IDEAS home Printed from https://ideas.repec.org/a/eee/enepol/v97y2016icp450-460.html
   My bibliography  Save this article

An economy-wide evaluation of new power generation in South Africa: The case of Medupi and Kusile

Author

Listed:
  • Bohlmann, Jessika
  • Bohlmann, Heinrich
  • Inglesi-Lotz, Roula
  • van Heerden, Jan

Abstract

This paper investigates the role that the building of two new power stations, Medupi and Kusile, will play in facilitating future economic activity in South Africa. We use a dynamic computable general equilibrium (CGE) model to estimate the economy-wide effects of these new power stations. Our simulation results also provide insight into how much the local economy has lost due to inadequate electricity supply in the period leading up to the construction of Medupi and Kusile. We find that the decision to build additional power generation capacity was necessary and justified, and that the failure to sooner recognise the need for expansion of the country's electricity generation capacity and subsequent delays in commissioning Medupi and Kusile, likely cost the economy over R110bn in lost production. Additional analysis, in which a further two-year delay in the construction of Medupi and Kusile is simulated, shows that such an event will cause the economy to perform below baseline projections up to 2022.

Suggested Citation

  • Bohlmann, Jessika & Bohlmann, Heinrich & Inglesi-Lotz, Roula & van Heerden, Jan, 2016. "An economy-wide evaluation of new power generation in South Africa: The case of Medupi and Kusile," Energy Policy, Elsevier, vol. 97(C), pages 450-460.
    • Handle: RePEc:eee:enepol:v:97:y:2016:i:c:p:450-460
    DOI: 10.1016/j.enpol.2016.07.020
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301421516303731
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.enpol.2016.07.020?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Dixon, Peter B. & Koopman, Robert B. & Rimmer, Maureen T., 2013. "The MONASH Style of Computable General Equilibrium Modeling: A Framework for Practical Policy Analysis," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 23-103, Elsevier.
    2. Inglesi-Lotz, R. & Blignaut, J.N., 2012. "Electricity intensities of the OECD and South Africa: A comparison," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(7), pages 4491-4499.
    3. Mark Horridge, 2000. "ORANI-G: A General Equilibrium Model of the Australian Economy," Centre of Policy Studies/IMPACT Centre Working Papers op-93, Victoria University, Centre of Policy Studies/IMPACT Centre.
    4. Roula Inglesi-Lotz, James Blignaut, 2011. "Estimating the price elasticity for demand for electricity by sector in South Africa," South African Journal of Economic and Management Sciences, University of Pretoria, Faculty of Economic and Management Sciences, vol. 14(4), pages 449-465, December.
    5. Spalding-Fecher, Randall & Matibe, David Khorommbi, 2003. "Electricity and externalities in South Africa," Energy Policy, Elsevier, vol. 31(8), pages 721-734, June.
    6. Inglesi-Lotz, Roula & Blignaut, James N., 2014. "Improving the electricity efficiency in South Africa through a benchmark-and-trade system," Renewable and Sustainable Energy Reviews, Elsevier, vol. 30(C), pages 833-840.
    7. Bohlmann, H.R. & Van Heerden, J.H. & Dixon, P.B. & Rimmer, M.T., 2015. "The impact of the 2014 platinum mining strike in South Africa: An economy-wide analysis," Economic Modelling, Elsevier, vol. 51(C), pages 403-411.
    8. Horridge, Mark & Meeraus, Alex & Pearson, Ken & Rutherford, Thomas F., 2013. "Solution Software for Computable General Equilibrium Modeling," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 1331-1381, Elsevier.
    9. Adams, Philip D. & Parmenter, Brian R., 2013. "Computable General Equilibrium Modeling of Environmental Issues in Australia," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 553-657, Elsevier.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ye, Yuxiang & Koch, Steven F., 2021. "Measuring energy poverty in South Africa based on household required energy consumption," Energy Economics, Elsevier, vol. 103(C).
    2. Bohlmann, H.R. & Horridge, J.M. & Inglesi-Lotz, R. & Roos, E.L. & Stander, L., 2019. "Regional employment and economic growth effects of South Africa’s transition to low-carbon energy supply mix," Energy Policy, Elsevier, vol. 128(C), pages 830-837.
    3. Jessika A. Bohlmann & Roula Inglesi-Lotz & Heinrich R. Bohlmann, 2022. "Carbon Tax and its Impact on South African Households," Working Papers 202248, University of Pretoria, Department of Economics.
    4. Kruger, Wikus, 2022. "A quiet transition: The role of Namibia's state-owned power utility in the renewable energy auction program," Utilities Policy, Elsevier, vol. 78(C).
    5. Dirk Johan van Vuuren & Annlizé L. Marnewick & Jan Harm C. Pretorius, 2021. "Validation of a Simulation-Based Pre-Assessment Process for Solar Photovoltaic Technology Implemented on Rooftops of South African Shopping Centres," Sustainability, MDPI, vol. 13(5), pages 1-26, February.
