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 specify the variables that explain the electricity demand in South Africa
and to forecast electricity demand by creating a model using the Engle–Granger methodology for co-integration
and Error Correction models. By producing reliable results, this study will make a significant contribution
that will improve the status quo of energy research in South Africa.
The 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.
