Future demand MODULE 5

TOOLKIT EDITION 1 2018

MODULE 5
Future demand
MODULE 5 Future demand

MODULE PURPOSE
This module focuses on estimating future demand and on managing demand in such a way that economic optimisation is
achieved, that the city’s spatial agenda is supported and services are delivered when required, that scarce natural resources
are well-managed, and that the city’s assets and services are configured to the adaptations required by climate change. This
module strongly advocates the adoption of green infrastructure technologies where appropriate to support the transition to
a low carbon environment, and to reduce the consumption of non-renewable resources.

WHY
1. Forecasting the need for future infrastructure and community services, and natural resource inputs, is a critical function of both
urban planning and of infrastructure asset management planning. This is because growth is not assured, and the level of growth
or decline is not constant. Demand will likely change over time, in terms of the nature, quantum or the spatial manifestation
thereof.
2. Long lead times are often a key feature of infrastructure creation. It is therefore often necessary to project demand even before it
manifests. Assuming that estimates point to the existence of sufficient demand, it may then take several years to identify, acquire
and obtain the necessary approvals to develop land, undertake feasibility studies, obtain budget for construction and enter
into construction contracts, for the construction process itself, and then asset handover and commissioning. The objectives of
demand forecasting then are to:
• quantify the demand for infrastructure services, in part to determine the quantum thereof, that points to the nature and scale
of solutions to be implemented, and in part to the feasibility of the solution itself; and to
• ensure that demand can be serviced or otherwise managed when it manifests at a material scale.
3. Future demand responses can include asset and non-asset solutions, the appropriate mix of which will likely ensure the future
proofing of the city. In responding to demand, cities should consider the requirements of service delivery, climate change
adaptation, optimising existing infrastructure capacities, and supporting spatial transformation objectives.

OUTPUTS OF MODULE 5:
1. The adoption of a corporate customer growth forecast, to be interpreted by sectoral planners in estimating future demand. The
corporate customer growth forecast should:
• Be based on the spatially-based, segmented corporate customer profile approved by city management.
• Present a 30-year customer growth forecast for all customer categories adopted. The forecast should be presented in graphical
and tabular formats, and should be supported by a narrative.
• Consider all relevant factors that could lead to growth or decline in future customers.
• State the confidence in future growth projections.
• Highlight risks and opportunities evident in the customer growth forecast e.g. the risk of a decline in the number of medium
to high income residential customers relative to low income residential customers, which poses a future financial sustainability
risk, and also risks in providing subsidised services to the poor.
• Future customer growth should be spatially apportioned to determine where demand will likely manifest or otherwise
increase or decrease, taking into account factors such as committed low income housing projects, pending and approved
development applications, bulk capacities, land availability, and spatial planning dictates.
• The rationale and methodology, as well as key factors considered in the spatial apportionment of future growth should be
documented.
• The corporate customer growth forecast should be approved by city management, and interpreted by spatial and sector
planners when preparing built environment plans, including SDFs, sectoral asset management plans and the city’s built
environment performance plan.

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 Future demand MODULE 5

2. Sectoral customer growth forecasts and future demand quantified and presented in sectoral asset management plans, having
interpreted the approved corporate customer growth forecast.
3. Demand management plans included in sectoral asset management plans that are responsive to city strategic outcome
statements, resource constraints, the need for climate change adaptation and future city proofing, and spatial priorities.

KEY RELEVANT NATIONAL REGULATIONS, POLICIES AND STRATEGIES:

1. Spatial Planning and Land Use Management Act, No. 16 of 2013
2. National Environmental Management Act, No. 107 of 1998
3. Energy Efficiency Strategy of the Republic of South Africa. March 2005.
4. National Climate Change Response White Paper. October 2011.
5. Sectoral legislation, policies and strategies.

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MODULE 5 Future demand

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 Future demand MODULE 5

CONTENTS
Module 5 Future demand

5.1 ENGAGING WITH THE FUTURE 5.1

5.1.1 The future is pliable 5.1
5.1.2 Planning horizon 5.3
5.1.3 Focus and content of this module 5.6

5.2 FROM CUSTOMER GROWTH TO ESTIMATED NET ADDITIONAL DEMAND 5.7

5.2.1 General 5.7
5.2.2 Projecting growth in residential customers 5.8
5.2.3 Projecting growth in non-residential customers 5.12
5.2.4 Apportion growth in customers spatially 5.13
5.2.5 Quantify current demand 5.17
5.2.6 Identify factors and trends driving or influencing future demand 5.18
5.2.7 Calculate net additional demand 5.28

5.3 RESPONDING TO DEMAND 5.32

5.3.1 Strategic objectives and hierarchy of responses to demand 5.32
5.3.2 Supply-side management 5.34
5.3.3 Demand management 5.35

5.4 PREPARE DEMAND RESPONSE PLAN 5.49

5.5 APPROVAL, COMMUNICATION, REVIEW AND UPDATING REQUIREMENTS 5.50

5.6 SUMMARY 5.51

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MODULE 5 Future demand

LIST OF
Figures that appear in this toolkit

FIGURE 5.1: Process to spatially apportion growth in customers – basic approach 5.13
FIGURE 5.2: National, provincial and city economies all go through cycles of growth and contraction 5.19
FIGURE 5.3: Over time there are structural shifts in the economy (Buffalo City) 5.20
FIGURE 5.4: Possible future urban infrastructure trends 5.21
FIGURE 5.4(A): Compare annual maximum demand to capacity per customer type (electricity) 5.30
FIGURE 5.4(B): Determine annual demand per service and compare to current capacity per supply area (electricity) 5.30
FIGURE 5.4(C): Current ability to meet demand (electricity) 5.31
FIGURE 5.4(D): Ability to meet future demand per customer type (electricity) 5.31
FIGURE 5.5: Optimising asset portfolios 5.34
FIGURE 5.6: Daily electricity demand patterns in South Africa 5.35
FIGURE 5.7: Hierarchy of responses to scarce resource utilisation 5.37
FIGURE 5.8(A): Capital development cost premiums – Buffalo City: Soil constraints 5.42
FIGURE 5.8(B): Capital development cost premiums – Buffalo City: Major land forms 5.43
FIGURE 5.8(C): Weighted capital development cost premium surface – Buffalo City 5.44
FIGURE 5.9: Range of demand management tactics 5.45
FIGURE 5.10: Demand process summarised 5.51

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 Future demand MODULE 5

LIST OF
Tables that appear in this toolkit

TABLE 5.1: Examples of norms to determine growth in non-residential customers 5.12

TABLE 5.2: Quantifying current demand: available municipal data sources 5.17
TABLE 5.3: Factors driving demand for municipal services 5.18
TABLE 5.4: General trends affecting demand 5.19
TABLE 5.5: Development cost premium index 5.40
TABLE 5.6A: Demand management methods: Electricity 5.46
TABLE 5.6B: Demand management methods: Roads and transportation 5.47
TABLE 5.6C: Demand management methods: Potable water 5.48

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MODULE 5 Future demand

5.1 ENGAGING WITH THE FUTURE

5.1.1 The future is pliable

It is often assumed that cities are large and that they will continue to grow in future. This is by no means a certainty. Many once
thriving cities now find themselves in continual decline, often as a result of their past strengths and unwillingness or inability
to adapt to changing conditions.

Detroit, automotive mecca of the world, was one of the five

wealthiest cities in the United States during the early decades of
the twentieth century. By 1960, Detroit was the wealthiest per
capita city in the US. By 2013 the city had filed for bankruptcy.
33% of the city’s built footprint is either in a vacant or derelict
state, 60% of all children are living in poverty, 50% of the
population is reported to be functionally illiterate and 18% of
the population is unemployed (Matthews, 2013). Detroit is no
isolated case. The Centre for Cities observed (2015) that the
once powerful manufacturing metros of the North, Midlands
and Wales in the United Kingdom have fallen behind, whilst
the cities of the South achieve greater rates of growth. This is
quite a common problem. Manufacturing’s contribution to the
economy is in decline, whilst the services’ sector is increasing its
share of the economy. Many manufacturing cities are struggling
to convert to the knowledge economy in the post-industrial
age. What can we learn from this?

There are a few important points:

Cities need not stay locked into Doing the same things The future is pliable to some
mediocrity now, and neither is tomorrow as were done extent. It is possible to influence
their current prosperity assured yesterday will likely lead to the future to achieve better
in the future. stagnation and eventual decline. outcomes for cities. This
provides the rationale for
planning.

5.1
 Future demand MODULE 5

In short, cities should engage with the future, and attempt to shape it towards better outcomes. Several tools are available for
engaging with the future, including:

01 VISIONING 03 SCENARIOS ARE DESCRIPTIONS OF

POSSIBLE FUTURES
Which in its final state articulates what communities see Since there is more than one possible future, there tends to be
as the most desirable future. It is therefore a reflection of a set of scenarios that explain different yet conceivable ways
normative values that find expression in outcome statements on what the future may hold. Scenarios are often confused
to be achieved at some future point. Visioning is generally a with visions, and even more so with forecasts. But they are
participatory process, and should involve extensive consultation distinctly different. A vision is a desired future state. A good set
to agree a common desired future. of scenarios will not present a series of desired future states,
but rather various ways in which the future may unfold. Some

02 FORECASTS
of these scenarios will describe undesirable futures, such as the
position that Detroit now finds itself in, whilst others hopefully
In the built environment, forecasts generally are quantitative describe desirable futures. And unlike forecasts that aim to
representations of future values or outcomes of specific project and quantify what is most likely to happen, the emphasis
variables under particular conditions (modelling assumptions). in scenario development is not on what’s most likely to happen,
Forecasts can be used in a number of ways. The first is to adopt but rather on the identification of different probabilities. It is
a vision and then to forecast that vision. This is called normative also common practice to arrange scenarios from least to most
forecasting: actions are selected because it is believed that they desirable. Scenarios are very useful tools when contemplating
will achieve the chosen vision. Another approach is to prepare uncertain futures, made even more uncertain by long planning
forecasts with no particular future in mind. The resulting forecast periods and by the complex interrelationships typically found
then allows decision-makers to analyse results and to identify in cities. Scenarios are also extremely useful in considering
future opportunities and threats that will inform decisions changes or transition over time, whether as a result of changes
about the future. Forecasts are normally prepared by experts, in the external environment (e.g. changes in legislation or the
rather than by communities. Examples of forecasts include technological environment), as a result of the implementation
population forecasts, land take, demand for water and energy, of city strategy, or in considering the interplay between changes
infrastructure needs and costs. in the external environment and the impacts of implementation
of city strategy.

04 PROGRAMMES AND PROJECTS

These are specific city initiatives to shape or influence future
outcomes towards attainment of the common vision agreed
upon. Examples include initiatives such as urban renewal
efforts to strengthen CBDs and primary nodes, invest in public
transport along key corridors, establish and maintain urban
edges, revitalise urban brownfield spaces, implement mixed-
use zoning, upgrade bulk and distribution infrastructure to
serve higher land use in urban spaces, all in an effort to establish
compact cities with greater economic and social interaction.
Programmes and projects often involve capital investment and
infrastructure creation, but can also include interventions of a
policy, educational or behavioural nature, such as promoting
smarter travel or using water wisely.

