An Economy-Wide Evaluation of New Power Generation in South Africa: The Case of Kusile and Medupi

Jessica Bohlmann, Heinrich Bohlmann () and Roula Inglesi-Lotz
Additional contact information
Jessica Bohlmann: Department of Economics, University of Pretoria

No 201540, Working Papers from University of Pretoria, Department of Economics

Abstract: The South African economy has suffered over the past decade due to a lack of adequate electricity supply. With two new coal-fired power stations, Kusile and Medupi scheduled to come online over a six year period (2014-2019), their additional generation capacity is expected to restore electricity reserve margins and facilitate increased growth and investment in the local economy. In this paper, we use a dynamic CGE model for South Africa to evaluate the economy-wide impact that the additional power generation from these two stations will have across a broad range of macroeconomic and industry variables. In terms of the new power generation capacity, our findings suggest that the macroeconomic impact of Kusile and Medupi will be a definite positive. Results show that, in the medium term, investment expenditur is particularly sensitive to the building of these new power plants. Additional costly blackouts are also likely to be avoided, further promoting economic growth and investment. Once Kusile and Medupi are fully operational and able to provide its projected 9600MW of base load electricity supply, old coal-fired power plants may be decommissioned and replaced by cleaner and more efficient generation sources as outlined in the Department of Energy's Integrated Resource Plan. Our analysis also suggests that this outcome provides a good balance between utilising modern clean coal technologies that are cost-effective while laying the foundation to improving our generation-mix and carbon emissions profile.

Keywords: Computable general equilibrium; UPGEM; electricity supply; Kusile; Medupi (search for similar items in EconPapers)
JEL-codes: C68 Q41 Q43 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2015-06
New Economics Papers: this item is included in nep-cmp and nep-ene
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.up.ac.za/media/shared/61/WP/wp_2015_40.zp58417.pdf (application/pdf)

Related works:
Working Paper: An Economy-Wide Evaluation of New Power Generation in South Africa: The Case of Kusile and Medupi (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pre:wpaper:201540

Access Statistics for this paper

More papers in Working Papers from University of Pretoria, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Rangan Gupta ().