Investigating the Impact of Implementing “Subsidies Targeting Law” on Optimization of Energy Consumption in Iran and Forecasting the Future Trend

Iran as a country with huge resources of energy has suffered from mismanaged consumption, energy waste, increasing of CO2 emission and climate change over the past decades. Given the need to optimize energy consumption and decrease energy waste, Iranian government has implemented “subsidies targeting law” since 2010. By performing this law in electrical sector, payment of subsidy on electricity consumption is gradually going to be removed and consumers would pay the actual price in the future, while before carrying out this reform, the price of electricity was lower than its actual level. In this paper, electricity consumption in industry is investigated before and after implementing the first phase of elimination of energy subsidy in Iran and it is analyzed whether the act of removing subsidy is efficient or not. An Artificial Neural Network model and regression model is applied to forecast electricity consumption with the actual price. Forecasting outputs are compared and analyzed and in results and discussion part, it has been mentioned that electricity consumption is lowly affected by price liberalization. Before this research it has been expected that targeting of energy subsidies would effectively impact on energy use, but the results of this paper doesn’t support this expectation. Increasing prices due to implementing subsidies reform affect electricity consumption with some delay, so in future it is expected to have more decrease in Electricity consumption. This delay could be because of government delay in decreasing resource consumption or because of time consuming optimization activities