Regional economic effects of changes in South Africa’s electricity generation mix

This paper examines the long-run regional economic effects within South Africa of changing the electricity-generation mix away from coal. We use a regional CGE model of South Africa to conduct our analysis. The results of our simulations suggest that the effect of the policy is sensitive to other economic and policy conditions, in particular export market conditions regarding coal. Under conditions in which surplus coal resulting from lower domestic demand cannot be readily exported, the economies of coal-producing regions in South Africa such as Mpumalanga are significantly affected. The subsequent migration of semi-skilled labour from Mpumalanga to other regions in South Africa demand careful planning by policymakers with regards to energy policy.