5.2
MODULE 5 Future demand

The end result of the application of these instruments is a set

of plans, including the city’s growth and development strategy
that is the long term strategy, its Integrated Development Plan
(IDP) that focusses on needs in the medium term (five years), the
Spatial Development Framework (SDF, that provides the spatial
vision and interventions expressed spatially to effect the desired
change), asset management plans and supporting master plans
that indicate the required infrastructure, non-asset responses
and financial implications to realise the required vision.

5.1.2 Planning horizon

Forecasting the future need for infrastructure services and social amenities is a critical function of both urban and infrastructure
asset management planning. Increased demand may or may not be desirable, depending on its impact on the revenue
position of the city, resource consumption and generation of wasteful products, including co2. If desirable, cities will generally
respond with asset solutions and when not desirable, it will likely respond with non-asset solutions to curb or substitute
demand.

The creation of infrastructure assets on anything but the The objectives of demand forecasting then are to:
smallest scale generally have fairly long lead times. It is therefore • quantify the demand for infrastructure services, in part to
often necessary to project demand even before it manifests. determine the quantum thereof, that points to the nature
Assuming that estimates point to the existence of sufficient and scale of solutions to be implemented, and in part to the
demand, it may then take several years to identify, acquire and feasibility of the solution itself; and to
obtain the necessary approvals to develop land, undertake • ensure that demand can be serviced or otherwise managed
feasibility studies, obtain budget for construction and enter when it manifests at a material scale.
into construction contracts, for the construction process itself,
and then asset handover and commissioning. Expanding

“
Eskom’s electricity generation capacity is an excellent example:
Forecasting the future need for
blackouts became a common phenomenon in 2007 and, despite
Eskom embarking on a process to build new power stations at infrastructure services and social
around that time, the country in 2015 still experienced capacity amenities is a critical function.”
constraints.

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 Future demand MODULE 5

Get it right, and cities prosper. But there are risks. If demand
has been overestimated, then an excess of infrastructure has
been created – assets referred to as “white elephants”. This
places an unnecessary burden on a city’s operating account
in the form of increased capital repayments, finance charges,
asset operation and maintenance expenses to be incurred
on an ongoing basis, without a commensurate pay-off in
benefits. And since infrastructure has lives typically measured
in decades, these costs add up to very sizable amounts. Just
a few large developments, say of the scale of an international
convention center, where demand has been overestimated, can
place tremendous pressure on a city’s finances and threaten its
financial viability. Of course, the accumulated effect of multiple
projects of moderate size where excess infrastructure capacity
is created can have exactly the same effect. Ratepayers, if it is
known to them that they are paying higher rates and charges
to finance surplus capacity due to poor planning, are likely to
be resentful. Worse, since capital is always limited, and since On the other hand, if demand is underestimated either in terms
unnecessary capital will have been locked into assets with of magnitude or in the timing of the manifestation thereof,
excess capacity, there may not be sufficient capital available to then a services access backlog will emerge, possibly with
invest in assets and activities with greater benefits. devastating consequences. Communities may protest if they do
not get timely access to services. A city may be forced to reject
development applications by businesses where there is not
sufficient bulk capacity in either its water or electricity systems.
Much needed employment creation is foregone, along with the
attendant benefits of decreased dependency on government
support and increased social stability. The potential for increased
municipal revenues is also impaired. Should the applicant be a
well-known investor or company, or it becomes a pattern that
business or industrial development applications are delayed or
turned down for a period of a few years, the city may develop a
reputation as a poor choice of investment. Capital is highly
mobile, and there is fierce global competition for fixed capital
investment. To appreciate the impact of infrastructure capacity
constraints on economic growth, Eskom again serves as an
excellent example. It has been estimated by multiple sources,
including local economists and the World Bank, that constrained
generation capacity by 2015 continues to impair GDP growth
by some 2 per cent annually.

Forecasting involves engaging with the future. The single greatest defining property of the future is the uncertain nature thereof.
Forecasters, analysts and planners often assume a single possible future, and will at most prepare forecasts doing sensitivity analyses
on a few known key variables – in this sense their “planning” is deterministic in nature. Importantly, they by definition do not model
for what they don’t know. These tendencies and problems will be discussed in greater detail in later sections. But there is no one
single future, rather multiple possible futures. Human beings are famous for wildly incorrect assumptions about the future, whether
about trends, estimates on demand, the timing thereof or the costs involved. This applies to intellectuals, professionals such as
economists, actuaries and statisticians tasked with engaging the future, captains of industry, government policy makers and built
environment practitioners, not only in South Africa, but globally.

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MODULE 5 Future demand

It is reasonable to ask whether forecasting is a worthwhile

exercise when the future is so uncertain, when economists often
fail to correctly predict economic growth for the next twelve
months, and when so many assumptions about the future turn
out wrong. Affecting changes in the built environment takes a
very long time. This is in part due to the often long lead times
for major infrastructure development. In greater part, though,
it is due to the fact that existing city build footprints have
been established over very long periods of time. Township lay-
outs and transportation networks are resilient and resistant
to change, often requiring vast investments over sustained
periods to reconfigure. Furthermore, public sector infrastructure
investment tends to be characterised by:

High levels of Long The creation of Fairly slow rates of Long yield periods
capital outlay development infrastructure uptake of capacity (the time taken
lead times with lives often for the project to
measured in generate surplus
decades revenue)

Because infrastructure is generally build to last for several

decades, and because it can often take twenty to thirty years
for the project to become financially viable (where surpluses
generated exceeds expenditure on the project), it is necessary
to forecast the long term demand for the infrastructure, and to
undertake investment appraisal over sufficiently long periods
to determine financial viability. But demand generally does
not stay constant over the planning period, nor does it follow
conveniently neat linear trends. It is affected by multiple
variables, including changes in population and the economy,
social outlooks and trends, technological advances and the
ability of the natural environment to sustainably support
infrastructure services provision.

Accordingly this Toolkit recommends that cities prepare

asset management plans and infrastructure investment plans
contained in the city’s strategic asset management plan by
adopting a planning horizon of thirty years. This also means that
future infrastructure needs and demand should be forecasted
for thirty years.

5.5
 Future demand MODULE 5

5.1.3 Focus and content of this module

Customers generate demand, and this module first considers techniques for projecting customer growth and appropriating
future customers (demand) spatially in the city space. It then considers how the growth of customers is translated into demand
per sector (e.g. potable water or electricity).

The result at that point should be gross demand quantified most cases it will be necessary to respond with both asset and
by type of customer, spatially, over time. The next question non-asset solutions. By employing asset solutions a city typically
is whether we are able and willing to serve gross demand. To responds to increased demand by building more infrastructure,
answer this question, it is necessary to consider factors such upgrading capacity or reconfiguring systems to ensure more
as current supply arrangements and capacity, future supply effective supply. Non-asset solutions generally aim to manage
constraints and opportunities, the financial needs and abilities demand through a combination of hard and soft measures.
of both the city and customers, and the timing of supply. In

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MODULE 5 Future demand

5.2 FROM CUSTOMER GROW TH TO

ESTIMATED NE T ADDITIONAL DEMAND
5.2.1 General

01 ONE CONSOLIDATED GROWTH FORECAST FOR

THE CITY AS A WHOLE
The most important decision in forecasting customer growth is
to prepare and agree one consolidated customer growth forecast
for the city as a whole. This forecast then needs to be interpreted
by various departments and sectors for the impact of growth in
customers on demand, capacity and cash flow considerations.
Why one consolidated forecast? If departments make different
assumptions on the number of customers in the base year of the
forecast and then further assume different rates of growth, then
clearly some will end up projecting greater customer growth
that will translate into a proportionally higher requirement
for future capital funding to provide infrastructure to service
growth. The end result is then likely to be a disproportional
allocation of limited capital to various departments. It is also
necessary to align the growth forecasts prepared with land use
allocations in the SDF, requiring not just coordination between
engineering departments (e.g. water, roads and electricity), but
also between the planning and engineering departments.

02 PROJECT GROWTH FOR ALL CUSTOMER

CATEGORIES
Module 4 showed that customers have different needs for
infrastructure and social amenities, and that they often require
different levels of service. Different types of customers at
various levels of service also generate different volumes of
demand. Many municipalities however limit growth forecasts
03 ALLOCATE GROWTH SPATIALLY
Customers, housing and other forms of accommodation (e.g.
to population growth. Limiting growth forecasts to residential
office space, shops, factories and warehouses), and infrastructure
customers will provide at best a partial view of future demand
capacity are not spread uniformly across the city space, and
and infrastructure needs. Consider Box 5.1 for the importance
neither will future customers conveniently locate themselves
and impact of non-residential customers on demand and
evenly or even necessarily where spare bulk capacity exists. It
revenue generation for cities. Large non-residential customers
is therefore necessary to anticipate where future customers will
generally also employ a significant portion of the local
locate, to determine whether sufficient capacity exists in those
community, that in turn are able to afford municipal services
areas, and if not, what the city’s responses to demand should
that increases municipal revenue and decreases dependency
be. Techniques for allocating customer growth spatially are
on municipal social welfare support. Furthermore, large non-
discussed in Section 5.2.4.
residential customers provide critical mass around which
associated and support industries develop, and if conditions are
satisfactory, they attract further investment into the area. 04 QUANTIFY THE DEMAND FOR ALL CUSTOMER
CATEGORIES
Once growth in customers has been quantified and spatially
This toolkit recommends that cities project growth for all located, the next step is to calculate the demand per
customer categories proposed in Module 4 (see Table 4.9 for infrastructure and community service. This is dealt with in more
customer categories). detail in Section 5.2.5.

5.7
 Future demand MODULE 5

5.2.2 Projecting growth in residential customers

FORECASTING POPULATION GROWTH AND INCREASE IN NUMBER OF HOUSEHOLDS

When forecasting growth in residential customers, cities should project not only population growth, but also expected growth in
household formation in each of the residential customer categories presented in Module 4. When planning for the future, and
estimating demand, the following should be forecasted:

“
• Expectations on future population size – this is indicative
Planning for municipal infrastructure services
of facility capacity requirements and use, not only of
municipal social amenities, but also those of other spheres of and municipal revenue is normally done on
government and the private sector. the basis of households.”

