This paper describes a simple structural model of industrial energy demand based on production-function-like concepts, with vintaging of the available capital stock. The model is designed to help users understand the past and likely future effects of variations in factor prices and rates of output growth on industrial energy demands by major industry group. The approach handles capital-stock adjustment, electric/non-electric energy competition and business cycle effects in a simple, but natural, way. A description of an interesting initial application of the model to the primary metals industry is also included. This application improves our understanding of the approach and demonstrates its usefulness in industrial energy demand analysis.
Reprinted in 1988 from Resources and Energy, Vol 10, No 2, June 1988, pp 111-133