Aggregate electricity demand in South Africa: Conditional forecasts to 2030

Abstract

In 2008, South Africa experienced a severe electricity crisis. Domestic and industrial electricity users had to suffer from black outs all over the country. It is argued that partially the reason was the lack of research on energy, locally. However, Eskom argues that the lack of capacity can only be solved by building new power plants.The objective of this study is to fill part of the gap of the energy research in the country. By using the Engle Granger methodology for co-integration and Error Correction Models, the variables that explain the aggregate electricity use in South Africa during the period 1980-2005 are examined. Furthermore, we make conditional forecasts of electricity consumption based on the current energy policiesThe findings indicate that there is a long run relationship between electricity consumption and price as well as economic growth/income. The last few years in South Africa, price elasticity was rarely taken into account because of the low and decreasing prices in the past. The short-run dynamics of the system are affected by population growth, too After the energy crisis, Eskom, the national electricity supplier, is in search for substantial funding in order to build new power plants that will help with the envisaged lack of capacity that the company experienced. By using two scenarios for the future of growth, this study shows that the electricity demand will drop substantially due to the price policies agreed -until now-by Eskom and the National Energy Regulator South Africa (NERSA) that will affect the demand for some years.

On the causality and determinants of energy and electricity demand in South Africa: A review

“…The first attempt to estimate the influence of electricity prices to its consumption was made by Pouris (1987). Since then different econometric approaches have been used to assess the impact of price (Inglesi, 2010;Ziramba, 2008, Amusa et al, 2009Inglesi-Lotz and Pouris, 2010;Inglesi-Lotz, 2011).. Ziramba (2008) examined the residential electricity demand and found that for the period 1978 to 2005, price of electricity was insignificant in the long-run. Amusa et al (2009) also found that electricity prices …”

“…In the international literature in accordance to basic economic theory, the demand of a good or a service is usually dependent on factors such as its own price, the income of the consumers, the price of substitute goods and other exogenous variables related to the nature of the good (Inglesi, 2010). The majority of international studies include as main explanatory variables the income of the consumers (or economic growth) and the price of energy (electricity) (for example, Atakhanova and Howie (2007) Nasr et al (2000); ).…”

“…The most commonly used were various cointegration techniques (Inglesi, 2010;Ziramba, 2008;Amusa et al 2009). However, there were two studies identified that tried to unfold the factors affecting changes in energy and electricity consumption by using decomposition methods (Inglesi-Lotz and Pouris, 2011;.…”

The evolution of price elasticity of electricity demand in South Africa: A Kalman filter application

“…(8) includes standard variables, used in international and local literature (Inglesi, 2010;Nakajima and Hamori, 2010;Dilaver and Hunt, 2010) such as prices of electricity and output of the economy, to explain the electricity consumption.…”

Detection of multiple bubbles in South African electricity prices

“…Although the effects of the electricity prices to the electricity consumption in South Africa are well documented (Ziramba, 2008;Inglesi, 2010;Inglesi-Lotz, 2011;Inglesi-Lotz and Blignaut, 2011;Inglesi-Lotz, 2014;Inglesi-Lotz and Pouris, forthcoming), the nature of the evolution of electricity prices in South Africa was never examined in the literature.…”