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MODULE 5 Future demand

BOX 5.1:
The importance and impact of non-residential customers

CONSUMPTION COMPARISON:
Both Steve Tshwete and Drakenstein are high capacity local
municipalities situated in Mpumalanga and the Western Cape DAILY POTABLE WATER CONSUMPTION
respectively. Each boasts a strong local economy: Middelburg by EMM’s top 5 customers
is an important industrial zone in the Maputo Corridor and is
considered the undisputed stainless steel capital of the southern 16,000

AADD (KL/DAY)
hemisphere. The area is both rich in coal deposits and in close 14,000
proximity to Eskom power stations, further benefiting the local 12,000
economy. There are 50 449 households. Drakenstein comprises 10,000
Paarl and Wellington and has 44 410 households. The local 8,000
economy is highly diversified and boasts wine making, tourism, 6,000
education and a host of tertiary economic activities. 4,000
2,000
But the scale of operations of the top companies in Ekurhuleni 0
eclipses these large local economies. The top 5 water customers Sappi Clover Alrode Mondi Kimberley
in Ekurhuleni consume an average of 46 266 kℓ per day, Brewery Carton Clark
compared to the total daily consumption of 38 310 kℓ in Steve EMM TOP 5 WATER CUSTOMERS
Tshwete and 44 253 kℓ in Drakenstein. Another way to look at the
impact of the large customers is to equate their consumption to
COMPARISON OF WATER CONSUMPTION
residential demand. Sappi consumes the equivalent daily water
demand of about 14 000 medium income households. Similarly, between EMM top 5 customers and other high
capacity local municipalities
the top 10 electricity customers in Ekurhuleni consume more
than the combined demand for electricity in Steve Tshwete. 50,000
The largest Ekurhuleni electricity customer, International 45,000
40,000
AADD (KL/DAY)

Chemical Corp 2, consumes more electricity than the entire Elias 35,000
Motsoaledi Municipality (Groblersdal and environments). 30,000
25,000
20,000
15,000
10,000

“
5,000
...the top 10 electricity customers in Ekurhuleni 0
Steve Tshwete Drakenstein EMM top 5
consume more than the combined demand customers
for electricity in Steve Tshwete.” MUNICIPALITIES

SURPLUS GENERATED FROM SALES TO SAPPI

REVENUE COMPARISON:
The municipality generates an annual surplus of about R 15.7
45,000,000 million from water sales to Sappi. The surplus generated from
REVENUE PER ANNUM

40,000,000
selling the same volume of water to domestic customers yield
EXPENDITURE /

35,000,000
30,000,000 a surplus of only R 6.6 million. As a result the surplus margin on
25,000,000
(R)

20,000,000 Sappi sales is 69% compared to the 29% margin for domestic
15,000,000 sales. Put another way, if Sappi decides to disinvest from the
10,000,000
area, Ekurhuleni would require growth of approximately 30 000
5,000,000
0 medium income paying customers to maintain current levels of
Production cost Equivalent Sappi account surpluses. This surplus can in turn be used to provide land and
domestic
volume sales a full suite of basic services to 625 poor households. And is this
only on the water account!
EQUIVALENT CUSTOMER COMPARISON

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 Future demand MODULE 5

• Shifts in the age composition of the population. Age profiles are normally good indicators of the type of amenities required.
A young population will need crèches, schools, universities and sport and recreation facilities, and a variety of businesses will
be geared to service the needs of young people. A large proportion of elderly people require old age homes, medical support,
specialist medical suppliers (e.g. of walking and hearing aids), and perhaps home-based care systems.
• Household growth. Each household requires a physical structure and represents one unit of demand for housing. An household
is normally also either a municipal customer that requires municipal engineering services and therefore receives a municipal bill,
or is considered poor and is in need of financial support in the form of free basic services, or a combination of both. Planning for
municipal infrastructure services and municipal revenue is normally done on the basis of households.
• Household income. It is necessary to project future household income to determine whether they are customers that will likely
generate surplus revenues for the city, or poor households that require financial support.

StatsSA provides data to assist in both profiling and forecasting residential customers, as follows:
• Sex and age distribution
• Highest education level (all ages)
• Average household income
• Employment for those aged 15-64

Note that indicators such as births and deaths are not reported per municipality. Stats-SA does
however report the population growth rate between the last two censuses (2001 and 2011).

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MODULE 5 Future demand

A number of techniques are available to forecast population growth, including:

01 PROJECTIONS BY MATHEMATICAL FORMULAE

This is the most basic form of projecting population – and is most
often done using Microsoft Excel to predict future population
using trends. The trend based methods assume that population
growth follows natural laws and, therefore, can be expressed
in mathematical or graphical form. Population is forecast by
examining and projecting past trends into the future. Various
types of expressions (also known as trend lines) can be used
to explain past historical growth and predict future growth:

Exponential Linear Geometric Logarithmic Polynomial

The weakness of such projections is that they are founded on past two decades in fertility, mortality, and migration trends,
the assumption that the factors and conditions which produced projections of this kind are becoming less reliable. Graphic and
population growth or decline in the area in the past will continue mathematical projections are useful, however, as rough checks
unchanged and will have the same effects in the future, or on those obtained by other methods. Usually, no analysis is
that they are derived from an assumed curve of population made of factors that cause population changes, e.g., births,
growth. In view of the changes that have taken place during the deaths, and migration.

02 COHORT COMPONENT POPULATION

PROJECTION METHOD
The cohort-component method is based upon the balance is not always readily available. Thus, it may be difficult to collect
equation extended for sex and age and is therefore internally the information to apply this tool. Secondly, it assumes that
consistent. Because it is based on age-structured populations survival and birth rates and estimates of net migration will
and events (births, deaths, migration), it yields a rich set of remain the same throughout the projection period. In addition
demographic indicators. The cohort component population it does not consider the non-demographic factors that influence
projection method follows the process of demographic change population growth or decline.
and is viewed as a more reliable projection method than those
that primarily rely on census data or information that reflects
population change. When the cohort component method
is used as a projection tool, it assumes the components of
demographic change, mortality, fertility, and migration, will
“ When the cohort component method is used as
a projection tool, it assumes the components
of demographic change, mortality, fertility,
remain constant throughout the projection period. The major
disadvantage associated with this method is that it is highly and migration, will remain constant
dependent on reliable birth, death and migration data; which throughout the projection period.”

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 Future demand MODULE 5

03 PROJECTIONS BY REGRESSION ANALYSIS

The most common regression-based approach data to
estimating the total population of a given area is the ratio-
correlation method. This multiple regression method involves
relating between changes in several variables (known as
symptomatic indicators) to population changes. Using this
method it is possible to predict the future population of a
municipality based on changes of population over time of a
larger area (e.g. South Africa in total).

5.2.3 Projecting growth in non-residential customers

NORMS-BASED APPROACH
Arguably the easiest method to project growth in non- minimum population threshold to be viable. This same principle
residential customers is to follow a norms-based approach, applies to businesses. This type of norm assumes a ratio of one
which is also the preferred method for estimating in particular facility or business for a stated number of people. Norms for
the need for institutional customers. There are in the main amenities, that are institutional customers, are provided in the
three types of norms applied to determine the number of CSIR’s Guidelines for the Provision of Social Facilities in South
non-residential customers. The first is catchment-based: a African Settlements (2012). The following are examples of norms
social amenity (whether a hospital, school or church) needs a for various non-residential customers:

TABLE 5.1: Examples of norms to determine growth in non-residential customers

CUSTOMER CATEGORY CUSTOMER TYPE NORMS

Tertiary hospital 2 400 000 People

Police station 60 000 – 100 000 People

Institutional Post office 10 000 – 20 000 People

Primary school 7 000 People

University 1 000 000+ People

Business Filling station 2 500 Cars

Another norms-based method is to determine the demand for non-residential customers as a function of households to space
required. An example of this is provision for neighbourhood activity centers, where a norm such as the following can be applied:
0.6m2/per capita. The final method is to relate GVA per sector and growth in GVA per sector to land area per type of land use, and
on that basis to determine whether more land (and therefore customers) are required. Applied to functions such as retail, the study
would consider retail floor space as opposed to land area.

5.12
MODULE 5 Future demand

5.2.4 Apportion growth in customers spatially

Future customers will settle at particular points in space, and will generate demand at those specific points. To know whether
their demand can be met, it is necessary to compare demand to supply capacity for defined areas, as supply capacities vary
across the city. Having prepared customer growth forecasts, the next step therefore is to apportion growth in customers
spatially. There are various approaches to apportioning the growth in customers spatially, including apportionment on the
basis of:

1. Desired outcomes, such as density requirements necessary

to achieve land use intensification in desired areas and to
achieve viable public transport.
2. Available infrastructure capacities.
3. Land availability.
4. Cost of development in particular areas.
5. Existing and committed developments.
6. Some combination of the above approaches.
7. Some form of statistical apportionment, whether
proportionally, randomly or through some other means.

A city will naturally want to direct growth in a manner that achieves its strategic objectives, and according to how it sees the optimal
future functioning of the city. And it is right that cities do so. There are however practical considerations to take into account. There
is a wealth of literature demonstrating past failures of urban planning in considering how future growth will play out, the impacts
of spatial decisions on public transport, the functioning of urban land markets, the choices of investors and fixed capital formation.
As a result actual development in the past often tended to follow a different path to the one planned. When apportioning growth,
cities are advised to follow this approach:

QUANTIFY FUTURE LAND USE ID THE AVAILABILITY OF LAND FOR

1 2
REQUIREMENTS DEVELOPMENT WITHIN THE URBAN EDGE

Take into account development controls e.g. density Quantify per land use, considering various categories of
requirements and height restrictions land e.g. greenfields, brownfields...

CONSIDER EXISTING COMMITMENTS AND DETERMINE WHERE AND WHEN FUTURE

3 4
RIGHTS DEVELOPMENT MAY CRYSTALIZE

Such as proclaimed townships, committed low income Methods include consultation, considering development
housing projects, approved building plans etc. applications, rights not yet exercised etc.

APPORTION GROWTH SPATIALLY AND NOTE

5
KEY ASSUMPTIONS

The outcome of the appointment exercise may warrant

review of spatial structuring elements or development
controls.
FIGURE 5.1: Hierarchy of responses to scarce resource utilisation

5.13
 Future demand MODULE 5

1. Quantify future land use requirements in hectares, taking into 4. Next, consider where and how (type and pace) future
account development controls such as density requirements development may crystallise. Several methods may be used,
and height restrictions. including:
2. Identify the availability of land for development within the • Consulting with large developers, government
urban development boundary in various categories (e.g. departments, parastatals and utilities, and other investors
available greenfield, no development constraints, greenfield • Development applications submitted but not yet
some constraints, brownfield) and in various spatial approved – focus on location and type of application
segments.
• Rights not yet exercised (see step 3), but be careful not
3. Consider existing commitments. These include: to double count – the outcome of step 3 is to identify
• Proclaimed townships, with erven not yet developed where commitments have already been made and how
• Committed low income housing projects – obtain data on much space have been allocated already, this step aims to
location of projects, planned number of housing units and identity the nature and pace of development
the timing of delivery • More advanced methods such as gravity analysis and the
• Approved building plans – obtain data on location, identification of the strength of nodes, and identification of
building type and size derelict brownfield spaces ideal for future redevelopment.
• Land use, title deed or zoning rights awarded but not yet 5. Apportion growth spatially and note key assumptions. It
taken up – obtain data on rights not yet taken up and the may be necessary to review spatial structuring elements or
location thereof. development controls.

1. The outcome of this apportionment process indicates how, where and at what pace future growth
is likely to materialise.
2. The outcomes of this process may indicate that future growth patterns do not correspond with
the future spatial vision of the city. Where this is the case, and cities wish to retain its desired
future spatial vision, specific measures are required to change the probable future growth
pattern.
3. These measures should be documented and the apportionment exercise re-run.

5.14
MODULE 5 Future demand

BOX 5.2: C ASE STUDY

Spatial apportionment of customer growth in Buffalo City

Customer growth forecast up to 2044. Customer growth was projected for each category of customer upto 2044 (residential
and non-residential).

