Economic Valuation of Electricity Input in Iranian Energy-Intensive Industries

Electric energy is one of the most significant production inputs in various industries, especially energy-intensive industries. As an incentive for industrial activity, this input is delivered to Iranian industries at prices below their cost. In one sense, this type of pricing has made energy-intensive industries profitable, while on the other hand, it has reduced investment in electricity generation industries. The current study uses published data from 2003 to 2019 of the country’s industries to identify energy-intensive industrial groups. Their production function estimate using dynamic, per capita panel model. On the basis of the marginal production value of these industries, the economic value of electric energy input was calculated. This study indicates that in the energy-intensive industry of “Manufacture of chemicals and chemical products”, the short-term and long-term economic value of electric energy input is approximately 5.6 to 6.5 times the average price paid for it. This ratio is approximately 1.8 to 2 in the “Manufacture of other non-metallic mineral products” and 1.4 to 1.7 in the “Manufacture of basic metals” energy-intensive industries. The average of this ratio is about 2.9 to 3.5 for entire Iranian industry ranges.