Prepaid Electricity Meters and Energy Poverty—Lessons from South Africa

Abstract

The notion that high rates of electricity accessibility translate to progressive human development should be applied with caution, particularly within a region like Sub-Saharan Africa. To build and understand this argument, this chapter uses knowledge generated on the South African prepaid electricity meter market to show that the technology has the propensity to contribute to the problem of energy poverty. In the past decade, while the country has managed to reach electricity accessibility rates of more than 90%, the cost of electricity has also increased by more than 300%. We note that the introduction of prepaid electricity meters has been at the centre of household electrification but beyond that we also find that the technology results in a 48% reduction in electricity consumption. Deviating from the mainstream analysis that the latter is positive, we argue that it may not. This is because poor prepaid metered households continue to spend a significant portion (60%) of their income on electricity, rendering them energy impoverished. With existent and widening socio-economic inequalities in the country and region-wide, this chapter can assist regional decision-makers to think cautiously about the components that should frame the household prepaid electricity meter programme, with the ultimate goal of avoiding further widening of inequality.