450,000
Domestic high
400,000 income

Domestic medium
350,000 income

300,000 Domestic low

income

250,000 Domestic poor

200,000 Informal

Backyard shacks
150,000
Business
100,000
Commercial &
Industrial
50,000
Institutional
-
PSI
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044

CALCULATING LAND AVAILABILITY 200,000 171,195

Land available for development was calculated, within and
180,000
outside the urban edge, taking into account whether land
is developed or not, and if not yet developed, whether it is 160,000
developable (e.g. not protected green zones). Land remaining
140,000
was then calculated according to the cost of development,
taking into account factors such as slope and soil type.
120,000
HECTARE

100,000

80,000

60,000
21,154
40,000

16,782
20,000
4,815
0

Can be Can be Already Undevelopable

developed - no developed at a developed
constraints cost premium

Inside Urban Edge Outside Urban Edge

5.15
 Future demand MODULE 5

CONSIDERATION OF CURRENT AND COMMITTED DEVELOPMENT, AND DEVELOPMENT PRESSURES

Multiple factors were considered in the spatial apportionment of future customers, some of which included current built status,
development controls, current and committed low income housing projects, and building plans.

LEGEND

2015/16 municipal boundary

BCMM boundary
Housing demand
Informal residential
Traditional residential
Housing supply
Housing supply (current projects)
Housing supply (future residential
proposals from SDF)
Built-up areas
Urban edge

APPORTIONING CUSTOMER GROWTH SPATIALLY

Having considered all the factors noted above, future customers were allocated to the priority zones and added to current customers
in 10-years increments to provide the basis for total demand per spatial priority area, as follows:

PZ 1 – PZ 2 – PZ 3A - PZ 3B - TOTAL –
CUSTOMER GROUP RURAL
CENTRAL WEST BANK BERLIN QUENNERA YEAR 10
Residential (rolled-up) 111 310 9 174 36 605 25 882 48 399 231 370
Informal 21 951 2 629 1 555 3 724 6 379 36 239
Backyard shacks 5 527 446 1 236 1 329 2 283 10 821
Business 2 918 90 771 237 76 4 091
Commercial & industrial 847 246 225 63 161 1 543
Institutional 984 132 315 85 242 1 758
PSI 3 331 211 717 582 351 5 193
TOTAL 146 867 12 929 41 424 31 904 57 892 290 796

5.16
MODULE 5 Future demand

5.2.5 Quantify current demand

Each infrastructure and community services function needs to interpret the corporate customer profile and growth forecast
adopted and then quantify gross demand for that service. The starting point should be to quantify current demand per
service. In many instances a wealth of data should be available to determine current demand, such as:

TABLE 5.2: Quantifying current demand: available municipal data sources

SERVICE SOURCE OF DATA

Electricity Electricity sales (meter readings and income from pre-paid electricity) – billing system

Housing waiting list, cross check with register of indigents and current number of
Low income housing
informal housing structures

Public transport Bus ridership statistics (ticket sales)

Roads and bridges Traffic counts

Weighbridge statistics – consider landfill site classification to determine types of solid

Solid waste
waste, and consolidate results across landfill sites

Water Water sales (meter readings) – billing system

Master plans and other specialist studies may also provide useful information in quantifying current demand. However, before
using such information, first confirm the following:

Date that the plan or Source data used in Completeness of the Key assumptions
study was prepared – the study (primary data used made e.g. the current
it may be outdated data, or data derived number of customers
from other sources)

Some datasets may be incomplete, outdated or not deemed credible for whatever reason. There may for example be multiple illegal
dumping sites across the city space, and solid waste volumes as per weighbridge statistics are considered not to be representative
of the total volume of waste generated. In such instances data sets can be substituted, augmented or moderated by considering
norms provided in the Red Book.

5.17
 Customer and Future profiling MODULE 5
service demand 4

5.2.6 Identify factors and trends driving or influencing future demand

DEMAND DRIVERS
When estimating future demand, which should be done for each service individually, it is necessary to (1) consider the drivers of
demand, (2) trends that shape, nuance or redirect demand and (3) changes in the nature of demand.

Different approaches are used to forecast the demand for

infrastructure services, and include:

• Top-down models that use limited macro indicators such as

GDP (or provincial/regional GVA) to forecast demand.
• Bottom-up models such as residential models that typically
forecast on the basis of number of households, household
consumption and growth in number of households.

Each of these approaches has associated benefits and limitations. The following table provides some indication of factors that
influence the demand for specific infrastructure services:

TABLE 5.3: Factors driving demand for municipal services

WATER AND ROADS & PARKS &

ELECTRICITY SOLID WASTE
SANITATION STORMWATER RECREATION

Government policy & Government policy & Government policy & Government policy & Government policy &
regulation regulation regulation regulation regulation

Spatial planning and Spatial planning and Spatial planning and Spatial planning and Spatial planning and
land use management land use management land use management land use management land use management

Population growth Population growth GDP growth GDP growth GDP growth

Weather patterns & Real disposable

Population growth Population growth Population growth
climate change income

Density and Real disposable Real disposable

Usage efficiency Energy costs
permeability income income

Modes of transport Job creation and real Environmental

Consumer preference Leasure trends
available disposable income awareness

Location of
Energy efficiency
commercial areas

A major factor driving the demand for more infrastructure in Think about what factors influence or drive demand. Population
most sectors is urban expansion. Johannesburg was noted in growth by itself, for example, does not translate into increased
Module 1 (Figure 1.5) as an example of a city that expanded demand for roads. To be a road user, a person needs a car that
its spatial footprint by 20 per cent over the past twenty years. in turn normally requires employment and sufficient income
The additional built space needed to be serviced by new roads, to qualify for a vehicle loan. Real disposable income also fuels
piped services, electricity lines and cables, and amenities. consumption in general that results in more delivery trucks on
the road.

5.18
MODULE 5 Future demand

TRENDS
Many forecasters use a set few variables to model future demand. These variables tend to be based on past experience, and
forecasters most often extrapolate. They therefore assume that the future will play out under the same rules and trends as was or is
currently the case, only influenced by the numerical values of their key variables. This is a fundamental mistake. Before undertaking
future demand projections, take time to think about how things are likely to change in the future. First consider general trends
(Table 5.4), and then more specifically future urban trends as they affect various infrastructure services (see Figure 5.4).

TABLE 5.4: General trends affecting demand

TRENDS EXAMPLES
• Economic investment/disinvestment
• Expanded/contracted job opportunities
Economic • Economic structuring, i.e.
corporatization, outsourcing and
workforce mobility
• Population growth/decline
• Household size
• Education levels
• Increased working hours
Social
• Social consciousness
• Lifestyle issues and preferences
• Travel and improved mobility
Take care when considering trends, they are often not as • Diseases, notably HIV/AIDS
simple as one would like to think they are. Think for example • Global warming
of the economy. Most forecasters assume either linear Environmental • Depletion of scarce natural resources
economic growth or contraction in projecting the demand for • Greater environmental awareness
infrastructure services. But this is not how the economy works.
• Improved product and process
Instead there are economic cycles of growth and contraction.
Technological technologies
Negative growth is not only possible, it is part of the normal
• Alternative fuels
economic cycle (see Figure 5.2).

10%

8%

6%

4%

2%

0%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
-2%
Asian crisis Global recession: US
-4%
sub-prime market
9/11
-6%

South Africa Eastern Cape Nelson Mandela Bay Metro Buffalo City Metropolitan Municipality

FIGURE 5.2: National, provincial and city economies all go through cycles of growth and contraction

5.19
 Future demand MODULE 5

A recession happens when negative growth is recorded for two It is also possible that a city’s economy as a whole may grow,
consecutive quarters, measured in real gross domestic product whilst experiencing downturns in particular sectors (see Figure
(GDP). This can happen in particular sectors such as mining or 5.3). In the long run, the primary and secondary sectors’ (i.e.
manufacturing, or with the economy as a whole. A depression is agriculture, mining and manufacturing) contributions to gross
a more severe form of a recession, typically lasting for two years value add (GVA) will likely decrease, whilst the contributions
or more, and tends to be characterised by declining output, of services (e.g. financial services) will likely increase. However,
significant increases in unemployment and bankruptcies, and take care not to neglect sectors with declining contributions to
reduced credit availability. GVA – the primary and secondary sectors are all large employers,
they tend to employ lower skilled workers that may not be
easily accommodated in other sectors, and they often anchor
economic value chains.

FIGURE 5.3: Over time there are structural shifts in the economy (Buffalo City)
50,000.00

45,000.00

40,000.00

35,000.00

30,000.00

25,000.00

20,000.00

15,000.00

10,000.00

5,000.00

-
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Many societies now enjoy longevity, with people living longer as

PA: Agriculture, forestry and fishing [SIC: 1] a result of improved health systems. Older people are generally
PB: Mining and quarrying [SIC: 2] also becoming more active, and this trend will likely continue
SC: Manufacturing [SIC: 3] with future generations of older people. Healthy life expectancy
SD: Electricity, gas and water [SIC: 4] is also on the rise, but not as much as life expectation. As a result
SE: Construction [SIC: 5] people live more years with sickness and infirmity. These are
TF: Wholesale and retail trade, catering and accommodation general global trends.
[SIC: 6]
TG: Transport, storage and communication [SIC: 7] In South Africa however, life expectancy decreased from 60.46
TH: Finance, insurance, real estate and business services [SIC: 8] years for men and 68.87 for women in 1990, according to Stats-
TI: Community, social and personal services [SIC: 92, 95-6, 99, 0] SA, to 57.67 years for men and 63.01 years for women in 2013.
TJ: General government [SIC: 91, 94] The current South African life expectancy at birth is 62.50 years
and the plan is to improve this to 70 years by 2030.

5.20
MODULE 5 Future demand

FIGURE 5.4: Possible future urban infrastructure trends

META FUTURE URBAN INFRASTRUCTURE TRENDS

• Urban and infrastructure design and retrofitting for climate • Increasing shift towards green infrastructure as a less costly
change adaptation, resiliency and long-term sustainability alternative to traditional grey infrastructure that augments
• Increasing capturing of negative externalities and sharper cities’ infrastructure capabilities
focus on all elements of sustainability, including the • Focus on multi-functional green spaces and green
economic, social and environmental dimensions thereof. infrastructure that delivers a wide range of ecological services
Negative externalities are adverse impacts, such as pollution, such as clean air and water, stormwater management, co2
that are not included in the cost of a product or service, and capture and to cool cities, whilst delivering more pleasant
the social cost thereof is then carried by society at large and attractive places that support social interaction through
• Increasing fragmentation and democratisation of a range of recreation, leasure and education options, and
infrastructure through distributed infrastructure incorporated land value capture
into the public realm and in buildings • Smarter, connected infrastructure able to control supply and
• Built systems will increasingly mimic ecological systems, provide real time information to customers enabling them to
becoming regenerative, closed loop systems generating no waste adjust consumption and achieve cost saving

BUILDINGS

• Future buildings, whether flats, houses, offices, shops or

factories, will increasingly use improved design, recyclable
materials and internal systems for lighting, cooling, heating,
water efficiency, and general improvements in air quality
• Future zoning will enable multiple use for buildings
• Buildings will be designed for multiple use, adaptability and
connectivity to both outdoors and the internet.
• Existing buildings will be retrofitted for improved resource
efficiency

