External publications

The politics of South African renewable energy support

Pegels, Anna
External Publications (2014)

in: Anna Pegels, Green industrial policy in emerging countries, London: Routledge, 126-147

ISBN: 978-0-415-87067-2
Information

In her chapter ‘The politics of South African renewable energy support’ Anna Pegels analyses the measures taken by the South African government since 2009 to deploy renewable energies in the country. The South African energy regulator introduced fixed renewable energy feed-in tariff (FIT) rates in 2009. However, considering the rates to be too high, other government agencies opposed the scheme. The rates were indeed quite attractive and, in combination with the plummeting cost of solar PV equipment in particular, would have led to considerable rents for renewable energy project developers. However, a two-year implementation stalemate ended when the fixed FIT rates were replaced with a competitive bidding procedure. While this procedure has been lauded for its professionalism, considerable uncertainty arose during the conversion phase, and a more systematic approach to policy-learning would have been desirable. However, the newly introduced bidding system seems to be very successful in curbing excessive profits. Compared to the initial FIT, tariff rates have fallen sharply, which has also helped to take the edge off the opposition from South Africa’s energy-intensive and powerful industry. It has, moreover, limited the need to raise electricity prices to consumers, who have already faced several price hikes in recent years. There is little willingness to pay for renewable energy deployment, since such issues as poverty reduction, job creation and infrastructure provision clearly take precedence over environmental protection in South African voters’ preferences. A competitive process for renewable energy support, recognized as likely to prevent excessive profits, is more acceptable under these conditions than a feed-in tariff without competitive determination of support rates. The additional combination of the support scheme and local content requirements (LCRs) in South Africa underlines the job creation potential and helps to make the scheme politically acceptable.