South Africa’s electricity consumption : a sectoral decomposition analysis

Abstract

South Africa’s electricity consumption has shown a sharp increase since the early 1990s. Here we conduct a sectoral decomposition analysis of the electricity consumption for the period 1993–2006 to determine the main drivers responsible for this increase. The results show that the increase was mainly due to output or production related factors, with structural changes playing a secondary role. While there is some evidence of efficiency improvements, indicated here as a slowdown in the rate of increase of electricity intensity, it was not nearly sufficient to offset the combined production and structural effects that propelled electricity consumption forward. This general economy-wide statement, however, can be misleading since the results, in essence, are very sector specific and the inter-sectoral differences are substantial. Increases in production were proven to be part of the rising trend for all sectors. However, only five out of fourteen sectors were affected by efficiency improvements, while the structural changes affected the sectors’ electricity consumption in different ways. These differences concerning the production, structural and efficiency effects on the sectors indicate the need for a sectoral approach in the energy policy-making of the country rather than a blanket or unilateral economy-wide approach.