    6. Monyei, C.G. & Adewumi, A.O., 2017. "Demand Side Management potentials for mitigating energy poverty in South Africa," Energy Policy, Elsevier, vol. 111(C), pages 298-311.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jessica A. Bohlmann & Heinrich R. Bohlmann & Roula Inglesi-Lotz, 2015. "An Economy-Wide Evaluation of New Power Generation in South Africa: The Case of Kusile and Medupi," Working Papers 201540, University of Pretoria, Department of Economics.
    2. Vladimir Zybatov, 2018. "Strategic Planning of Energy-Efficient Development of a Region of the Russian Federation," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(3), pages 941-954.
    3. Jessika A. Bohlmann & Roula Inglesi-Lotz & Heinrich R. Bohlmann, 2022. "Carbon Tax and its Impact on South African Households," Working Papers 202248, University of Pretoria, Department of Economics.
    4. Erwin Corong & Thomas Hertel & Robert McDougall & Marinos Tsigas & Dominique van der Mensbrugghe, 2017. "The Standard GTAP Model, version 7," Journal of Global Economic Analysis, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, vol. 2(1), pages 1-119, June.
    5. Jianmin You & Xiqiang Chen & Jindao Chen, 2021. "Decomposition of Industrial Electricity Efficiency and Electricity-Saving Potential of Special Economic Zones in China Considering the Heterogeneity of Administrative Hierarchy and Regional Location," Energies, MDPI, vol. 14(17), pages 1-22, September.
    6. Larisa Vazhenina & Elena Magaril & Igor Mayburov, 2022. "Resource Conservation as the Main Factor in Increasing the Resource Efficiency of Russian Gas Companies," Resources, MDPI, vol. 11(12), pages 1-14, December.
    7. Nong, Duy & Meng, Sam & Siriwardana, Mahinda, 2017. "An assessment of a proposed ETS in Australia by using the MONASH-Green model," Energy Policy, Elsevier, vol. 108(C), pages 281-291.
    8. Sam Meng & Tien Pham, 2017. "The impact of the Australian carbon tax on the tourism industry," Tourism Economics, , vol. 23(3), pages 506-522, May.
    9. Monyei, C.G. & Adewumi, A.O., 2017. "Demand Side Management potentials for mitigating energy poverty in South Africa," Energy Policy, Elsevier, vol. 111(C), pages 298-311.
    10. Kohler, Marcel, 2014. "Differential electricity pricing and energy efficiency in South Africa," Energy, Elsevier, vol. 64(C), pages 524-532.
    11. McNeill, Judith, 2015. "A review of the economic modelling on the impacts of the Australian carbon tax," Conference papers 332598, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    12. Tafadzwa Ruzive & Thando Mkhombo & Simbarashe Mhaka & Nomahlubi Mavikela & Andrew Phiri, 2019. "Electricity Intensity and Unemployment in South Africa: A Quantile Regression Analysis," International Journal of Energy Economics and Policy, Econjournals, vol. 9(1), pages 31-40.
    13. Jakub Boratyński & Jakub Borowski & Adam Czerniak & Dariusz Rosati, 2017. "The Balassa-Samuelson effect in CEE economies: a CGE analysis," EcoMod2017 10516, EcoMod.
    14. Khumbuzile C. Mosoma & Heinrich R. Bohlmann & Sifiso M. Ntombela & Renee van Eyden, 2023. "Quantifying the Economic Effects of Land Reform Policy in South Africa: A Computable General Equilibrium Analysis," Working Papers 202307, University of Pretoria, Department of Economics.
    15. Konstantins Benkovskis & Eduards Goluzins & Olegs Tkacevs, 2016. "CGE model with fiscal sector for Latvia," Working Papers 2016/01, Latvijas Banka.
    16. Jan H van Heerden, 2020. "The Possible Effects of the Extended Lockdown Period on the South African Economy: A CGE Analysis," Working Papers 202042, University of Pretoria, Department of Economics.
    17. Kym Anderson & Signe Nelgen & Ernesto Valenzuela & Glyn Wittwer, 2009. "Economic contributions and characteristics of grapes and wine in AustraliaÂ’s wine regions," Centre for International Economic Studies Working Papers 2009-01, University of Adelaide, Centre for International Economic Studies.
    18. Arief Anshory Yusuf, 2008. "INDONESIA-E3: An Indonesian Applied General Equilibrium Model for Analyzing the Economy, Equity, and the Environment," Working Papers in Economics and Development Studies (WoPEDS) 200804, Department of Economics, Padjadjaran University, revised Sep 2008.
    19. Bohlmann, H.R. & Horridge, J.M. & Inglesi-Lotz, R. & Roos, E.L. & Stander, L., 2019. "Regional employment and economic growth effects of South Africa’s transition to low-carbon energy supply mix," Energy Policy, Elsevier, vol. 128(C), pages 830-837.
    20. Mai, Yinhua, 2008. "Removing border protection on wheat and rice: effects on rural income and food self-sufficiency in China," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 52(2), pages 1-19.

    More about this item

    Keywords

    Computable general equilibrium; UPGEM; Electricity supply; C68; Q41; Q43;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:97:y:2016:i:c:p:450-460. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/enpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.