An economy-wide evaluation of new power generation in South Africa: The case of Medupi and Kusile |
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| Affiliation: | 1. State Key Joint Laboratory of Environment Simulation and Pollution Control (SKLESPC), and School of Environment, Tsinghua University, Beijing 100084, China;2. Ministry of Education Key Laboratory for Earth System Modeling, and Center for Earth System Science, Room S925, Meng Minwei Science Building, Tsinghua University, Beijing 100084, China;1. School of Economics, Faculty of Economics and Management, National University of Malaysia, 43600 Bangi, Malaysia;2. Faculty of Economics, Kharazmi University, No. 43, Taleghani Ave., Tehran, Iran;1. Department of Economics and Business Studies, University of La Rioja, Logroño, Spain;2. Department of Economic Analysis, University of Zaragoza, Zaragoza, Spain;3. Regional Economics Applications Laboratory, University of Illinois, Urbana-Champaign, United States;1. Department of Civil and Environmental Engineering, Imperial College, London, UK;2. Grantham Institute – Climate Change and the Environment, Imperial College, London, UK |
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| Abstract: | This paper investigates the role that the building of two new power stations, Medupi and Kusile, will play in facilitating future economic activity in South Africa. We use a dynamic computable general equilibrium (CGE) model to estimate the economy-wide effects of these new power stations. Our simulation results also provide insight into how much the local economy has lost due to inadequate electricity supply in the period leading up to the construction of Medupi and Kusile. We find that the decision to build additional power generation capacity was necessary and justified, and that the failure to sooner recognise the need for expansion of the country's electricity generation capacity and subsequent delays in commissioning Medupi and Kusile, likely cost the economy over R110bn in lost production. Additional analysis, in which a further two-year delay in the construction of Medupi and Kusile is simulated, shows that such an event will cause the economy to perform below baseline projections up to 2022. |
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| Keywords: | Computable general equilibrium UPGEM Electricity supply C68 Q41 Q43 |
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