Cointegration Relationship between Electricity Intensity and Power Price in China

This paper analyzes the main factors impacting electricity intensity (namely power consumption per unit GDP) in China first, which include power price, gross domestic product and the proportion of industry in whole economy. Then the relationships between power price and electricity intensity was studied based on Granger-causality and cointegration tests. The result indicates that there exists Granger causality relationship running from power price to electricity intensity, so does the Granger causality relationship between the proportion of industry in whole economy and electricity intensity which running from the former to the latter . At the same time, it shows us a co-integration relationship between them, since the electricity intensity reduces 3.695% while the power price gets a 1% growth, and electricity intensity increases 18.922% while the proportion of industry in whole economy gets a 1% growth, which indicates that the proportion of industry in whole economy has a greater effect on electricity intensity. In order to reduce the level of electricity intensity, save energy, optimize energy efficiency and promote sustainable economic development, China should raise power price properly, what´s more important is to adjust the industrial structure, reducing the proportion of high-power-consuming industries.