South Africa relies heavily on energy from coal-fired power plants, which emit large amounts of carbon. However, the transition to greater use of renewable energy such as solar energy is hampered by a number of factors. The main one is corruption, which affects the quality of institutions.
In a recent paper, I described how perceptions of corruption in national institutions have had a major impact on the country's transition to clean energy. This is particularly true for energy-related institutions such as the national power company Eskom.
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My findings were based on an econometric model that I developed based on economic theory. The report highlighted how perceptions of corruption and the effectiveness of government institutions have influenced attitudes toward the country's energy transition efforts.
Read: Corruption in SA hits record low – Transparency International
Econometrics combines statistics, mathematical models, and economic theory to understand and model economic problems. Clarify the relationships and impacts of various economic factors.
The model showed that when trust in institutions increases, people, policy makers, and businesses are more likely to adopt renewable energy practices.
The study also found that the quality of the regulatory framework and government effectiveness shape people's views. This influenced decisions regarding the addition of renewable energy to the supply mix.
These findings are important as South Africa's energy transition faces many challenges. These range from technical and financial challenges to broader political, socio-economic and institutional hurdles. The key to a successful energy transition is policy alignment with environmental and social needs. Improving the quality of institutions, putting in place anti-corruption procedures and establishing clear rules are essential.
Energy mix and vision
South Africa's energy situation has changed significantly since the mid-1990s. Coal then accounted for 73% to 76% of the primary energy mix. Oil accounted for 21% to 22%.
By 2022, the share of coal has fallen to nearly 69%. The share of renewable energy sources increased to approximately 2.3%.
Our research supports other studies showing that 2008 was a turning point for the South African economy, particularly the energy sector. Factors involved include:
- global financial crisis.
- changes in government policy, including monetary policy;
- Domestic and Eskom leadership changes.
- Power outages and rising electricity prices.and
- economic downturn.
Institutions and economic impact
This study was designed to understand the impact of national policy, government efficiency, and past dependence on fossil fuels. We built a model based on historical data on energy mix and governance scores.
The analysis focused on the share of renewable energy in South Africa's total final energy consumption. I used this as a proxy for the nation's transition to clean energy.
Organizational quality is a complex concept. Therefore, in our modeling exercise, we used his three global governance indicators to represent organizational quality:
- Corruption Perception Index.
- Regulatory quality – the perception of a government's ability to enact regulations that support private sector development.and
- Government effectiveness – perceptions of the quality and reliability of public services.
The first model confirmed a positive relationship between perceptions of corruption-free organizations and renewable energy deployment. The highest governance score produces more renewable energy.
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The second model showed that transparent and effective regulation potentially hinders the adoption of cleaner alternatives. This can be explained by the fact that regulatory decisions have largely supported the country's dependence on fossil fuels for energy. Energy markets, especially electricity markets, are getting better thanks to smarter, open and high-quality rules. As a result, there is less desire to switch to greener, renewable options.
Read: Residential and business solar installations doubled to 5GW last year
Finally, the third model showed a negative relationship between government efficiency gains and the share of renewable energy. There is typically a close relationship between stable governments and the traditional energy sector. This can influence policy choices. If these long-established companies, like the fossil fuel sector, oppose reforms that jeopardize their interests, the promotion of renewable energy sources could be negatively affected.
We also found that the share of renewable energy changed slowly. This could be due to slow procurement processes, as well as possible lobbying and corruption.
next step
South Africa has a new Integrated Resources Plan 2023, which proposes a short-term (2023-2030) plan that combines gas, solar, wind and battery storage.
But to accelerate the adoption of cleaner energy, South Africa needs to take urgent steps to fight corruption and improve trust in the country's institutions.
read:
Nersa registers 908MW of new renewable power generation capacity [Dec 2023]
DMRE begins bidding process for approximately 8000MW from IPPs [Dec 2023]
Draft IRP 2024 “admits failure” [Jan 2024]
Policymakers should first focus on regulatory changes. Efficient procurement procedures and honest practices accelerate the transition to renewable energy. What is needed is streamlined procurement, increased transparency and increased competition.
Lula Inglesi-Lotz Professor of Economics; University of Pretoria
This article is republished from The Conversation under a Creative Commons license. Read the original article.