio-economic indicators.

Description
Year
Population GDP per Capita Inflation (%) Electricity Demand
2015 100721246 3045.60 4.01 66441.78

2016 102316572 3238.93 3.42 68432.64

2017 103922121 3472.09 3.67 70799.79

2018 105532614 3758.69 4.18 73458.29

2019 107139854 4106.68 3.98 76211.47

2020 108736328 3824.24 4.09 76335.03

2021 110321007 4066.12 4.00 78641.36

2022 111902558 4339.88 3.47 80980.13

2023 113496057 4626.47 3.22 83447.07

26
2024 115118429 4861.97 6.51 86547.04

2025 116784653 5708.54 3.42 90805.39

Figure 4. Predicted values of population for the years 2015-2025.

27
 Figure 5. Predicted values of inflation for the years 2015-2025.

Figure 6. Predicted values of gross domestic product (GDP) per capita.

28
 Figure 7. Predicted electricity demand based on selected descriptor variables.
The future values of population, GDP per capita and inflation rate were predicted

by GMDH Shell DS software. The plot of predicted values of population, GDP per capita

and inflation rate through years is shown in Figures 5, 6, 7 and 8. These figures indicates

that the population is expected to reach over 116 million in the year 2025, while the GDP

per capita is predicted to reach over $5700 in the same year. In addition to these, the

inflation is expected to decrease even though it was observed that it was fluctuating on

the previous predicted years. These values were used in order to determine the trend of

future electricity demand in the Philippines through multiple regression analysis. The

predicted values of selected socio-economic indicators and electricity demand are shown

in Table 5. It is evident in figure 8 that there will be a continuous increase of electricity

29
demand for the next years. In the year 2025 the electricity demand as a function of the

three selected socio-economic factors will reach an estimated value of 90,000 GWh.

30
 CHAPTER 3

SUMMARY OF FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

SUMMARY OF FINDINGS

Table 1, shows the electricity demand in the Philippines, from each sectors dating

from 2001 to 2014 while Table 2 shows the values of the selected socio-economic

indicators in the Philippines for the same range of year (2001 to 2014). The data gathered

for the socio-economic indicators was used in obtaining the predicted values of each until

the year 2025. A correlation was then established using multiple regression analysis to

arrive at an equation that relates the dependent variables (socio-economic indicators) to

the independent variable which is the electricity demand.

From Figure 8, it can be clearly seen that trend of the graph continues to increase,

the population being the greatest contributor to the increase of electricity demand, having

a p value of 0.011, followed by the GDP with a p value of 0.098, then followed by the

inflation rate being the lowest factor to the increase in electricity demand with a p value

of (0.272).

CONCLUSIONS

In this paper, the electricity demand of Philippines was modeled using multiple

regression analysis using population, GDP per capita, and inflation rate as the descriptor

variables. Population and GDP per capita were found to be the major factors that

influence the demand while the inflation percentage indicates to be of minor influence.

With the increasing population every year, human needs particularly the technological

31
needs also increases. It would then consequently correspond to an increase in electricity

demand. In this study the electricity demand of the Philippines from 2001 up to 2014 was

modeled by multiple regression in Microsoft excel using the socio-economic indicators

that affect the electricity demand in the Philippines namely the, population, gross

domestic product per capita and inflation rate. The generated equation for the multiple

regression model was then used to predict the electricity demand from 2015 up to 2025

and was found out that population being the key factor to be considered in predicting

electricity demand. Having known the predicted electricity demand until year 2025, can

be used to maintain the balance between electricity demand and supply.

RECOMMENDATIONS

1. It is suggested to explore other socio-economic factors that might also influence

the increase of electricity demand for the years to come.

2. Philippines, being situated in the tropical zone, factors like average summer

temperature is recommended to be explored since it might be a significant

factor for the increase in electricity demand in the country.

32
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