Application of multiple regression analysis to forecasting South Africa’s electricity demand

Abstract

In a developing country such as South Africa, understanding the expected future demand for electricity is very important in various planning contexts. It is specifically important to understand how expected scenarios regarding population or economic growth can be translated into corresponding future electricity usage patterns. This paper discusses a methodology for forecasting long-term electricity demand that was specifically developed for applying to such scenarios. The methodology uses a series of multiple regression models to quantify historical patterns of electricity usage per sector in relation to patterns observed in certain economic and demographic variables, and uses these relationships to derive expected future electricity usage patterns. The methodology has been used successfully to derive forecasts used for strategic planning within a private company as well as to provide forecasts to aid planning in the public sector. This paper discusses the development of the modelling methodology, provides details regarding the extensive data collection and validation processes followed during the model development, and reports on the relevant model fit statistics. The paper also shows that the forecasting methodology has to some extent been able to match the actual patterns, and therefore concludes that the methodology can be used to support planning by translating changes relating to economic and demographic growth, for a range of scenarios, into a corresponding electricity demand. The methodology therefore fills a particular gap within the South African long-term electricity forecasting domain.