Appendix: Further discussion of the weather data and results

A1. Introduction
Weather can have a profound effect on energy consumption especially in extreme hot temperatures
such as those experienced in the GCC countries. The hot temperatures are believed to drive
residential and commercial electricity consumption because space cooling is such an important
component, which on its own constitutes around 70% of residential electricity consumption in Saudi
Arabia. Energy analysts and policy makers (such as SEC, the Saudi Electricity Company often use
a measure of divergence from normal temperatures to estimate peaks in demand when planning
future electricity capacity or to strip out short-term weather effects to identify longer-term growth
trends. Therefore, the inclusion of weather variables when attempting to model residential electricity
demand is arguably vital for positioning the estimated demand function, even if the variation over
time in the weather variables is not that notable. Hence, the estimated models presented in the main
text of the paper attempt to differentiate the impact on electricity consumption from factors that can
be controlled for or at least influenced (such as level of economic activity, prices, efficiency, and
exogenous consumer behaviour) and those that cannot (such as the weather).

Nevertheless, it is worth considering the HDD and CDD variables further. The next section,
therefore, looks at the weather data in more detail, while the final section of this appendix considers
the impact on the main preferred specifications from omitting the weather variables.

A2. Data
Table A1 presents summary descriptive statistics and shows the very high average CDD, which
highlights the very hot temperatures in the GCC region. Furthermore, Fig A1 and the dispersion
measures in Table A1 illustrate the variation in both the HDD and CDD variables for the six GCC
countries. These suggest that there is a reasonable amount of variation in both weather variables
despite the extreme hot temperatures. Moreover, it is interesting to note that according to the
coefficient of variation, the dispersion in HDD is greater than that for CDD in all six GCC countries.
Whereas, according to the interquartile range, CDD shows the greatest dispersion, reflecting that
HDD is affected more by extreme values than CDD. Also, HDD is included only in the Saudi

Modeling GCC Residential Energy Demand Appendix Page 1 of 4

 Arabian preferred model, whereas CDD is included in five out of the six preferred models shown in
Table 2.

Table A1: Weather variables used in the estimation

Bahrain Kuwait Oman
HDD CDD HDD CDD HDD CDD
Mean 122.9 2425.7 708.1 2687.5 261.9 2617.2
Median 110.0 2410.0 709.3 2683.5 261.8 2644.0
Std 55.2 189.4 96.1 123.6 36.4 80.0
CoV 44.9% 7.8% 13.6% 4.6% 13.9% 3.1%
IQR 46.8 257.5 102.2 171.0 53.3 89.1

Saudi Arabia Qatar UAE

HDD CDD HDD CDD HDD CDD
Mean 571.8 2302.6 123.1 2699.6 312.8 2786.8
Median 562.7 2300.6 112.0 2770.0 312.6 2809.3
Std 56.4 111.5 62.8 215.0 41.3 104.2
CoV 9.9% 4.8% 51.0% 8.0% 13.2% 3.7%
IQR 55.7 181.2 51.8 372.5 63.2 131.5
Note: Std is the standard deviation, CoV is the coefficient of variation (the ratio of the standard deviation
to the mean), and IQR is the interquartile range (the first quartile subtracted from the third quartile).
Source: See Section 4.1.

Fig. A1: Weather variables

a) HDD b) CDD

Source: See Section 4.1.

Modeling GCC Residential Energy Demand Appendix Page 2 of 4

 A3. Effect of omitting weather variables from estimation
Table A2 compares and summarises the preferred specifications for the four countries that the
model fitted best: Bahrain, Kuwait, Oman, and Saudi Arabia. This shows that the long-run
estimated price and income elasticities change for Oman and Saudi Arabia, but hardly changes for
Bahrain and Kuwait. However, the diagnostic tests show in general that for all four countries the
preferred specifications perform better than those that exclude weather variables (and for Saudi
Arabia, the model without weather variables only achieves very weak convergence). Furthermore,
Fig. A2 compares the estimated UEDTs from the preferred specifications with the estimated
UEDTs from those omitting the weather variables and this clearly shows that the trends are very
similar for all four countries.

Table A2: Impact on preferred specifications from omitting weather variables

Bahrain Kuwait Oman Saudi Arabia
Without Without Without Without CDD
Pref. Model Pref. Model Pref. Model Pref. Model
CDD CDD CDD & HDD
LR elasticity estimates
Γ (GDP) 0.71 0.78 0.43 0.46 0.86 0.53 0.48 0.26
Δ (Price) 0.00 0.00 0.00 0.00 -0.10 -0.12 -0.16 -0.12
Θ (Pop) 0.00 0.00 0.68 0.66 0.00 0.00 0.80 0.43
Goodness of fit
p.e.v. 0.000899 0.001576 0.000586 0.000621 0.000451 0.000621 0.000392 0.000724
AIC -6.514 -6.025 -6.799 -6.813 -6.990 -6.741 -7.129 -6.659
𝑅2 0.997 0.994 0.997 0.997 0.999 0.999 0.999 0.998
𝑅𝑑2 0.916 0.846 0.977 0.974 0.881 0.828 0.766 0.500
Residual Diagnostics
Std Error 0.030 0.040 0.024 0.025 0.021 0.025 0.020 0.027
Normality 0.10 1.63 0.72 0.62 1.64 1.44 0.58 0.28
H(h) H(7) = 2.55 H(7) = 1.84 H(6) = 0.82 H(7) = 1.13 H(6) = 0.25 H(6) = 0.28 H(6) = 0.85 H(7) = 0.61
r(1) 0.14 0.00 0.11 -0.00 -0.02 0.04 -0.33* 0.02
DW 1.71 1.97 1.75 1.97 1.71 1.75 2.27 1.82
Q(p, d) 𝜒32 = 1.76 𝜒32 = 1.76 𝜒42 = 5.84 𝜒42 = 7.00 𝜒32 = 2.86 𝜒32 = 2.89 𝜒32 = 5.13 𝜒32 = 4.87
Auxiliary residuals:
Normality – Irr. 2.55 1.57 1.36 1.94 0.87 1.82 1.11 1.50
Normality – Lvl 0.85 1.96 0.32 0.32 0.10 0.92 0.24 2.00
Normality – Slp 3.67 6.69** - - 2.37 1.40 1.99 2.87
Pred. Failure 𝜒𝑓2 𝜒32 = 0.23 𝜒32 = 1.51 𝜒32 = 2.43 𝜒32 = 4.03 𝜒32 = 0.83 𝜒32 = 0.72 𝜒32 = 2.64 𝜒32 = 3.20
Note: See Table 2 for details of diagnostic tests. For Saudi Arabia, the estimated equation without the weather variable only weakly
converged whereas the preferred equation in the paper strongly converged.

Modeling GCC Residential Energy Demand Appendix Page 3 of 4

Fig. A2: Comparison of estimated UEDTs for specifications with and without
the variables

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