# Electricity Usage Efficiency and Electricity Demand Modeling in the Case of Germany and the UK
## 2 Development of Electricity Consumption, GDP, and Industrial Output in Germany  
In this section, the development of some crucial market variables which affect electricity consumption is presented. Countries analyzed include Germany as well as the UK as another substantial market for electricity in the EU region. The UK data are provided particularly for comparison purposes as the structure of the UK economy is very different compared to Germany.  
There are several economic factors which do affect electricity prices. Various studies have dealt with this issue establishing that electricity demand depends particularly on economic variables and national circumstances as well as on climatic conditions [13; 14; 15]. However, at the beginning of this decade, the development of economies of western European countries and their electricity consumption have decoupled. This factor has significantly complicated the issue of forecasting the electricity demand for the future years.  
The idea of rising electricity demand seemed to be based on two main considerations [2; 16; 17]:  
1. Long-term historical trends, as rising economical output has been associated with higher power consumption in Europe for decades;
2. Increasing usage of electricity in the energy-intensive industries instead of oil and gas (as mentioned in the UK ministerial statement above), while the point that the demand for electricity will decline was supported by the following factors [1];
3. The shift of European economies to sectors other than industries, which are less power consuming [18];
4. Slower expected economic output growth in Europe in the future [19];
5. More efficient electricity usage in the future as for the unit of output less electricity is needed every year.  
Creating future forecasts based on long-term historical trends may be tricky. As shown in Figure 1, electricity consumption was rising by an average of 1.5% a year during the period from 1995 to 2005 (the increase was even sharper in the previous decades) in both Germany and the United Kingdom. However, the next periods have seen the opposite trend with the demand for electricity decreasing visibly.  
Decreases in demand for electricity during the 2008-2010 period were usually linked to the economic woes in Europe; however, the power consumption was already not growing during the relatively stable 2005-2008 period and went down even during the post-crisis years of 2010-2012. As shown in Figures 2 and 3, the United Kingdom was more affected by the sliding GDP growth and industrial production than Germany, hence the power consumption also decreased more rapidly there.  
Figure 1: Electricity consumption, average yearly % change over the following periods: 1995–2005, 2005–2008, 2008–2010, and 2010–2012 (data source: transparency.entsoe.eu, gov.uk).  
These charts show that there is some underlying force responsible for the electricity consumption decrease for the two countries shown. This could have been caused by the increased emphasis put on improving the efficiency of electricity usage which is also stated as one of the goals by the German Ministry for Technology and Economics. The idea is analyzed in the next sections of this paper.