The economics of energy efficiency for the poor—a South African case study

South Africa’s Reconstruction and Development Programme set ambitious goals for providing basic services to all, including housing and electrification. More efficient use of energy has the potential to socially and politically support these goals, particularly when it is targeted at low-income communities lacking adequate energy services. This paper examines the economics of energy efficiency for the urban poor from the perspective of society, utilities and poor consumers, using five example programmes. While the five energy efficiency programmes generally have significant economic and environmental benefits from a social perspective, they may not be as attractive to utilities and consumers. Also examined are the policy options for overcoming the significant barriers to energy efficiency, and ways government can bridge the gap between what is good for society and what is good for the electricity industry.