Assessing the validity of the load capacity curve hypothesis in South Africa

Abstract

To remain resilient to climate change, it is imperative for every economy to ensure a robust load capacity factor (LCF). Notably, economic variables, including economic expansions (GDP), energy transition (Etrans), digitalization (Digit), and resource rents (Res), are fundamental to achieving substantial LCF. Currently, extant studies have not conclusively ascertained the contributions of the selected variables to LCF. Furthermore, studies have yet to verify the validity or otherwise of the load capacity curve (LCC) hypothesis in South Africa (SA), a leading economy in Africa. This study filled these literature lacunae by analyzing annual data of about five decades (1972–2023) for SA. From the verified evidence, the LCC hypothesis is invalid in SA since GDP2 impaired LCF profoundly both in the short and long terms. However, GDP2 produced some LCF-enhancing effects at the upper quantiles. This suggests that with commitments to optimal allocation of GDP’s proceeds, SA could reap the benefits of both expanding growth and improved LCF. Other explanatory variables, including Etrans, Digit, and Res, also produced varying LCF-enhancing and mitigating effects over the quantile distributions of LCF. These varying attributes also underscore the need for strategic adaptation and application of the enlisted control variables such that their LCF-enhancing effects are maximized, while their negative implications are mitigated. Overall, economic expansion and other highlighted variables have the potential to improve LCF in SA; however, they have not attained the optimal point to support ecological sustainability.