The Steinhoff Saga Management review - University of Stellenbosch Business School

January – July 2021

Can households help to mitigate South Africa’s electricity crisis?

By Owen Mbundu

  • JAN 2021
18 minutes to read

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It’s a case of every bit helps

South Africa finds itself in the midst of an electricity crisis which greatly inhibits the country’s ability to achieve meaning economic growth.

The dominant position of state utility Eskom, and the dire situation in which it finds itself, has a long and complex history. The factors at play in this context include energy poverty (the majority of South Africans spend more than 10% of household income on electricity), wasteful usage, the public’s apathy, pressure to reduce greenhouse gas emissions, rampant corruption, incompetent staff, Eskom’s debt, and political interference.

It has been said that South African households are consuming around 25% of all energy generated by Eskom. One study says a 10% reduction in electricity consumption would be as effective as building a new power plant albeit more cost-effective. Therefore, conserving even negligible amounts of electricity sustainably could reduce the pressure on Eskom.

Even though Eskom is biased towards the supply side of the problem, why are more households not actively helping to reduce their electricity consumption? If more people participate in reduction measures, everyone stands to benefit, directly and indirectly. It is widely believed that it is better to have multiple energy conservation interventions than rely on a single intervention.

Environmental sustainability also needs to be taken into account. Annual human consumption of natural resources has reached a stage where people consume in nine months what the earth can produce in 12 months. The challenge is clear: To preserve the future of the planet, a shift to more sustainable patterns of consumption is vital.

South African households are consuming around 25% of all energy generated by Eskom.

This study was therefore undertaken to gain a better understanding of how South African households could reduce their usage footprint. This called for a closer look at the behavioural aspects of electricity consumption at household level. In other words, if every household makes a concerted effort to reduce its electricity consumption then the country could realise significant savings in electricity demand. It would also reduce the need for huge capital projects, and cut pollution levels.

About electricity generation in South Africa

State utility Eskom generates well over 90% of South Africa’s energy, wholly owns the high-voltage transmission grid and supplies 60% of electricity directly to clients. Attempts to privatise the utility or parts thereof never materialised. Eskom, therefore, remains a private entity that is wholly owned by the government, which exposes it to the political vagaries of the prevailing system.

Between 1991 and 2000, Eskom spearheaded a mass electrification campaign unparalleled anywhere in the world. The campaign brought electricity to almost four million households. Until 2008, Eskom was lauded globally for providing some of the cheapest electricity in the world.

Then problems started to surface in parallel with political and economic changes. These included poor decision making (referring to Eskom’s inability to match demand with supply, and poor planning in terms of commissioning new power plants), lack of governance (with too many government departments and other stakeholders as ‘parents’; and too close a relationship with the mining corporations, which are intensive users of energy), environmental unsustainability (as it generates over 90% of its power from coal, needs to adhere to climate change commitments, and deal with the growing export potential of coal to countries such as China), and inertia (resistance to transform the electricity sector).

The utility still enjoys monopolistic status, which it fiercely guards much to the detriment of itself and the country. Eskom’s dominance means a preference for the status quo: over-reliance on coal as a source of energy. In addition, more coal plants are under construction, which is contradictory to the country’s globally agreed climate change commitments.

In response to the crisis, Eskom embarked on a building programme to increase its capacity. The utility also commissioned (in 2007) two enormous coal-fired plants – Kusile and Medupi, increasing its reliance on fossil fuels. Both plants suffered severe delays and are still not fully operational.

It is widely believed that it is better to have multiple energy conservation interventions than rely on a single intervention.

In addition, various energy efficient demand-side management activities were put in place with a focus on the residential sector. Electricity conservation campaigns were aimed at households because homes were the single most significant energy-consuming sector. While the campaigns did not result in sustainable behaviour change, they did raise awareness about the need to conserve electricity. Overall, there are three key reasons for South African households to conserve energy:

  • Economic development: By preserving household energy consumption in a constrained situation like in South Africa, more becomes available for economic activity. The relationship between reliable electricity supply and economic development is well established.
  • Poverty reduction: In South Africa, electricity is crucial to lift the poor out of poverty.
  • Environmental and health challenges: South Africa relies heavily on coal as the primary source of energy. But coal is contributing to the country’s unenviable reputation as one of the world’s biggest greenhouse gas emitters. Conserving energy can potentially reduce the country’s dependence on coal, which will contribute to a more sustainable environment.

