Christopher Molteno

Evaluating electricity demand side management opportunities in South Africa

Pressure to protect the environment and halt climate change is leading to a global change in electricity systems. Variable renewable energy (VRE) is cleaner but poses a challenge to balancing supply and demand. This can be addressed by incentivising and encouraging electricity customers to change their use behaviour to match demand to supply. This valuable tool in balancing and stabilising an electricity system is called Demand-Side Management (DSM).

This research investigated the potential of DSM in South Africa (SA). SA is heavily reliant on coal, is recently recovering from an electricity shortage crisis and is intending to move to a cleaner electricity network. The research is focused on large industrial electricity customers, and the drivers for and obstacles to DSM. It dealt with energy efficiency, self-generation, co-generation, and Demand Response (DR). It involved qualitative interviews of supply-side and industry sector representatives.

The results showed that Eskom (SA’s main utility company) developed its DSM programmes largely in response to its supply crisis, particularly regarding DR. Consequently, Eskom’s reasons for promoting DSM and DR do not align with international examples where the purpose is more environmental. Barriers were found to be practical, economic and psychological. These either prohibited a facility from participation or were being well addressed by Eskom. The drivers for DSM participation were found to be far more varied than just economic and/or compensatory. Exemption from load-shedding was the foremost value proposition, but one which is unsustainable due to the gradual elimination of load-shedding. While environmental issues are important to these industries, DSM’s environmental impact is not local, nor promoted as a driver. Finally, carbon tax was identified as an imminent threat to the profitability of industry in SA and a possible driver of DSM.

The research concluded that DSM should be a sustainable component of environmentally responsible policy. In support of this, carbon tax would directly and locally motivate environmental and DSM decisions.