Clean Energy Investment in Developing Countries: Domestic barriers and opportunities in South Africa

The document examines the barriers to clean energy investment in South Africa, highlighting the dominant role of the state-owned utility Eskom and a heavy reliance on coal. It analyzes the national policy framework, including the 2003 White Paper on Renewable Energy and the 2008 National Energy Act, while evaluating incentives such as the Renewable Energy Feed-in Tariff (REFIT) and Tradable Renewable Energy Certificates (TRECs). The report concludes that while macroeconomic stability is favorable, institutional barriers and a lack of political will are the primary hurdles to scaling renewable energy.

• South Africa's energy sector is characterized by a heavy dependency on coal, which accounted for 90 per cent of electricity generation in 2006, leading to a high carbon dioxide intensity of 0.18 metric tonnes per thousand USD of GDP in 2006.
• The electricity market is dominated by Eskom, a state-owned enterprise that acts as the primary generator, sole transmitter, and a major distributor, creating a monopolistic environment that hinders the entry of independent power producers (IPPs).
• The 2003 White Paper on Renewable Energy set a target of providing 10,000 GWh of electricity from renewable resources by 2013, representing approximately 4 per cent of projected energy consumption.
• Key barriers to clean energy investment include anticompetitive practices, inflation rates, a lack of skilled labor, and the high cost of operations and maintenance for renewable projects.
• The National Energy Regulator of South Africa (NERSA) developed a Renewable Energy Feed-in Tariff (REFIT) to guarantee prices for electricity supply, though it has faced criticism regarding its contractual structure and the appropriation of carbon revenue.
• Provincial and local governments, such as the Western Cape Province and eThekwini Municipality, have often been more progressive in implementing clean energy projects than the national government, though they are constrained by the Municipal Finance Management Act of 2003.
• South Africa's financing for renewable energy deviates from global trends by relying more on government and international funding rather than private capital, with the Clean Development Mechanism (CDM) providing between 10 and 20 per cent of project financing.
• The Long Term Green House Gases Mitigation Scenario Building Process (LTMS) identifies a 'Use the Market' strategy, which proposes a CO2 tax to incentivize renewables and a target of 118 GW from renewable sources by 2040.

APA

Roy, S., Disenyana, T., & Kiratu, S. (2010). Clean Energy Investment in Developing Countries: Domestic barriers and opportunities in South Africa. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/bali_2_copenhagen_rsacase.pdf

Chicago

Roy, Suryapratim, Tsidiso Disenyana, and Sheila Kiratu. Clean Energy Investment in Developing Countries: Domestic barriers and opportunities in South Africa. International Institute for Sustainable Development, 2010. https://www.iisd.org/system/files/publications/bali_2_copenhagen_rsacase.pdf.

Wikipedia

{{cite report |last1=Roy |first1=Suryapratim |last2=Disenyana |first2=Tsidiso |last3=Kiratu |first3=Sheila |title=Clean Energy Investment in Developing Countries: Domestic barriers and opportunities in South Africa |publisher=International Institute for Sustainable Development |date=June 2010 |url=https://www.iisd.org/system/files/publications/bali_2_copenhagen_rsacase.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{roy2010clean, author = {Roy, Suryapratim and Disenyana, Tsidiso and Kiratu, Sheila}, title = {{Clean Energy Investment in Developing Countries: Domestic barriers and opportunities in South Africa}}, institution = {International Institute for Sustainable Development}, year = {2010}, month = jun, url = {https://www.iisd.org/system/files/publications/bali_2_copenhagen_rsacase.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }