Residential electricity demand in Azerbaijan: structural breaks, elasticity estimation, and regional heterogeneity

This paper estimates residential electricity demand in Azerbaijan over 1995–2024 using the general-to-specific methodology, validated by a seven-algorithm machine learning exercise with SHAP cross-paradigm attribution. The 2007 metering reform is endogenously identified as a permanent level shift in measured residential consumption, with the pre-reform level exceeding the post-reform level by approximately 69% on impact (short-run coefficient; 141% in the solved long-run relation), the largest such structural break documented in the residential electricity demand literature. A temperature elasticity of 0.05 captures durable appliance-stock adjustment to warming. Under IPCC AR6 SSP scenarios, climate warming alone adds 5–13% to national residential demand by 2050; combined with income growth, per capita consumption is projected to reach 1,280–1,333 kWh yr⁻¹. The price elasticity suggests that cost-recovery tariff reform could reduce residential demand by 25–50% in the long run, while sub-national analysis shows that the Baku-Absheron corridor accounts for 44% of national residential consumption, creating asymmetric leverage for spatially targeted efficiency policy. Policy implications are developed for the post-2027 electricity market liberalization, Karabakh reconstruction demand, and minimum energy performance standards for cooling equipment.