The effect of mismatched supply and demand of electricity on economic growth in South Africa

Since 2008, the South African economy has experienced several power cuts (unplanned or as part of a load-shedding schedule), presumably because of the inability of the electricity supply to cover the demand. This paper examines the impact of such a demand-supply mismatch on the country's economic growth within a production function framework. To do so, we use an Autoregressive Distributed Lag Model (ARDL) for the period 1985 to 2019. The paper finds that a positive mismatch (or surplus) of electricity (supply>demand) boosts economic growth in the long run. This finding provides evidence that supports the necessity of electricity supply expansion and the promotion of energy efficiency measures that both will create a mismatch (surplus) conducive to economic growth.

Automated summary

This paper examines the impact of demand-supply mismatch on the economic growth in South Africa. Using an Autoregressive Distributed Lag Model, the study finds that a positive mismatch of electricity (supply>demand) boosts long-term economic growth, providing evidence for the necessity of expanding electricity supply and promoting energy efficiency measures.