Underperforming economy impacts electricity demand

A "lacklustre" economic environment has meant electricity generation decreased in August, while consumption moderated from the previous month's reading, an economist has said.

Statistics South Africa (Stats SA) on Thursday issued data on SA's electricity generation and consumption.

According to the data, electricity generated in August 2018 contracted by 0.4% year-on-year. In July, however, electricity generation increased 2.2% year-on-year.

Electricity consumption for August increased slightly by 1.2% year-on-year, compared to 2.7% recorded in July.

According to Investec economist Lara Hodes, the electricity distributed and consumed over the past eight months reflects "muted levels" of consumption demand, particularly in energy-intensive sectors such as mining and manufacturing.

Apart from "lacklustre economic growth", electricity demand is impacted by disruptive technologies in the energy space, which means electricity demand is no longer restricted to the national grid, she said.

"As a result, it is imperative for Eskom to identify new growth markets," she added.

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Hodes also warned that rising electricity prices – as a result of the energy regulator allowing Eskom to recover R32.7bn through tariff hikes of as much as 4.4% - could pose an upside risk to SA’s inflation.

The 2018 Integrated Resource Plan, along with Eskom’s strategy document – due for release in November – should provide clarity on the future of SA’s energy sector, as well as Eskom’s plans as it battles debt and declining consumption, Hodes said.

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