Indicators such as electricity demand are also applied to electricity consumption , and this in turn serves as a source of measurement data. There are various types of studies and at Endesa we explain what they are and how to interpret them .
The economy tends to be cyclical, alternating between growth phases and recession phases, which is why it is important to review the economic performance of your company through statistics , data that will help you establish patterns or signals to study the economic situation at any given time. This is the function of economic indicators.
But we do not only have indicators that show us the past or the present, there are also those that allow us to detect certain changes in economic growth in advance. This type of indicators, called “leading indicators”, is usually linked to electricity consumption .
Some of the most widely used indicators in Spain for the "advanced" analysis of the economic situation are the ISI (Synthetic Indicator of Industrial Activity) or the ISA (Synthetic Indicator of Economic Activity) .
The electricity consumption indicator as a leading economic indicator
Although the synthetic indicators we discussed earlier take into account several factors in their preparation (sales numbers of large companies, etc.) among which the electricity consumption indicator is included, we are going to study it as a leading indicator “per se” and its usefulness in “predicting” the economy and knowing what the price of electricity depends on .
To use electricity consumption as an analysis tool we can use two series of data that are public:
The statistical series of electricity demand
The Electricity Grid Index (IRE)
Both are provided by the Red Eléctrica de España research team, and are very interesting.
How does electricity demand serve as a leading economic indicator?
When the demand for electricity tends to increase in a country, it is taiwan whatsapp number a clue that, possibly, a greater number of goods and services are being generated in its economy, because in developed societies energy (mainly electricity) is the source that industry uses to produce. This also allows us to deduce that businessmen and industrialists have greater demand from their end customers, a global panorama that anticipates economic growth .
When electricity demand falls, it can be interpreted as a clear warning that a recession or downturn is possibly approaching . Therefore, it is important to be aware of what is happening in the energy markets .
With this prior interpretation, the total demand in Megawatts (MWh) of electricity is published monthly in a graphRed Eléctrica de España (REE), the company that holds the monopoly in our country on the transportation of electricity and management of the electrical system, will be our leading economic indicator .
REE graph: demand meter
Chart: components of the monthly variation in peninsular demand (%).
When analyzing the REE graph it is important to take into account seasonality:
The weather: because an increase or decrease in temperatures will lead to greater energy consumption than in the same previous period.
Work schedule: since the administrative work calendar, whether there are more or fewer working days in a given month, must be taken into account to correctly compare the data.
What is the IRE (Red Eléctrica Index) and how does it help?
Among the analysis tools to obtain electrical measurement data that we mentioned before was the Electric Network Index (IRE), indicators or calculations that are also provided by the REE study team, useful for knowing the demand for electricity.
The IRE records the evolution of electricity consumption of medium and large companies in the country (factories, warehouses, industrial plants, etc.), connected to the Network with a contracted power greater than 450 kW at each supply point of those that make up the IRE.
According to REE, 47% of the total electricity demand in Spain corresponds to consumers with supplies of more than 450 kW of power , which is why this index groups half of the national demand. It is this segment of demand, that of large consumers, which groups together the companies that directly influence the general economic performance of the country.
For this reason, the IRE is a more “fine-grained” leading economic indicator than the Total Demand that we analyzed in the previous point, because here data is obtained exclusively from the productive economic segment (the other part of the demand corresponds to households, shops and businesses).
