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With South Africa’s history of dependence and insistence on use of coal-fired power – despite overwhelming evidence of the harmful impact to the environment – and the problems its main energy supplier and chief environmental culprit Eskom has struggled with in the last decade, it would seem logical that the country makes a determined effort to generate larger proportions of its energy from renewable sources.
However, this is not the case, and one of the reasons is corruption.
Stellenbosch University’s Centre for Renewable and Sustainable Energy Studies reports that most of South Africa’s electrical energy in 2023/24 was generated from coal (78.5% of total system demand), with renewable energy providing a scant 8.8%. The South African system was unable to provide 4.4% of the electricity demand (i.e., mainly load shedding). This data is current up to the end of 2024 Q2.
Furthermore, annual electricity production from coal as a percentage of total production continued to decrease in 2023, with a corresponding increase in unserved energy – the amount of customer demand that cannot be supplied owing to a shortage of generation or other factors. This is a situation that South Africans are all too familiar with.
A recent study by economics professor Roula Inglesi-Lotz of Pretoria University delves into the relationship between corruption and the rate of transition to renewables, finding that there is a clear link.
“Making the transition to greater use of renewable energies, such as solar, is being hampered by a number of factors,” says Inglesi-Lotz in her research paper titled Exploring the impact of institutional quality to South Africa’s transition to renewables. “Chief among them is corruption, which is affecting the quality of institutions.”
Institutional quality significantly influences South Africa’s transition to renewable energy and the inescapable conclusion is that improving governance, reducing corruption, and enhancing regulatory frameworks are crucial for advancing the country’s renewable energy goals.
South Africa’s new Integrated Resource Plan 2023 (2023-2030) proposes a combination of gas, solar, wind and battery storage – but to boost the adoption of cleaner energy, the country must take urgent action to fight corruption and improve confidence in the country’s institutions.
“Policymakers should focus first on making regulatory changes. Efficient procurement procedures and honest practices would speed up the shift to renewables. What’s needed are streamlined procurement, greater transparency and more competition.”
Findings and challenges
The study uses three different tools as proxies for institutional quality:
- Corruption Perception Index (CPI)
- Regulatory Quality
- Government Effectiveness
“Perceived institutional cleanliness, as measured by a higher CPI, positively affects the share of renewables,” Inglesi-Lotz writes. “This can be attributed to the public’s growing association of corruption with government activities and fossil fuel-based electricity generation.”
In other words, disgruntled residents hold the Eskom situation in their minds as a symbol of the wider corruption problem within government, one that is exacerbated by the ongoing state capture debacle and the never-ending discussion on corruption within Eskom. “[They] associate any corruption in the country with government activities and, by association, with fossil fuels (and nuclear) generation of electricity (as this was the traditionally chosen fuel in the past).”
Cleaner energy would symbolise cleaner institutions, the study notes. “Eliminating corruption would reduce the negative effects of lobbying in the energy sector (fossil fuels established the status quo) and improve the strength of regulatory powers and market dynamics. Better control of corruption may also enhance the attractability of the South African energy sector to local and international investors as the returns would not be interfered with by corrupt practices.”
In terms of improved regulatory quality, writes Inglesi-Lotz, this fosters a healthier energy market but paradoxically results in a lower share of renewable energy in the short term, possibly because better regulation results in better performing energy, simultaneously reducing incentives for renewables and lowering the willingness to substitute with cleaner, renewable alternatives.
This negative relationship between regulatory quality and renewable energy share in the short term indicates that South Africa may face challenges in balancing immediate energy needs with long-term sustainability goals. Accordingly, policymakers must consider how to improve overall energy market conditions while still incentivising renewable energy growth.
“By encouraging openness, predictability, and accountability, improved regulatory processes have the potential to boost South Africa’s electrical and energy industry, ultimately leading to improvements in resource allocation, market operations, and the assessment of return on investments. Such laws can encourage private sector investment, enhance market performance, and facilitate the integration of renewable energies, all of which will increase the industry’s overall sustainability and efficiency.”
Lastly, government effectiveness, while it contributes to stability, can hinder the growth of renewables because it may sometimes prioritise established industry interests, short-term economic priorities, and energy security over the development of long-term sustainable energy sources.
“The promotion of renewable energy sources may be hampered if these established companies, like the fossil fuel industry, fight reforms that threaten their interests,” the study notes. “This calls for a re-evaluation of how government effectiveness is defined and measured in the context of energy transition.”
Charting a way forward
Although South Africa relies heavily on coal, a reliance shaped by the country’s abundant coal reserves and established policies, this reliance results in severe air pollution, significant greenhouse gas emissions, and negative health impacts. These problems are coupled with high unemployment and social inequality, making the energy transition a complex challenge as it must encompass both socioeconomic imperatives and environmental goals.
“South Africa is at a tipping point where cleaner energy demand meets the opportunity for economic growth and social equality.”
Furthermore, writes Inglesi-Lotz, the study’s findings underscore the complex interplay of political and institutional dynamics in shaping South Africa’s energy landscape, and highlight the need for integrated policies addressing environmental and socioeconomic objectives. “This complexity requires nuanced, multifaceted policy approaches that consider various stakeholder interests and long-term sustainability goals.”
But there is also a real chance to implement meaningful reform. “The research provides a basis for policymakers to reassess and potentially reform institutional structures, regulatory frameworks, and governance practices to better support renewable energy adoption and sustainable development.”
The study concludes with the following recommendations:
- Improve institutional quality by implementing openness, anti-corruption measures, and the rule of law.
- Prioritise stable renewable energy policies such as feed-in tariffs, tax breaks, and regulatory frameworks.
- Investigate the importance of public-private collaboration and policy alignment with climate goals.
- Investigate how institutions’ and policymakers’ capacity-building measures affect their ability to implement sustainable energy policies.
- Investigate the social and economic consequences of energy transition policies to ensure a just and equitable transition.
