This report summarizes SouthAfrica's energy challenges, efforts to establish alow-carbon energy strategy through the Power ConservationProgram; and several World Bank backed initiatives to helpthe country save energy, reduce greenhouse gas emissions,and help South Africa cope with a power crunch. The PowerConservation Program has proved its effectiveness. Theeconomic benefits of the program include the reduced needfor dispatching expensive, oil-fired power plants. Thenational electric utility, Eskom, has maintained the PowerConservation Program as an option that can be expandedbeyond the large industrial customer base, if further powershortages arise due to an imbalance between electricitysupply and demand. The system is well understood amongEskom's staff, integrated into business processes, andit can be adjusted to accommodate a larger customer base, ifnecessary. It is an excellent hedging mechanism that canhelp Eskom to manage power system reliability if the reservemargins deteriorate in the future.