Energy demand projections and relevance of income dynamics in Gauteng’s residential sector

Energy modelling serves as a crucial tool for informing both energy policy and strategy development. But the modelling process is faced with both sectoral energy data and structural challenges. Among all the sectors, the residential sector usually presents a huge challenge to the modelling profession due to the dynamic nature of the sector. The challenge is brought by the fact that each an every household in a region may have different energy consumption characteristics and the computing power of the available models cannot incorporate all the details of individual household characteristics. Even if there was enough computing power within the models, energy consumption is collected through surveys and as a result only a sample of a region is captured. These challenges have forced energy modellers to categorise households that have similar characteristics. Different researchers choose different methods for categorising the households. Some researchers choose to categorise households by location and climate, others choose housing types while others choose quintiles. Currently, there is no consensus on which categorisation method takes precedence over others. In these myriad ways of categorising households, the determining factor employed in each method is what is assumed to be the driver of energy demand in that particular area of study. Many researchers acknowledge that households’ income, preferences and access to certain fuels determine how households use energy. Although many researchers recognise that income is the main driver of energy demand in the residential sector, there has been no energy modelling study that has tried to categorise households by income in South Africa. This paper chose to categorise households by income because income is taken to be the main driver of energy demand in the urban residential sector. Gauteng province was chosen as a case study area for this paper. The Long-range Energy Alternatives Planning System (LEAP) is used as a tool for such analysis. This paper will further reveal how the dynamics of differing income across the residential sector affects total energy demand in the long run. The households in Gauteng are classified into three income categories – high, middle and low income households. In addition to different income categories, the paper further investigates the energy demand of Gauteng’s residential sector under three economic scenarios with five energy demand scenarios. The three economic scenarios are first economic scenario (ECO1), second economic scenario (ECO2) and third economic scenario (ECO3). The most distinguishing factor between these economic scenarios is the mobility of households from one income band to the next.The model results show that electricity demand will be high in all the three economic scenarios. The reason for such high electrical energy demand in all the economic scenarios compared to other fuels is due to the fact that among all the provinces, Gauteng households have one of the highest electricity consumption profiles. ECO2 showed the highest energy demand in all the five energy demand scenarios. This is due to the fact that the share of high income households in ECO2 was very high, compared to the other two economic scenarios. The favourable energy demand scenarios will be the Energy Efficiency and MEPS scenarios due to their ability to reduce more energy demand than other scenarios in all the three economic scenarios