Razi University

Industrial development and economic growth critically depend on a reliable supply of energy carriers, particularly electricity, as an essential production input. The primary objective of this study is to examine the impact of industrialization on electricity consumption across Iranian provinces using econometric techniques. To this end, an electricity demand model is specified and estimated using the Generalized Method of Moments (GMM) within a dynamic panel data framework. Alongside the industrialization index, real industrial value added, real energy intensity, urbanization rate, and population growth are incorporated as explanatory variables. The empirical results indicate that the lagged dependent variable has a positive and statistically significant coefficient, confirming the persistence and dynamic adjustment in electricity consumption. Furthermore, industrialization and real industrial value added exert a significant positive effect on electricity demand, highlighting that industrial expansion acts as a major driver of electrical energy usage across the provinces. In addition, real energy intensity and urbanization contribute significantly to higher electricity consumption. Diagnostic checks, including the Arellano–Bond autocorrelation tests and the Sargan test, confirm instrument validity and model specification. Based on these findings, modernizing industrial production lines, adopting energy-efficient technologies, and transitioning toward low-energy-intensive industrial structures are recommended to ensure sustainable electricity demand management.