5.21
 Future demand MODULE 5

ENERGY

• The demand for energy will continue to rise whilst the

natural resource base (e.g. coal) will continue to dwindle.
Political and societal resistance to dirty energy will continue
to mount. International protocols and targets will demand a
shift towards clean energy production. Cities globally will be
rated on resource efficiency and ecological impact, and those
ratings will influence their global competitiveness and ability
to attract investment and knowledge workers
• Energy supply will become more mixed, and will increasingly
feature renewable energy such as solar, geothermal,
cogeneration and wind. Successive generations of renewable
energy technologies at all scales (from home to regional
production scale) will become more widespread and cost-
effective. To adapt to climate change cities will prioritise
energy conservation, then local renewable energy generation
and lastly drawing power from the regional grid
• Localised energy production: buildings across land use types
will generate renewable energy through installations such as
solar panels and heat pumps, and excess electricity will be
sold back into the system, or shared on a credit basis
• Energy management systems and smart meters monitor
energy use in real time, and manage the load and utilisation
across the city by controlling consumption automatically

5.22
MODULE 5 Future demand

TRANSPORTATION

• Greater mix of travel modes, with new developments • Bicycle and vehicle sharing facilities and schemes will over
designed for firstly active travel (walking and cycling), time become commonplace, and electric charging points
access to public transport, and lastly by vehicle. This will will be rolled out through the city. Drones will increasingly
require significant increases in investment in active travel be used for deliveries, reducing some pressure on the road
infrastructure, including the development of complete system
streets in dense, high priority areas, cycling lanes and secure • Cities will likely establish mobility management systems,
bicycle parking facilities and sidewalks. provide real time traffic information, publish smart travel
• Existing roads will be retrofitted to accommodate not only plans and develop specific traffic plans for facilities such as
multiple travel modes, but also to become walkable (focus on schools that generate high volumes of traffic at particular
streetscaping), accommodate rainwater storage in the sub- times of the day
base of the street and to be safer (e.g. switch to frangible poles)

WATER

5.23
 Future demand MODULE 5

WASTE

• Wastes of various types are increasingly viewed as input • Recycling and (where applicable) composting facilities will
materials into agricultural, manufacturing and other be incorporated into building designs e.g. grey water will
economic and social processes. The ultimate aim is to close be recycled on-site and used for purposes of irrigation and
waste cycles to ensure zero waste toilets
• Waste generation targets will be established for residential • Cities will increasingly fit waste-to-energy technologies to
and non-residential customers. These will be monitored and their solid waste facilities, and invest more in waste sorting
reported on for compliance and accountability purposes and recycling facilities

• Water will become an increasingly scarce resource, whilst the demand for water will continue to increase. South Africa has run out
of suitable dam sites and major freshwater resources are fully utilised. Coastal cities treat seawater for human consumption
• Cities in general distribute water catchment, in homes, businesses, permeable pavements, public green space, rain gardens etc.
• Water is allocated to uses as appropriate: potable water for human consumption and non-potable water for irrigation. Grey water
to be re-used for non-potable purposes

“
Now, having considered both general and sector-specific drivers The point is to think about how the future may
of demand and trends, take time to think about key influences
and variables, and how they will affect demand forecasts. Box
play out, what will be different to current facts,
5.3 provides an example of some of the things to think about trends and assumptions, and how it affects the
prior to running forecasting models, by considering electricity. design of the forecast model...”
This is not an extensive list. The point is to think about how
the future may play out, what will be different to current facts, Having thought about how future demand may shape, it is
trends and assumptions, and how it affects the design of the very likely that several scenarios or options may play out in the
forecast model (variables, the relationship between variables future. Consider for example Box 5.4 that contemplates various
and parameters adopted). scenarios for the future of solid waste for a city.

5.24
MODULE 5 Future demand

5.25
 Future demand MODULE 5

BOX 5.3:
Things to think off prior to embarking on gross demand forecasting

Let us assume we are asked to prepare a gross demand forecast for electricity for the city. We already have the current
customer profile and the corporate customer growth forecast, and we have a reasonable idea of electricity usage by customer
type, based on time-series data on electricity consumption statistics compiled over the years. What are some of the things
we should probably be thinking about? Consider the following – this is not an extensive list, merely illustrative of the sort of
things to think about that may change in future, and the types of impacts it may have on demand forecasting:

ISSUE WHY IS THIS IMPORTANT?

Cost of bulk energy. Indications are that South Africa will in The cost of electricity, as is the case with any other product or
future increasingly diversify its energy mix, and the current service, may either stimulate or dampen demand. If the energy
main contender appears to be nuclear power. The CSIR (2015) mix favours nuclear power, then the cost of bulk purchases will
estimates the levellised costs of different options to be: increase that may stifle demand. As green energy becomes
economically more viable, customers who are able to might opt
to provide for their own energy needs, and the city’s revenue
potential will in such an event be impaired. The city may
however also decide to invest in own energy generation by for
example establishing wind or solar farms where viable.

ENERGY SOURCE COST/KWH

Nuclear power R 1.00/kWh

New coal R 0.80/kWh
Solar photovoltaic R 0.80/kWh
Wind R 0.60/kWh

ISSUE TECHNOLOGICAL ADVANCES

New building regulations and sustainable accommodation. New Each successive decade produces more appliances that increase
building regulations, applicable to both residential and non- the demand for energy. More energy efficient appliances may limit
residential accommodation, require building design to reduce demand, but the sheer volume of technology may offset energy-
energy and water consumption, and to reduce their co2 footprints. efficiency gains made.

WHY IS THIS IMPORTANT? WHY IS THIS IMPORTANT?

Not only do customers save on energy, at times some generate The demand for energy per household, which is a key variable in
surplus energy that is sold back into the grid, turning customers forecasting future demand, may increase. Consider for example
into producers and suppliers. This increases available supply, the electric car. Estimates vary on consumption costs, depending
but limits demand and the revenue potential of the city. On on factors such as the vehicle itself, driver behaviour and season,
the other hand, such energy tends to be renewable in nature, but may be in the order of 4 200 kWh for annual travel of 24
assisting cities and the country to meet climate change targets. 000 kms. Still considering electric cars, there will also likely be a
And when such surplus energy can be bought from private future need for public charging points, requiring infrastructure
producers at lower rates than from Eskom, the city’s financial investment. How will this be done? Will the city supply such
performance is improved. But at some scale Eskom power points, enter into arrangements with the private sector, or
is still required, and it needs to cover at least its operating simply leave the private sector to respond as they see fit? In the
expenditure. So the less units Eskom sells, the higher the unit event that the city decides to provide such infrastructure, who
cost rate becomes. will be responsible, the electricity department or the transport
department?

5.26
 MODULE 5 Future demand

BOX 5.4:
Scenario planning for solid waste

SCENARIO 1: CONTINUATION OF CURRENT TRENDS SCENARIO 2: CONSERVATIVE ESTIMATES ON WASTE

Current growth in waste generated which is 2.27%, was used REDUCTION THROUGH A COMBINATION OF WASTE-TO-
ENERGY AND WASTE MINIMISATION METHODS
to indicate future results should current trends continue
unchanged. In this scenario a conservative approach is assumed, especially
during the initial stage. An assumption was made that growth
would be halved after 4 years, and reduced to 0% after a further
5 years. Waste generation will thereafter be steadily reduced,
initially at 1.5% /annum, and after 2029/30 with 5%/annum till
the end of the planning period by using a combination of waste
to energy and waste minimisation methods.

SCENARIO 3: AGGRESSIVE ESTIMATES ON WASTE

REDUCTION THROUGH A COMBINATION OF WASTE-TO-
ENERGY AND WASTE MINIMISATION METHODS
Starting after 4 years growth will be reduced to 0 over 5 years,
where after 10% and 25% reductions in the waste stream will
be achieved by waste treatment project implementation during
2020 and 2023 respectively. It is assumed that ‘Waste to Energy’
processes will be employed. It is possible that this process may
even be used to burn previously deposited solid waste. It is
further assumed that the volume of waste generated during
2024 will be reduced by a further 25% over the next 5 years, and
thereafter by 5% of the waste generated annually till the end of
the planning period by using a combination of waste to energy
and waste minimisation methods.

EXPECTED FUTURE SOLID WASTE VOLUMES UNDER VARIOUS SCENARIOS

3 000

2 500
THOUSAND TONNES/ANNUM

2 000

1 500

1 000

500

-
2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

Scenario 1 Scenario 2 Scenario 3

5.27
 Future demand MODULE 5

5.2.7 Calculate net additional demand

CALCULATE GROSS DEMAND

Having interpreted demand drivers and trends, asset to enhance revenue, curb expenditure or wastage, to implement
management planners should forecast gross demand per new technologies or reconfigure current infrastructure systems.
service (e.g. potable water or electricity), taking care to factor The forecast at this point should be regarded as a customer
for addressing service access backlogs, growth (or decline) in needs statement, and asset management responses will only
all customers categories, as well as target levels of service per be formulated following estimation of gross demand. Once the
customer category and spatially defined area. The objective is to forecast model has been run, take time to assess the results. Do
arrive at gross demand, the purity of the forecast should not at they make sense? Does the model yield answers to questions
this point be tainted with particular objectives such as the desire posed prior to running it?

Quantitative forecasts suffer from various limitations, largely due to the uncertain nature of the future. A particularly difficult aspect
to model is transition that tends to happen in phases of unsure duration. Where this is the case, cities are advised to prepare a
narrative supplementing the forecast model.

5.28
MODULE 5 Future demand

DOCUMENT CURRENT AND PLANNED SUPPLY CAPACITY AND ARRANGEMENTS

Once forecast models have been run and gross demand has been calculated, the next step is to compare gross demand with supply
capacity to determine whether the city is able to meet demand now and in the future, and if not, how to appropriately respond to
increased demand. The process is as follows:

1. Document current supply arrangements. In the case of water

and electricity, who supplies it? Does the city abstract its own
water and treat it, does it buy all bulk water from a water
board and then treat it, does it only buy treated water, or
some combination of these arrangements? In the event that
the city abstracts water, what are the permitted abstraction
limits? Ask similar questions of energy supply.
2. Calculate current bulk infrastructure capacities per spatial
segment adopted (supply limits). Take care to allow for
reserve margins or secure supply limits (e.g. not exceeding
firm capacity in electricity supply systems or maintaining 48
hours supply in command reservoirs). In the case of landfill
sites only consider remaining airspace.
3. Deduct current consumption (e.g. water or electricity),
utilisation (roads or amenities), occupation levels (municipal
buildings) or other measures of current demand and supply
from available capacity. The result should be net available
capacity, which in practice may be net negative capacity for
some over-utilised facilities such as wastewater treatment
works.
4. Next, consider the following:
• Infrastructure coming to end of useful life, or to be
decommissioned for whatever reason (e.g. technological
change or system reconfiguration)
• Supply risks relating to external suppliers, own bulk
infrastructure and other factors

5. Then, arrive at net available capacity and compare with gross

demand. The difference is net gross demand (the portion of
gross demand that can’t be serviced with current capacity)
that requires appropriate asset management responses that
may include a mix of asset and non-asset responses.
6. Finally, the city may already have some initiatives or projects
in various phases of planning and implementation. Identify
and record these in the asset management plan, including
details on capacity, area(s) benefit, cost and timing – and
ensure that these are taken into account in the plan to
address net gross demand.