 

Is it a case of simply changing people’s behaviour?

Findings from behavioural science studies – the science of understanding human behaviour – show that people do not always make ‘rational choices’. Instead, they use unconscious mental shortcuts to evaluate options and make decisions quickly. Behavioural interventions can therefore open up new ways of getting consumers to use less electricity.

Many regard behavioural interventions as too paternalistic, and prone to misuse, especially in the public policy sector. Behavioural interventions raise questions: How are defaults determined, and is the process open for manipulation? Who decides what is proper behaviour for the next person? And, do nudges undermine the democratic rights of citizens?

Taking a closer look

It is unlikely that a single intervention will solve South Africa’s complex electricity problems. Ideally the solution should be multipronged to reflect both the demand and supply aspects of the electricity landscape. On the one hand, Eskom and the authorities should ensure future capital investments are channelled towards cleaner electricity generation. On the other hand, users should use electricity more sparingly.

So, where to from here?

This study was undertaken to gain a better understanding of current sustainable electricity consumption measures in households in South Africa, to explore individual behaviour around electricity consumption, and to find out how to leverage this knowledge in order to achieve sustainable electricity consumption at household level. A key departure point was this: Small consumption behaviours by thousands of households on a sustained basis can significantly reduce the country’s dependence on fossil fuels for its energy security. Reduced reliance on fossil fuels means fewer emissions of carbon dioxide, cleaner air and healthier citizens.

Previous behavioural interventions focused on supply and on tangible interventions such as energy-saving appliances. What makes this study different is its focus on end users’ relationship with electricity and the factors that may drive their behaviour, especially in the developing economy context.

By preserving household energy consumption in a constrained situation like in South Africa, more becomes available for economic activity.

How was the study conducted?

The primary intention of this exploratory study was to understand the behaviours that could lead to more sustainable usage of electricity by South African households.

First, an environmental scan was undertaken to gain a broader perspective and reveal emerging themes about the topic being investigated. Next, behavioural barriers to sustainable household electricity consumption were explored. Next, a causal layered analysis (CLA) was undertaken to discover the worldviews, myths and metaphors around sustainable electricity use among local households. This was followed by an analysis of the factors produced by the environmental scan and CLA. Finally, four scenarios of sustainable electricity consumption in South African households were developed. Primary data for the study was collected via focus groups and interviews.

The environmental scan

The scan covered the social, technological, economic, environmental and political (STEEP) environments, and produced a number of meaningful insights. The scanning sources included books, published reports, journals and content gleaned from credible sources on the internet.

Exploring behavioural barriers

Behavioural science interventions target the small choices and actions that individuals take daily.

Even though these choices and actions are small, on the whole they could make a significant difference. The ability to change these everyday behaviours toward more desired outcomes are important for sustainable outcomes. But there are various barriers that prevent the adoption of energy-saving behaviours. These behavioural barriers include:

  • Habitual behaviours: Our daily lives are filled with automatic routines. Most of these daily behaviours are habits and not deliberate decisions. In a similar vein, the repetitive nature of some electricity use actions can be interpreted as habits that easily translate into wasteful actions without any consideration for the environment or socio-economic consequences. Changing these automatic behaviours often requires the interruption of environmental factors that prompt habit performance.
  • Lack of understanding the consequences of behaviours: As electricity is an ‘invisible resource’, it can be challenging for households to reduce consumption. One reason is that people do not understand the meaning behind their consumption, even when provided with information. The lack of understanding affects both short- and long-term behaviour. For example, if an individual wastes electricity today there is no immediate feedback or costs.
  • Personal relevance: Yes, people are concerned about the state of the natural environment. But this knowledge or concern does not always translate into pro-environmental behaviour. One way to overcome the disconnect between individual behaviour and future environmental consequences is through personalised information and feedback.
  • The influence of peers and social groups: People’s electricity consumption patterns can be influenced by those of their peers. People use social norms as benchmarks, or look at what their peers are doing to make sense of things. One software company in the USA sends information on the energy usage of similar neighbours to households, which has led to a significant drop in households’ energy usage.
  • Follow-through on sustainable choices: How choices are presented (choice architecture) could have a profound effect on the decisions we make. One study found that people are more likely to choose a green option when it is presented as a default – even if the green option costs more. Defaults are especially relevant in the case of intangible electricity.

