Strategic analyses on the South African grid supply and consumption inefficiencies by market segments

Abstract

The surging energy demand from residential and industrial sectors necessitates effective performance from the energy sector. The efficiency of energy generation, supply, and distribution is a crucial global agenda, as energy drives socio-economic development. Thus, strategically analyzing the efficiency of both supply services and consumer behavior in various energy markets is indispensable. This paper examines the performance of the distribution chain within the South African power grid system and the consumption intensity by regional segments. It assesses the sustainability of both the distribution chain and consumption patterns to inform long-term planning through critical intervention strategies. A two-tier approach is employed to analyze inefficiencies by examining supply and consumption in selected urban and rural residential markets. The indicators from the Energy Trilemma Index guided the empirical research, which was conducted through a quantitative survey. Supply performance was analyzed in socioeconomic terms, while consumption behavior was examined through appliance usage. Descriptive statistics and exploratory factor analysis were jointly used to analyze the different data sets. Findings indicate that households in less affluent rural regions such as Soweto, Extension 39, Ikageng, and Soshanguve generally earn below 15,000 ZAR (77%) and spend less on electricity (<200 ZAR by 36% and < 300 ZAR by 40% monthly). Conversely, households in more affluent rural and urban settings typically earn between 25,001 -34,000 ZAR (37%) and 34,001 -46,000 ZAR (39%), spending over 300 ZAR monthly on electricity (80%). Significant differences also exist between regions (NWP and GP) in terms of supply consistency, supply security, use of alternative energy, and energy savings. Most households use a high number of appliances daily, except for air conditioners and pool pumps. In less affluent settings, fridges, electric geysers, and stoves older than five years are common, whereas more affluent settings have newer appliances. The intensity of air conditioner and pool pump usage is low during winter, while space heating is less intense during summer. This segmentation study assists the national government in understanding current market dynamics and the diverse needs and preferences of consumers. Analyzing multiple regional settings provides a comprehensive understanding of unique behaviors and preferences across different target consumer markets, paving the way for eradicating energy poverty and achieving sustainable communities.