5.29
 Future demand MODULE 5

FIGURE 5.4(A): Compare annual maximum demand to capacity per customer type (electricity)

2,600,000
2,400,000
2,200,000
2,000,000
1,800,000
1,600,000
1,400,000
KVA

1,200,000
1,000,000
800,000
600,000
400,000
200,000
0

Manufacturing Commercial General Household Household Agriculture Mining

(municipality use (low usage) (normal
& street lights) use)
Annual Demand 1,230,327 144,744 48,248 192,993 530,729 24,124 241,241
Firm Capacity 1,426,728 167,850 55,950 223,800 615,451 27,975 279,751
Installed Capacity 2,412,301 283,800 94,600 378,400 1,040,600 47,300 473,000

FIGURE 5.4(B): Determine annual demand per service and compare to current capacity per supply area (electricity)

750,000
700,000
650,000
600,000
550,000
500,000
450,000
400,000
KVA

350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
Alberton Benoni Boksburg Brakpan / Germiston Edenvale Kempton Springs / Tembisa
Kwatema Park Nigel
Annual Demand 263,263 385,380 297,403 155,719 399,258 152,607 387,997 215,768 155,011
Firm Capacity 250,000 345,000 315,003 150,000 460,001 175,000 605,000 342,501 155,000
Installed Capacity 400,000 620,000 625,001 250,000 685,001 290,000 970,000 640,000 250,000

5.30
MODULE 5 Future demand

FIGURE 5.4(C): Current ability to meet demand (electricity)

6,000,000
5,500,000
5,000,000
4,500,000
4,000,000
3,500,000
KVA

3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
2009 2014 2019 2024 2029 2034 2039

Manufacturing Agriculture General (municipality use & street lights)

Commercial Mining Household (normal use)
Household (low usage) Growth Trend Total Firm Capacity
Total Installed Capacity

FIGURE 5.4(D): Ability to meet future demand per customer type (electricity)

2,550,000
2,400,000
2,250,000
2,100,00
1,950,000
1,800,000
1,650,000
1,500,000
1,350,000
KVA

1,200,000
1,050,000
900,000
750,000
600,000
450,000
300,000
150,000
0
Manufacturing Commercial General Household Household Agriculture Mining
(municipality (low usage) (normal use)
use & street
lights)

Projected Demand (2014) Projected Demand (2015) Projected Demand (2016) Projected Demand (2017)
Projected Demand (2018) Projected Demand (2019) Firm Capacity Installed Capacity

5.31
 Future demand MODULE 5

5.3 RESPONDING TO DEMAND

5.3.1 Strategic objectives and hierarchy of responses to demand

There are different approaches to responding to demand. On the one side there is a grouping advocating responding to
demand by increasing investment in infrastructure creation and accelerating the delivery of more assets. Proponents of this
approach argue that:

• Increased investment in infrastructure supports economic

growth.
• Infrastructure projects specifically stimulates the construction
industry and lends itself to job creation by designing projects
to be labour-intensive.
• A service access backlog exists that requires expansion of
infrastructure system coverage, and the establishment of
more amenities.
• Creating infrastructure for the poor demonstrates
commitment to care for and improve their living conditions,
and is therefore a political imperative.
• Cities will continue to grow, and more infrastructure is
needed to support a growing population and economy.

On the other side there is a grouping that advocates all possible measures to avoid infrastructure creation. The departure point for
this grouping is to first respond to demand with non-asset solutions to limit, reduce or switch demand. Such a set of responses is
commonly referred to as demand management. They argue that:

Cities already have Creating more assets Creating more assets Creating more assets
excess assets, and are not will, or should, lead in the context of tend to enable urban
able to properly care for to tariff increases that climate change and sprawl and expanded
existing assets. Creating customers may not be resource depletion city networks.
more assets will further able to afford. (e.g. water resources)
stretch very constrained is not sustainable.
resources, and will likely
lead to lower levels of
asset care.

5.32
MODULE 5 Future demand

There is merit in both sets of arguments, but neither position is correct. The size and composition of asset portfolios should be
matched to a city’s needs, resource base and strategic objectives, provided that needs and strategic objectives are financially,
economically, socially and environmentally sustainable. Some key guiding principles, presented in no particular order, include:

1. Limit and over time reduce investment in infrastructure that

are resource inefficient, contribute to the carbon footprint of
the city, or are not climate resilient. Resources in this sense
means scarce natural resources such as land and water, but
also scarce skills and financial resources. In other words,
disinvest from, and rationalise infrastructure that are not
effective, efficient or that are under-utilised.
2. Invest in sustainable infrastructure that is resource efficient
and climate resilient.
3. Increase investment in infrastructure that bolsters the
revenue streams of a city, whether through increased tariff
income or higher levels of land value capture that in turn
boosts property rates income.
4. Increase investment in infrastructure that improves the
economic functioning of the city and allows economic
growth.
5. Increase, within the financial means of the city, investment in
infrastructure and amenities that ensures equitable access to
services for all people, promotes social integration and leads
to the creation of great, liveable places.
6. Infrastructure investment and provision should support
spatial efficiency and optimisation, and likewise, spatial
planning should consider the technical and financial
dimensions of infrastructure systems when preparing and
implementing spatial frameworks.

The question is therefore not to build or not, but rather what should be build, reconfigured or disposed of. Robust asset management
therefore considers both supply-side management and demand-side management.

5.33
 Future demand MODULE 5

5.3.2 Supply-side management

Supply side management focusses on the planning, implementation and optimisation of infrastructure systems and value
chains that deliver effective and efficient services.

FIGURE 5.5: Optimising asset portfolios

CURRENT REPLACEMENT
COST VALUATION

Reproduction of Excess assets Obsolescence Over-design System

existing asset eliminated eliminated eliminated reconfiguration

Low LEVEL OF ASSET OPTIMISATION High

Techniques for optimising asset portfolio optimisation are presented in Module 6: Lifecycle Strategies and Plans.

5.34
MODULE 5 Future demand

5.3.3 Demand management

MULTIPLE APPLICATIONS OF DEMAND MANAGEMENT

There are often misconceptions about demand management and many assume it is simply a tool to permanently curb demand.
Consider the following definition of demand management:

DEMAND MANAGEMENT IS DEFINED AS

The active intervention in the market to influence demand for services and assets with forecast consequences,
usually to avoid or defer CAPEX expenditure. Demand management is based on the notion that as needs are satisfied
expectations rise automatically and almost every action taken to satisfy demand will stimulate further demand.

The overwhelming intent of the definition appears to be

to avoid capital expenditure, in this context infrastructure
creation or upgrading. There is also value in the statement that
satisfying demand now stimulates further demand – this is the
basic economic problem: human needs will always be greater
than their ability to satisfy those needs. Therein lies a timing
problem: because needs exceed capacity to satisfy them, there
often tends to be a lag in the manifestation of demand and the
meeting thereof. This is what is meant by the statement “…or
to defer capital expenditure”. More recently, with increasing
recognition that we are exceeding earth’s carrying capacity
with scarce resources being depleted or degraded beyond the
planet’s capacity to regenerate, coupled with the emerging
impacts of climate change, demand management is seen as an
instrument to limit resource depletion.

Demand management fulfils all these functions, and more. Its various applications include reducing, increasing, delaying or
switching demand, as follows – this is not an extensive list:

01
34
TO MANAGE FLUCTUATIONS IN DEMAND
The intent here is not to reduce demand, but rather to smooth 32
demand to avoid assets being over- or under-utilised. In other
words, the tactic is to synchronise demand and supply in the 30
MW THOUSANDS

most efficient way. An excellent example of this is the demand for

electricity that peaks at certain times of the day, and where seasonal
28
demand differs significantly. Likewise, roads may generally enable
easy, free movement but are choked in rush hour.
26

24

22
01.00
02.00
03.00
04.00
05.00
06.00
07.00
08.00
09.00
10.00
11.00
12.00
13.00
14.00
15.00
16.00
17.00
18.00
19.00
20.00
21.00
22.00
23.00
00.00

FIGURE 5.6:
Daily electricity demand patterns in South Africa
Typical summer day Typical winter day
Source: Eskom Annual Report 2009

5.35
 Future demand MODULE 5

02 TO MANAGE DEMAND DURING TIME LAGS IN

THE DELIVERY OF INFRASTRUCTURE
Either due to funding constraints, delivery capacity or other
technical or regulatory constraints.

03 TO PURSUE OPTIMUM ASSET UTILISATION

In this application demand management aims to stimulate
or increase demand for infrastructure services or assets, also
referred to as economic optimisation. At times assets are
constructed without sufficient demand to make those assets
financially viable, or the natural rate of increase in demand is
too slow to reach break-even in a reasonable period. Bus rapid
transport (BRT) systems are examples of such assets. They require
sufficient ridership to be economically viable. However South
African cities generally do not have the population densities to
deliver sufficient ridership. The demand management response
in this case is to produce high-density mixed development
around BRT stations. As noted in Module 4 (see Section 4.4),
sub-city places such as the CDB and other nodes and corridors
go through cycles of investment and disinvestment. In periods
of cyclical decline infrastructure capacities remain constant, and
those portions of the infrastructure systems tend to be under-
subscribed. Rather than construct new infrastructure elsewhere,
demand management in this case offers incentives to achieve
higher levels of utilisation of existing infrastructure.

04 TO ALLEVIATE PRESSURE ON SCARCE

RESOURCES
Such as water or non-renewable energy.

05 TO ACHIEVE COST EFFICIENCIES AND REDUCE

UNNECESSARY EXPENDITURE
Demand management in this context in large part relates to
spatial efficiencies and optimisation. This includes:
• pursuing a more compact urban form to avoid unnecessary
infrastructure creation and to pursue economies of scale in
operations and maintenance;
• encouraging development in areas where sufficient
infrastructure capacity exists; and
• where additional infrastructure needs to be constructed,
to locate such infrastructure in areas without development
constraints or development cost premiums, all other
considerations being equal, and to encourage development
around such infrastructure.

5.36
MODULE 5 Future demand

The following sub-sections provide guidance on the above aspects.

APPROACH TO INFRASTRUCTURE UTILISING SCARCE RESOURCES

Cities should progressively move towards implementing the hierarchy proposed in the figure below. The default approach to
the utilisation of scarce, non-renewable resources should be one of conservation. Demand over the conservation limit should be
responded to through on-site solutions such as rainwater harvesting, solar panels and heat pumps for energy generation.

1 CONSERVATION

Limit consumption of scarce, non-renewable resources (e.g.

water) and land, reduce carbon footprint.

LOCALISED RENEWABLE CAPTURE,

2
PRODUCTION OR RECYCLING

On-site capture or production through means of rainwater

harvesting tanks, solar panels, waste seperation bins and
on-site composting etc.

Sell excess
CONNECTION TO CITY INFRASTRUCTURE
production to the 3
SYSTEMS
municipal system

Connect to municipal infrastructure systems for larger-scale

needs, where localized solutions are not feasible or where
municipal financial needs demand it.

FIGURE 5.7: Hierarchy of responses to scarce resource utilisation

Considering the need for cities to remain financially viable, the

preferred approach could be to install such onsite solutions
(solar panels etc.) in low income housing units, to limit expensive
bulk purchases of water and electricity, system losses and the
adverse impacts of illegal connections. Higher income customers
generate net revenue for the city through consumption of water
and electricity, and should not be encouraged to switch to on-
site solutions unless there are supply constraints, or until such
time that the city can procure excess production from customers
at rates lower than the cost of bulk purchases.