 

Causal layered analysis

The outputs of the environmental scan informed the CLA which was supplemented through focus-group discussions. The worldview level, and myth and metaphor level represent the third and fourth levels of the CLA analysis. These levels of analysis allowed focus-group participants to reflect on deeply held ideological and social views about the efficient use of electricity in South African households. This brought richness to the discussion and highlighted the complexity of the topic.

The study identified the following worldviews: Households have an external locus of control; big infrastructure is the only solution; there is no room for privatisation; the environment is secondary; renewable energy is not practical; efficient use of electricity is provisional; small is better; and renewables are the future.

The study also identified these myths and metaphors: The situation is hopeless; environmental sustainability is for the educated and wealthy, government knows best about electricity; one’s own behaviour is inconsequential; all government initiatives are corrupt; sustainable behaviour requires too much effort; averting the electricity crisis is straightforward; climate change is a myth; and the energy crisis is a conspiracy.

 

Factor analysis

The environmental scan and CLA delivered a list of relevant factors. In preparation for the focus-group sessions participants were provided with summaries of the environmental scan and CLA. Each factor of the second to fourth layers of the CLA were first discussed and then ranked according to a scale. The focus group’s ranking of all the factors produced this list: government policy and regulation, economic growth, fossil fuels, external locus of control, affluent households, behaviour change, technological innovation, political leadership, Eskom’s financial standing, rampant corruption, and municipal revenue generation.

Next, the focus group performed an impact analysis of these factors on each other in order to understand their mutual interrelatedness and impact. The outcome of the impact analysis provided the inputs for the scenarios.

 

Four scenarios of what could be waiting for us

The participants identified a list of pivotal uncertainties. From this list, the focus group selected government policy and regulation, and behaviour change as the most influential factors. Four plausible scenarios of sustainable electricity consumption in South African households by 2035 resulted from the focus group’s discussions:

  • Defiant: In this scenario households are unwilling to change their electricity consumption behaviour despite government’s efforts to create enabling policies and regulations for them to do so.
  • Detached: Here, households are unwilling to change their electricity consumption behaviour in the context of government policies and regulation that have done nothing to encourage and support behaviour change.
  • Squandered: This scenario describes a future where government regulation lags the willingness of citizens to change their behaviour.
  • Engaged: In this scenario government, through regulation, creates an environment that is conducive to and supportive of positive behaviour change. Households reciprocate this gesture by actively engaging in sustainable electricity consumption behaviour.

 

So, what can we do?

A high-level analysis of these insights suggests that the sustainable use of electricity in South African households is a complex yet necessary field of study, especially because of the scarcity of studies in the developing economy context. Among others, the study recommends the following:

  • Change of paradigm. Those in authority should consider changing the paradigm from which they manage resources (electricity). This study recommends a shift away from the current controlling paradigm to a participatory paradigm. Doing so potentially creates the opportunity for government to use the talents, energies, and skills of the wider populace.
  • Amend the current energy plan. Government’s current energy plan has a strong bias toward costly and unaffordable infrastructure development. Authorities should consider incorporating demand-side management interventions into the plan. This includes measures to save or use energy more sparingly. Reducing household electricity by a realistic 10% (699 MW) is more than the joint generation capacity of the two Eskom plants Palmiet (400 MW) and Acacia (171 MW).
  • Use behavioural science insights. Behavioural science insights should form the basis of the behaviour change initiatives. These insights have proven to be effective in changing electricity behaviours on a sustainable basis.
  • Support behaviour change with technology. Behavioural science argues that for behavioural interventions to be lasting, they must be easy to implement. Technologies such as smart metering could fulfil this requirement.
  • Incentivise good behaviour. To reinforce behavioural interventions, Eskom could consider an incentive scheme that rewards desired behaviours.
  • Regulate and standardise municipal electricity tariffs. The price inelasticity of electricity has made it an easy source of extra revenue generation for poorly managed municipalities. In some cases, extra electricity levies border on abusive, which does not auger well for trust in a system.

 

Findings from this study suggest that policy makers have a real opportunity to transform the energy usage of South African households through more participatory approaches. However, gains depend on strong political will and leadership.

  • This article is based on the research assignment of Owen Mbundu – an MPhil in Futures Studies alumnus of USB. The title of his research assignment is: Towards more sustainable electricity consumption behaviours in South African households. Mr Mbundu is also head of Marketing at the business school.
  • His study leader was Prof André Roux, programme head of USB’s portfolio of Futures Studies programmes. Prof Roux lectures in Management Economics and Africa Country Risk Analysis at USB.

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