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Aggregate demand for electricity in South Africa: An analysis using the bounds testing approach to cointegration

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  • Amusa, Hammed
  • Amusa, Kafayat
  • Mabugu, Ramos

Abstract

Electricity demand in South Africa has grown at a very rapid rate over the past decade. As part of reform initiatives to enhance long-term sustainability of the country's electricity industry, South Africa's authorities have in recent years sought to develop an electricity pricing framework that is cost reflective and forms the cornerstone of demand management schemes meant to foster changes in consumption behaviour and enhance efficiency in resource use. The effects of any pricing policy on aggregate electricity consumption will depend on a useful understanding of the factors that influence electricity demand, and the magnitude to which electricity demand responds to changes in such factors. In this context, this paper applies the bounds testing approach to cointegration within an autoregressive distributed lag framework to examine the aggregate demand for electricity in South Africa during the period 1960-2007. The results indicate that in the long run, income is the main determinant of electricity demand. With electricity prices having an insignificant effect on aggregate electricity demand, future pricing policies will need to ensure that electricity prices are cost reflective and enhance efficiency of electricity supply and use.

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Bibliographic Info

Article provided by Elsevier in its journal Energy Policy.

Volume (Year): 37 (2009)
Issue (Month): 10 (October)
Pages: 4167-4175

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Handle: RePEc:eee:enepol:v:37:y:2009:i:10:p:4167-4175

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Web page: http://www.elsevier.com/locate/enpol

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Keywords: South Africa Electricity demand Cointegration;

References

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Citations

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Cited by:
  1. Naeem Ur Rehman, Khattak & Tariq, Muhammad & Khan, Jangraiz, 2010. "Determinants of Household’s Demand for Electricity in District Peshawar," MPRA Paper 56007, University Library of Munich, Germany, revised 2010.
  2. Wiesmann, Daniel & Lima Azevedo, Inês & Ferrão, Paulo & Fernández, John E., 2011. "Residential electricity consumption in Portugal: Findings from top-down and bottom-up models," Energy Policy, Elsevier, Elsevier, vol. 39(5), pages 2772-2779, May.
  3. Biru Paul & Md. Uddin & Abdullah Noman, 2011. "Remittances and output in Bangladesh: an ARDL bounds testing approach to cointegration," International Review of Economics, Springer, Springer, vol. 58(2), pages 229-242, June.
  4. Roula Inglesi-Lotz, 2012. "The sensitivity of the South African industrial sector’s electricity consumption to electricity price fluctuations," Working Papers 201225, University of Pretoria, Department of Economics.
  5. Bildirici, Melike, 2012. "Economic Growth and Electricity Consumption in Africa and Asia: MS-VAR and MS-GRANGER Causality Analysis," MPRA Paper 40515, University Library of Munich, Germany.
  6. Hussain Ali Bekhet & Lee Lian Ivy-Yap, 2014. "Highlighting Energy Policies and Strategies for the Residential Sector in Malaysia," International Journal of Energy Economics and Policy, Econjournals, Econjournals, vol. 4(3), pages 448-456.
  7. Adom, Philip Kofi & Bekoe, William, 2013. "Modelling electricity demand in Ghana revisited: The role of policy regime changes," Energy Policy, Elsevier, Elsevier, vol. 61(C), pages 42-50.
  8. Imen Gam & Jaleleddine Ben Rejeb, 2012. "How Can We Assess the Relation Between Equipment, Price and Electricity Demand in Tunisia?," International Journal of Energy Economics and Policy, Econjournals, Econjournals, vol. 2(3), pages 159-166.
  9. Theologos Dergiades & Lefteris Tsoulfidis, 2011. "Revisiting residential demand for electricity in Greece: new evidence from the ARDL approach to cointegration analysis," Empirical Economics, Springer, Springer, vol. 41(2), pages 511-531, October.
  10. Inglesi-Lotz, R., 2011. "The evolution of price elasticity of electricity demand in South Africa: A Kalman filter application," Energy Policy, Elsevier, Elsevier, vol. 39(6), pages 3690-3696, June.
  11. Srinivasan, Sunderasan, 2013. "Electricity as a traded good," Energy Policy, Elsevier, Elsevier, vol. 62(C), pages 1048-1052.

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