36
5.37
 Future demand MODULE 5

ACHIEVE COST EFFICIENCIES

Ideally, and provided that there are no other higher order spatial objectives stipulating that new infrastructure is required elsewhere
or that the city footprint should expand, the urban development boundary should be respected and development applications
outside the urban edge should be rigorously scrutinised, even when developers are willing to pay the full development costs of
infrastructure outside the urban edge. Developments within the urban edge should ideally be located in proximity to available
bulk capacity. This can be easily done with respect to government-sponsored low income housing developments, as cities normally
choose the sites where such development will take place. For private sector developments, the same result, though perhaps to
a lesser degree, can be achieved by:

• Communicating to developers where bulk capacity exists, and

where not. The incentive for them in selecting areas where
capacity exists is avoidance of delays in bulk infrastructure
installation.
• Larger developers often buy land as stock for future
development whilst land is relatively inexpensive, to be
developed later when sufficient demand manifests, and they
are able to achieve their desired profit margins. For such
developers the existence of current bulk capacity is not a
main concern, provided that developer contributions apply
uniformly across the urban space. To encourage developers
to take advantage of available infrastructure capacity and
maintain a tight urban form, cities should consider spatially
nuanced developer contributions.
• The publication of a weighted infrastructure and amenities
capacity map may encourage developers to locate closer
to well-serviced areas where the conditions for liveable,
sustainable settlements are already in place, and developers
can price their housing products accordingly.

Box 5.5 illustrates an innovative approach by Ekurhuleni to grade potential low income housing sites to both support spatial
structuring elements and to maximise the use of existing infrastructure and amenities. Cities can also achieve cost efficiencies by
selecting ideal sites and areas for infrastructure development and functioning. “Ideal” in this context means selecting sites where
construction costs are neutral – the costs to construct on such a site will not be higher than on any other site. A basic development
cost premium index is provided in Table 5.5, and examples of its application, the weighted capital development cost surface, are
demonstrated in Figure 5.8.

4. The development cost premium index does not override technical and environmental
considerations, criteria and regulations regarding the appropriate siting of infrastructure. Its
main use is to select from a range of technically and environmentally feasible sites the most ideal
location to avoid additional construction costs.
5. Where sufficient construction cost information is available, cities should calibrate the index
based on local experience and practice.

5.38
MODULE 5 Future demand

BOX 5.5:
Locating developments in areas where capacity exists

Ekurhuleni identified 5 065 parcels of land for potential low income housing development at a density of 69 units per hectare.
Development across so many sites is not feasible, and accordingly the city weighed the options of a rating of 1a (best option) to
5e (worst option), considering the following factors:

Proximity to spatial Availability Proximity to Proximity to schools.

structuring elements of municipal municipal amenities
identified in the infrastructure in such as sports and
SDF, inclusive of BRT each sector (e.g. recreation centers,
routes. water, electricity and parks, clinics and
sanitation). libraries.

LEGEND

Major land forms

1A 4A
1B 4B
1C 4C
1D 4D
1E 4E
2A 5A
2B 5B
2C 5C
2D 5D
2E 5E
3A Freeways
3B Road network
3C
3D
3E

5.39
 Future demand MODULE 5

TABLE 5.5: Development cost premium index

ROADS % COST PREMIUM

CATEGORY DESCRIPTION BULK FACILITY BULK DISTRIBUTION RETICULATION CONNECTION
Flat (< 2%) 0% 0% 0% N/A
Rolling Hills (3 - 5%) 11% 13% 13% N/A
Topography
Steep (6 - 12%) 16% 20% 20% N/A
Mountainous (>13%) 21% 27% 27% N/A
Low base status & restricted depth 0% 0% 0% N/A
High swell-shrink potential, plastic
10% 10% 10% N/A
and sticky soils
Geology Collapsing soils 8% 6% 5% N/A
Restricted soil depth; associated
0% 0% 0% N/A
with rockiness
Dolomitic 25% 20% 15% N/A

SANITATION % COST PREMIUM

CATEGORY DESCRIPTION BULK FACILITY BULK DISTRIBUTION RETICULATION CONNECTION
Flat (< 2%) 0% 0% 0% 0%
Rolling Hills (3 - 5%) 0% 0% 0% 0%
Topography
Steep (6 - 12%) 5% 5% 5% 5%
Mountainous (>13%) 10% 10% 10% 0%
Low base status & restricted depth 30% 30% 20% 5%
High swell-shrink potential, plastic
20% 5% 5% 0%
and sticky soils
Geology Collapsing soils 20% 10% 0% 0%
Restricted soil depth; associated
30% 30% 20% 5%
with rockiness
Dolomitic 40% 0% 0% 0%

SOLID WASTE % COST PREMIUM

CATEGORY DESCRIPTION BULK FACILITY BULK DISTRIBUTION RETICULATION CONNECTION
Flat (< 2%) 0% 0% 0% 0%
Rolling Hills (3 - 5%) 0% 0% 0% 0%
Topography
Steep (6 - 12%) 0% 0% 0% 0%
Mountainous (>13%) 50% 0% 0% 0%
Low base status & restricted depth 80% 0% 0% 0%
High swell-shrink potential, plastic
0% 0% 0% 0%
and sticky soils
Geology Collapsing soils 0% 0% 0% 0%
Restricted soil depth; associated
80% 0% 0% 0%
with rockiness
Dolomitic 40% 0% 0% 0%

5.40
MODULE 5 Future demand

STORMWATER % COST PREMIUM

CATEGORY DESCRIPTION BULK FACILITY BULK DISTRIBUTION RETICULATION CONNECTION
Flat (< 2%) 0% 0% 0% 0%
Rolling Hills (3 - 5%) 5% 5% 5% 0%
Topography
Steep (6 - 12%) 10% 8% 8% 5%
Mountainous (>13%) 15% 10% 10% 10%
Low base status & restricted depth 25% 25% 20% 20%
High swell-shrink potential, plastic
5% 5% 5% 5%
and sticky soils
Geology Collapsing soils 10% 10% 10% 10%
Restricted soil depth; associated
25% 25% 20% 20%
with rockiness
Dolomitic 30% 25% 20% 20%

WATER % COST PREMIUM

CATEGORY DESCRIPTION BULK FACILITY BULK DISTRIBUTION RETICULATION CONNECTION
Flat (< 2%) 0% 0% 0% 0%
Rolling Hills (3 - 5%) 0% 0% 0% 0%
Topography
Steep (6 - 12%) 0% 5% 5%
Mountainous (>13%) 0% 10% 10% 5%
Low base status & restricted depth 0% 30% 20% 0%
High swell-shrink potential, plastic
10% 5% 5% 0%
and sticky soils
Geology Collapsing soils 20% 0% 0% 0%
Restricted soil depth; associated
10% 30% 20% 0%
with rockiness
Dolomitic 40% 0% 0% 0%

5.41
 Future demand MODULE 5

LEGEND

Soil constraints
Low base status, restricted depth, imperfect to poor One or more of: low base status, restricted soil depth,
drainage, excessive wetness, high erodibility excessive or imperfect drainage, high erodibility
May be highly erodible Restricted depth, imperfect drainage, high erodibility;
May be seasonally wet slow water infiltration; seasonal wetness
May have restricted soil depth, excessive drainage, Restricted land use options
high erodibility, low natural fertility Restricted soil depth; associated with rockiness
One or more of: high swell-shrink potential, plastic No dominant constraints
and sticky, restricted effective depth, wetness Water bodies

FIGURE 5.8(A): Capital development cost premiums - Buffalo City: Soil Constraints

5.42
MODULE 5 Future demand

FIGURE 5.8{B): Capital development cost premiums – Buffalo City: Major land forms

LEGEND

Major land forms

Level plains Open hills or ridges
Level plains with some relief Open high hills or ridges
Plains with open low hills or ridges Open low mountains
Plains with open high hills or ridges Low hills or ridges
Rolling or irregular plains with some relief Hills or ridges
Rolling or irregular plains with low hills or ridges High hills or ridges
Rolling or irregular plains with high hills or ridges Low mountains
Rolling or irregular plains with low mountains Water
Open low hills or ridges

5.43
 Future demand MODULE 5

FIGURE 5.8(C): Weighted capital development cost premium surface – Buffalo City

LEGEND

Weighted development cost surface (% Premium)

0% - 5% Proposed Urban Edge
6% - 10% Already development
11% - 15% Undevelopable
16% - 20%
21% - 25%
26% - 28%

5.44
MODULE 5 Future demand

DEMAND MANAGEMENT TACTICS

There are six main categories of demand management tactics available to asset management planners, as shown in the following
figure.

FIGURE 5.9: Range of demand management tactics

5.45
 Future demand MODULE 5

Note the following about demand management tactics:

• Not all tactics are suited to all infrastructure services, at all
times and places. It is for example not wise to stimulate the
demand for water, though it may be appropriate to stimulate
“ Demand management tactics and supportive
measures...designed to nudge or encourage
customers to consume more or less of a service.”
development in an area where excess water infrastructure
capacity exists, rather than to construct new capacity demand management measures.
elsewhere. • Demand management tactics and supportive measures
• In many instances though, the application of one tactic is range from “soft” measures designed to nudge or encourage
not sufficient, and for best results several tactics should customers to consume more or less of a service, to “hard”
be employed simultaneously, as demonstrated in Figure measures that force compliance.
5.9 that considers demand management for roads and • The type of measures adopted need to be carefully considered
transportation. in advance: customers and communities should ideally
• As shown in Figure 5.9, tactics to substitute or delay voluntarily support them or at least agree with the need
demand often require creation of additional infrastructure, to implement them. Customer support generally requires
in this example traffic management centers and walking education about the benefits of the tactic, supported by
and cycling infrastructure. Provision should be made in the ongoing information about the success of implementation
lifecycle sections of infrastructure asset management plans thereof. The two types of measures can be designed to be
to provide such infrastructure, as well as for the operating implemented in concert where circumstances warrant it, and
and maintenance costs associated with implementing where the need for demand management is serious enough.

