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Examining the determinants of electricity demand by South African households per income level

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  • Jessika A. Bohlmann
  • Roula Inglesi-Lotz

Abstract

For the period 1975–2016, this paper examines the determinants of the residential demand for electricity in South Africa including disposable income, electricity prices, food prices as well as the impact of the 2007/08 load-shedding wave and the 2008 electricity price restructuring. Given the high income inequality levels in South Africa, this relationship was investigated at aggregated and disaggregated income levels. Based on an Autoregressive Distributed Lag (ARDL) model, the empirical results indicate long-run cointegration between residential electricity consumption, gross national disposable income, electricity prices and food prices. Disposable income elasticities have a positive sign for the aggregate and all income groups, indicating that as income increases, South African households consume more electricity (normal good). As expected, price elasticities are negative and significant – for both the aggregated and disaggregated models – indicating that electricity prices do influence electricity demand for all South African households. The paper also examines the complementarity or substitutability of food and electricity. At both the aggregated and disaggregated income levels, the results showed that food and electricity are substitute goods for all South African households. However, as expected, the magnitude of this relationship is marginally different for each income group.
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Suggested Citation

  • Jessika A. Bohlmann & Roula Inglesi-Lotz, 2020. "Examining the determinants of electricity demand by South African households per income level," ERSA Working Paper Series 833, Economic Research Southern Africa.
    • Handle: RePEc:rza:ersawp:833
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    2. Ye, Yuxiang & Koch, Steven F., 2021. "Measuring energy poverty in South Africa based on household required energy consumption," Energy Economics, Elsevier, vol. 103(C).
    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. Noriza Mohd Saad & Erna Farina Mohamed & Mohamad Taufik Mohd Arshad & Ahmad Lutfi Mohayiddin, 2023. "Electricity Tariff Changes and Consumer Sentiment on Household Consumption Expenditure in Malaysia," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 21(1), pages 175-191, March.
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    14. Ioana Ancuta Iancu & Cosmin Pompei Darab & Stefan Dragos Cirstea, 2021. "The Effect of the COVID-19 Pandemic on the Electricity Consumption in Romania," Energies, MDPI, vol. 14(11), pages 1-16, May.
    15. Mohloding, Refiloe & Phogole, Bopaki & Yessoufou, Kowiyou, 2025. "Household acceptance of solar water heaters in South Africa: An expectancy-disconfirmation model," Utilities Policy, Elsevier, vol. 95(C).
    16. Nor Salwati Othman & Nurul Hezlin Mohamed Hariri, 2021. "Estimating the Causality and Elasticities of Residential Electricity Consumption for Malaysia," International Journal of Energy Economics and Policy, Econjournals, vol. 11(6), pages 335-346.
    17. Yuanping Wang & Lang Hu & Lingchun Hou & Lin Wang & Juntao Chen & Yu He & Xinyue Su, 2024. "A SHAP machine learning-based study of factors influencing urban residents' electricity consumption - evidence from chinese provincial data," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(12), pages 30445-30476, December.
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    20. Christinah Setshedi & Gisele Mah, 2025. "Electricity Prices and Residential Electricity Consumption in South Africa: Evidence from Fully Modified Ordinary Least Squares and Dynamic Ordinary Least Squares Tests," Energies, MDPI, vol. 18(17), pages 1-19, August.
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    24. Kunofiwa Tsaurai, 2021. "Macroeconomic Determinants of Energy Consumption in BRICS (Brazil, Russia, India, China, South Africa)," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(2), pages 405-423.

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    Keywords

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    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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