Global and Local Approaches for Forecasting of Long-Term Natural Gas Consumption in Poland Based on Hierarchical Short Time Series

This study presents a novel approach for predicting hierarchical short time series. In this article, our objective was to formulate long-term forecasts for household natural gas consumption by considering the hierarchical structure of territorial units within a country's administrative divisions. For this purpose, we utilized natural gas consumption data from Poland. The length of the time series was an important determinant of the data set. We contrast global techniques, which employ a uniform method across all time series, with local methods that fit a distinct method for each time series. Furthermore, we compare the conventional statistical approach with a machine learning (ML) approach. Based on our analyses, we devised forecasting methods for short time series that exhibit exceptional performance. We have demonstrated that global models provide better forecasts than local models. Among ML models, neural networks yielded the best results, with the MLP network achieving comparable performance to the LSTM network while requiring significantly less computational time.