TABLE 5.6(A): Demand management methods: Electricity

OUTCOME TACTIC DESCRIPTION METHODS & MEANS

ELECTRICITY
Shift customer demand during the ~
Critical peak shift 12 hours per annum with the highest
demand for electricity • Peak tariffs
• Customer awareness campaigns
Load shifting Shift customer demand during the
and media notices
(“peak shaving”) Daily peak shift ~ 3 hours per day with the highest
• Smart grid
and matching demand for electricity
• Managed load shedding
Advance or delay appliance operating • Direct load control programmes
Load matching cycles by a few seconds to increase
the diversity factor of the set of loads
• Building codes on energy
efficiency
Reducing the overall demand for • Use of geyser blankets, energy
Energy efficiency electricity without limiting the utility saving lightbulbs etc.
that customers receive • Use of efficient load intensive
appliances such as refrigerators,
Load reduction or washing machines
• Vegetation clearance
Loss control Reduce system technical losses • Measures to curb illegal
connections
Move towards renewable energy Distributed generation and opt-in
Shift production to customers
(wind, solar, geothermal etc.) schemes
Resource
Move towards renewable energy Installation of solar panels, heat
efficiency and Demand switching
(wind, solar, geothermal etc.) pumps etc.
cleaner energy

5.46
MODULE 5 Future demand

TABLE 5.6(B): Demand management methods: Roads and transportation

OUTCOME TACTIC DESCRIPTION METHODS & MEANS
ROADS AND MOVEMENT NETWORKS
• Promote travel blending: combining trips to minimise total travel
time
Rush hour Reduce demand for
• Car pooling
congestion roads in morning and
• Congestion charging
management afternoon peak traffic
• Publish school travel plans and develop more walking and cycling
paths around schools, coupled with reduced speed limits
Area-based Reduce demand • Cordon charging
Reduced congestion in identified areas • Parking policies
pressure on management experiencing • Pricing of parking
road system
Reduce the number of • Promote working from home, and revisit zoning rights to enable
Demand vehicles on the road this
substitution Offer viable • Expand public transport coverage, number of trips and trip quality
alternatives to the car • Offer special lanes for other modes of travel
General Modulate or influence
• Implement traffic management centers
traffic load travel volumes or
• Publish travel plans and real-time traffic information
management patterns of flows
Concentrate • Locate new low-income housing and subsidised housing projects
Capture sufficient
development in proximity to public transport routes and points
density along public
around public • New higher income residential and mixed use developments to
transport routes
transport demonstrate explicit links to the public transport system
Quality bus stops and • Accessible, well-marked bus stops
Quality stations • High volume bus stops to provide shelter from the elements
Increased infrastructure • Clean, comfortable buses
use of public Quality bus fleet
• Accessible to people of all ages and the disabled
transportation
• Published, easy-to-read and accessible bus schedules
Trip times • Adherence to bus schedules
Quality travel • Convenient trip times throughout the day
and service • Convenient ticketing and payment arrangements
Payment and
• Consider throughput ticketing and discount arrangements for
ticketing
regular users
• Cycling lanes
• Connected system linking roads, public open space and off-road
Enabling
Cycling trails
Higher levels infrastructure
• Secure bicycle parking facilities at main public buildings and
of active spaces, shopping centers and key transport hubs
travel
• Cycling lanes
Walking & Enabling
• Connected system linking roads, public open space and off-road
jogging infrastructure
trails
• Introduce or intensify traffic calming measures e.g. speed humps
Build
Infrastructure • Improve pedestrian safety through
environment
Reduce traffic responses • infrastructure such as pedestrian bridges, well-marked crossings,
modifications
accidents side rails etc.
Regulatory Intensified law • Speed limit reduction and installation of speed cameras
responses enforcement • Re-assess road lay-out and conditions

5.47
 Future demand MODULE 5

Potable water differs from all other commodities and services (with the exception of air) in that its availability is an absolute condition
for life, and that it is a scarce natural resource. Outcomes should therefore always pursue a full sustainability balance that ensures
that the basic human needs of all are met, without compromising ecological sustainability. The emphasis is on water conservation
and management. The following are demand management tactics and methods aligned to these outcomes – however, note that
there is a broader water cycle beyond potable water services that includes water resource management as well.

TABLE 5.6(C): Demand management methods: Potable water

OUTCOME TACTIC DESCRIPTION METHODS & MEANS

POTABLE WATER
Ensure that full dam capacity • Structured, ongoing programme of dam verge
Dam verge
remains available, and water not clearance (for cities that have their own water supply
clearance
consumed by excess vegetation dams)

Improve • Building regulations to require improved water

availability efficiency
Customer-end water harvesting
Demand • Subsidise rainwater harvesting
infrastructure (e.g. rainwater
substitution • Investments by customers, either directly or through
harvesting tanks)
rebates
• Fit as standard to low income housing developments
• Municipal by-laws banning alien vegetation,
Eliminate coupled with a system of penalty fees and periodic
Focus on alien vegetation with
More effective alien inspections
high water usage
water use (using vegetation • Programme of alien vegetation clearance in known
the right type of areas of occurrence
water for the Substitute potable water
right purpose) Promote
usage with greywater where • Customer education and awareness programmes
greywater
appropriate (e.g. irrigation and • New building regulations to require re-use
usage
flushing)
• Implement predictive maintenance programmes
Improved asset • Improve distribution pipe maintenance regimes,
management especially response times to large pipe bursts
• Commit to a pipe replacement programme
Reduce water
system losses • Ensure that all households have access to water
(reduce the Clamp down on illegal • Ensure that all customer connections are metered
percentage of connections • Prosecute cases of illegal connections and meter
unaccounted tampering
for water)
More efficient • Meter across the network, from bulk abstraction
water use (using Water balancing and through to all customers connections
appropriate financial balancing • Conduct meter audits
amounts of • Perform balancing on a monthly basis
water, curbing
excess usage) • Customer education and awareness programmes
(e.g. water-wise gardening)
• Implement full cost accounting over the lifecycle
Customer behaviour • Implement block tariff structures that penalise high
Reduce excess levels of consumption
consumption • Restrict water usage in times of drought, and
prosecute offenders
• Retrofit building structures with water saving devices
Retrofitting
(e.g. more effective flushing, valves and washers)

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5.4 PREPARE DEMAND RESPONSE PLAN

The demand response plan should clearly articulate how net additional demand will be addressed, which may include a
range of asset solutions (e.g. new construction or upgrading of existing infrastructure or amenities, or improved maintenance
regimes) and non-asset solutions (e.g. demand substitution, regulation, pricing or customer education).

Cities are advised to consider adoption of appropriate levels

of assessment to determine the most appropriate solutions
for alleviation of existing infrastructure capacity constraints.
Module 3 presented a simple, scalable 5 point grading scale for
assessing capacity failure mode. In this way, where sophisticated
analyses are not appropriate or available, operator data can be
captured. Where demonstrated to be cost effective (relative
to the benefit of identification of the points of constraint and
optimised responses) as determined in line with the processes
indicated in Module 8, detailed capacity and utilisation analyses
should be pursued, for example hydraulic modelling of pipe
networks.

Selected asset and non-asset solutions should be scheduled, together with costs and impacts, across the 30-year planning
horizon, indicating the following:

Projects and activities, classified Project or activity costs, Location or areas of benefit
as either capital or operating together with a cash flow
expenditure, inclusive of project (expenditure only) forecast –
description and benefit (how financial viability is considered
and to what extent it addresses in Module 8
net additional demand)

Cities are advised to present the outcomes of the demand management response plan in a format compatible with the requirements
of the Municipal Standard Chart of Accounts (mSCOA), to avoid later repackaging when preparing budget submissions.

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5.5 APPROVAL, COMMUNIC ATION, RE VIE W

AND UPDATING REQUIREMENTS

01 APPROVAL 02 REVIEW AND UPDATING

The following arrangements should apply: The following arrangements should apply:
1. The corporate customer growth forecast, inclusive of the 1. The corporate customer growth forecast should be reviewed
future spatial apportionment of customers, should be and updated annually.
formally approved by city management and documented in 2. When reviewing and updating the corporate customer
the SAMP. growth forecast, cities should:
2. The corporate customer growth forecast, inclusive of the • Update the spatially-based, corporate customer profile;
future spatial apportionment of customers, will be the official and
version of future growth expectations of the city, and should
• Compare the updated corporate customer profile with
be included in the city strategic plan, the IDP (if there is a
the previous version prepared, and identify and quantify
city strategy other than the IDP), the MSDF, the city’s built
changes in the customer profile, both in terms of number
environment performance plan and its SAMP. Sectoral plans
of customers by type, as well as spatial changes in the
such as asset management plans and master plans should
customer profile.
interpret this forecast in analysing and planning for future
demand. 3. When updating the corporate customer growth forecast,
changes in both the number of customers and their spatial
3. To achieve the requirement of (2) above, the corporate
manifestation should be used as a check to review forecasting
customer growth forecast should be made available to all
assumptions and estimates, and to adjust these as necessary
relevant departments, committees, task teams, project teams
based on actual changes in the customer profile over time.
and consultants engaged in future planning.
4. Updated versions of the corporate customer growth forecast

“
should be submitted to city management for approval,
The corporate customer growth forecast... documented in the SAMP, and made available to all relevant
will be the official version of future growth departments, committees, task teams, project teams and
expectations of the city...” consultants engaged in future planning.

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5.6 SUMMARY

Coming to grips with future demand is a critical step in future city viability and prosperity. The three trickiest aspects of
future demand are the (1) uncertain nature of future, (2) the matching of supply and demand spatially and over time, and (3)
managing competing interests.

Typical errors in determining future demand include assuming

that the future will play out under the same conditions
that currently exist, undertaking deterministic demand
forecasts, assuming that demand follows easy patterns that
are mathematically predictable using two or three variables,
that future customers will conveniently settle where we want
them to, and not properly thinking through the implications
of demand management responses. This module offered an
approach, methodologies and several innovative instruments to
guide cities through the potential pitfalls of planning for future
demand. The macro process is summarised as follows:

PREPARE CONSOLIDATED CUSTOMER SPATIAL APPORTIONMENT OF CUSTOMER

1 2
GROWTH FORECAST GROWTH

Approaches and proposed methodology to allocate growth

Prepare one consolidated growth forecast for all customer
in customers in accordance with the spatial segmentation
categories for the city as a whole.
system adopted.

3 QUANTIFY CURRENT DEMAND 4 CALCULATE NET ADDITIONAL DEMAND

Interpret per sector. Sources of municipal data on current Calculate gross demand, document current and planned
demand. Factors driving demand, general trends and supply capacity and arrangements, and arrive at net
probable future urban infrastructure trends. additional demand.

5 RESPONDING TO DEMAND 6 DEMAND RESPONSE PLAN

Strategic objectives and hierarchy of responses to demand. Asset and non-asset solutions in response to demand over
Supply-side management. Demand management. the 30-year planning period.

FIGURE 5.10: Demand process summarised

The outcomes of the demand process feed into asset lifecycle planning discussed in Module 6: Lifecycle planning, and provide
inputs for financial and investment appraisal, discussed in Module 8: Investment appraisal and planning.

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REFERENCES

Swinney, P. and Thomas, E. March 2015. A Century of Cities: Urban Economic Change since 1911. Center for Cities. London.

Bischof-Niemz, T. 10 February 2015. Financial Costs and Benefits of Renewables in South Africa in 2014. CSIR. CSIR/02400/RD Core/
IR/2015/0001/B.

Paton, C. 29 July 2015. Revealed: Real Price of Nuclear Energy. Business Day. http://www.bdlive.co.za/business/energy/2015/07/29/
revealed-real-price-of-nuclear-energy.

Dabur, P, Singh, G and Yadav, NK. April 2012. Electricity Demand Side Management: Various Concepts and Prospects. International
Journal of Recent Technology and Engineering (IJRTE). ISSN: 2277-3878. Volume 1, Issue 1.

Dziegielewski, B. November 2003. Strategies for Managing Water Demand. Universities Council on Water Resources. Water Resources
Update, Issue 126, pp 29-39.

Davito, B., Tai, H. and Uhlaner, R. 2010. The Smart Grid and the Promise of Demand-Side Management. McKinsey.

Herbertson, P.W. and Tate, E.L. 2001. Tools for Water Use and Demand Management in South Africa. Technical Reports in Hydrology
and Water Resources No. 73. Secretariat of the World Meteorological Organisation. Geneva, Switzerland. WMO/TD – No. 1095.

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