Open Access Journal Article

Macroeconomic Drivers of Electricity Prices in Nigeria

by Mansur Bala a,* orcid ,  Nasir Ahmad Moyi a  and  Umar Muhammad Gummi a
a
Department of Economics, Sokoto State University, Sokoto, Nigeria
*
Author to whom correspondence should be addressed.
ETE  2024, 17; 2(3), 17; https://doi.org/10.58567/ete02030002
Received: 18 December 2023 / Accepted: 6 April 2024 / Published Online: 8 July 2024
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Abstract

Electricity price volatility in developing economies, particularly Nigeria, presents a significant challenge to sustainable development. In this paper, we examine the macroeconomic drivers of electricity prices (ELP) in Nigeria based on annual data spanning 1980-2022 and the autoregressive distributed lag (ARDL) procedure. Our model estimates the long-run and short-run impacts of population growth (PG), economic growth (GDP), crude oil price (COPR), and electricity consumption (ELC) on electricity prices (ELP). The empirical findings reveal a positive and long-run effect of PG on ELP, indicating that rising demand from a growing population increases electricity prices. In the short-run, ELC surprisingly co-moved with ELP, which may be attributable to price-sensitive demand within specific consumer segments or periods. Furthermore, GDP and COPR exert positive effects on ELP, indicating that economic growth drives energy consumption and prices, and the cost-driven impact of fossil fuel dependence in electricity generation. These findings shed light on the complex interplay of demographic, economic, and energy market-related forces driving electricity prices in Nigeria. Therefore, the paper proposes some policy suggestions based on the empirical findings.

Keywords: Electricity Price; Gross Domestic Product; Population Growth; Crude Oil Price; Electricity Consumption; Autoregressive Distributed Lag Model;
Copyright: © 2024 by Bala, Ahmad Moyi and Gummi. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY) (Creative Commons Attribution 4.0 International License). The use, distribution or reproduction in other forums is permitted, provided the original author(s) or licensor are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.

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ACS Style
Bala, M.; Ahmad Moyi, N.; Gummi, U. M. Macroeconomic Drivers of Electricity Prices in Nigeria. Energy Technologies and Environment, 2024, 2, 17. https://doi.org/10.58567/ete02030002
AMA Style
Bala M, Ahmad Moyi N, Gummi U M. Macroeconomic Drivers of Electricity Prices in Nigeria. Energy Technologies and Environment; 2024, 2(3):17. https://doi.org/10.58567/ete02030002
Chicago/Turabian Style
Bala, Mansur; Ahmad Moyi, Nasir; Gummi, Umar M. 2024. "Macroeconomic Drivers of Electricity Prices in Nigeria" Energy Technologies and Environment 2, no.3:17. https://doi.org/10.58567/ete02030002
APA style
Bala, M., Ahmad Moyi, N., & Gummi, U. M. (2024). Macroeconomic Drivers of Electricity Prices in Nigeria. Energy Technologies and Environment, 2(3), 17. https://doi.org/10.58567/ete02030002

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