Sectoral electricity elasticities in South Africa: Before and after the supply crisis of 2008

Abstract

In this paper, we estimate the price elasticity of electricity for various industrial sectors of the South African economy from 2002 to 2011. The data used include sectoral electricity consumption data and electricity tariff data, both courtesy of Eskom as well as output data based on national statistics. The most important contribution this paper makes is that it includes the period after the sharp rises in electricity tariffs in 2007/2008 following a period of load-shedding and insecurity in electricity supply. Previous studies have included data only until 2007 and, for the most part, have found statistically insignificant, positive elasticities. However, for the period post-2007, we found statistically significant and negative elasticities for 9 of the 11 sectors considered. Our results show that the majority of industrial sectors have become much more sensitive to changes in the price of electricity following 2007/2008, indicating to policymakers that tariff restructuring might influence consumer behaviour significantly.

Examining the determinants of electricity demand by South African households per income level

“…Therefore, this paper provides insight into the food-energy linkages within the overall nexus. This is also in accordance with the extensive literature on the water, food and energy nexus as highlighted in Smajgl, et al (2016) As argued by Narayan and Smyth (2005) and Blignaut et al (2015), reliable estimates of price and income elasticity of demand (like the ones calculated in this paper) are necessary when formulating and evaluating policies, especially those regarding household behaviour and the environment -particularly in the electricity sector. Thus, this study aims to estimate the long-run elasticities of residential demand for electricity in South Africa to understand and quantify the determinants of residential demand for electricity so in future we can accurately measure households' response to various energy related policy proposals such as the carbon tax and demand side management policies that aim at reducing electricity consumption in the residential sector.…”

“…As presented in the background and literature review sections, the most common variables to use when estimating aggregate electricity demand include income, price of electricity, price of a substitute of energy and temperature variables. In this study, we estimate the determinants of residential electricity demand in South Africa at both the aggregate income level and at different income levels -low-, middle-and high--as a function of gross national disposable income, electricity prices, food prices and a dummy variable accounting for the possible impact of the 2007/08 load-shedding wave and the 2008 electricity price restructuring that South Africa experienced 6 . All variables -except the dummy -are in their natural logarithms.…”

“…It has been argued, that prior to 2008, due to South Africa's historically low electricity prices, South African consumers did not have an incentive to consume electricity efficiently, which has been shown in increasing electricity consumption levels (Blignaut et al, 2015). However, since the 2007/2008 crisis, electricity prices in South Africa have increased at around 25 percent per annum, which is said to have influenced consumer behaviour (refer to Figure 3 for a depiction of electricity prices in the South African residential sector).…”

Do the electricity price shocks influence the Sectoral Production and KSE100 Index in Pakistan? An ARDL structural breaks approach

“…Although, previous literature mainly focused on the casual connection between the consumption of energy and growth in the economy (Bildirici et al, 2012;Destek & Aslan, 2017;Dogan, 2015;Ghali & El-Sakka, 2004;Ozturk, 2010;Polemis & Dagoumas, 2013;Wolde-Rufael, 2014;Wu et al, 2019). A sector specific relationship with electricity consumption is carried out between 1993-2006 and 1993-2011. The findings proposed that the irregular upsurge in the consumption of electricity is due to the structural changes in the production line (Blignaut et al, 2015;Inglesi-Lotz & Blignaut, 2011). Electricity consumption is usually more reactive to GDP (Bildirici et al, 2012;Ciarreta & Zarraga, 2010b, 2010aGhali & El-Sakka, 2004).…”

The impact of electricity prices on sectoral output in South Africa from 1994 to 2015

“…In other words, income is a prevailing macroeconomic driver of electricity demand. Blignaut et al (2015) and utilised panel techniques to examine how sectors behaved in response to electricity consumption from 2002 to 2011 and 1993 to 2006 in South Africa. These studies found that output is more sensitive to electricity consumption than to electricity prices.…”