Determinants of Energy Consumption in South Africa: Evidence from an ARDL Model (1980–2023)

This study examines the determinants of energy consumption in South Africa over the period 1980–2023 using a multivariate time-series framework. Unlike conventional studies that focus primarily on the energy–growth nexus, this analysis incorporates financial development, industrialization, and population growth to provide a more comprehensive understanding of energy demand dynamics. The Autoregressive Distributed Lag (ARDL) approach is employed to estimate both short-run and long-run relationships. Unit root tests confirm that all variables are integrated of order one, justifying the application of the ARDL bounds testing approach. The results reveal the existence of a stable long-run relationship between energy consumption and its determinants. Industrialization and population growth emerge as the most significant drivers of energy demand in both the short and long run, reflecting South Africa’s energy-intensive economic structure and rising demographic pressures. Financial development is found to have a positive and statistically significant effect, suggesting that improved access to credit stimulates energy consumption through increased investment and economic activity. In contrast, economic growth exhibits a positive but statistically insignificant long-run effect, indicating partial decoupling between output growth and energy demand. The error correction term is negative and statistically significant, confirming convergence to long-run equilibrium. Causality analysis further indicates that energy consumption is primarily driven by macroeconomic factors rather than acting as a leading indicator. The findings underscore the importance of industrial energy efficiency, population-responsive energy planning, and targeted financial support for sustainable energy investment. This study contributes to the literature by providing a comprehensive, country-specific analysis and offers policy-relevant insights for enhancing energy security and supporting sustainable economic development in South Africa.