Creating Incentives for Green Economic Growth: Green Energy in South Africa

The document examines South Africa's struggle to transition from a high-carbon, coal-based energy economy to a green economy. It analyzes the role of the state-owned utility Eskom, the impact of the Renewable Energy Independent Power Producer Procurement Programme (REIPPP), and various financial and regulatory incentives designed to attract private investment in renewables. The author argues that while policy signals are positive, a lack of inter-departmental coordination and the entrenched nature of the minerals-energy complex hinder the transition.

• South Africa's energy system is characterized by a heavy reliance on coal, which accounted for 72% of total primary energy consumption in 2012. This dependence has resulted in the country being one of the largest CO2 emitters per capita and per GDP globally.
• The state-owned power utility, Eskom, has historically maintained a monopoly backed by state ownership, which has made it slow to transition away from coal due to sunken costs in old technology.
• The Renewable Energy Independent Power Producer Procurement Programme (REIPPP) shifted South Africa from feed-in tariffs to a competitive bidding process. This program has been successful, approving 64 schemes—primarily solar and wind—with total costs exceeding ZAR 100 billion.
• The REIPPP includes stringent economic development requirements to ensure local benefit, such as minimum thresholds for black South African shareholding (12% for wind projects) and local content (25% threshold, 45% target).
• Financial incentives for green growth include the Green Energy Efficiency Fund (GEEF), a $47 million facility established by the Industrial Development Corporation (IDC) and the German Development Bank (KFW) for energy efficiency and small-scale renewables.
• Regulatory incentives such as Section 12B of the Income Tax Act allow businesses to use accelerated depreciation (at a rate of 50:30:20) for investments in renewable energy and biofuel production to improve cash flow.
• The Northern Cape Province has emerged as a hub for solar energy, hosting the first three concentrated solar power (CSP) plants and a proposed 5,000 MW solar park. Efforts are underway to develop Upington as a special economic zone (SEZ) to support local manufacturing.
• Despite policy commitments, the transition is hindered by a lack of coordination between government departments (DoE, DEA, dti, and National Treasury) and delays in environmental impact assessments, which can take up to 18 months.
• South Africa is considering shale gas fracking in the Karoo region as a 'bridging' fuel to replace coal, though this is contested by activists due to health and environmental concerns.

APA

Wentworth, L. (2014). Creating Incentives for Green Economic Growth: Green Energy in South Africa. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2014/07/Occasional-Paper-193.pdf

Chicago

Wentworth, Lesley. Creating Incentives for Green Economic Growth: Green Energy in South Africa. South African Institute of International Affairs, 2014. https://saiia.org.za/wp-content/uploads/2014/07/Occasional-Paper-193.pdf.

Wikipedia

{{cite report |last1=Wentworth |first1=Lesley |title=Creating Incentives for Green Economic Growth: Green Energy in South Africa |publisher=South African Institute of International Affairs |date=June 2014 |url=https://saiia.org.za/wp-content/uploads/2014/07/Occasional-Paper-193.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{wentworth2014creating, author = {Wentworth, Lesley}, title = {{Creating Incentives for Green Economic Growth: Green Energy in South Africa}}, institution = {South African Institute of International Affairs}, year = {2014}, month = jun, url = {https://saiia.org.za/wp-content/uploads/2014/07/Occasional-Paper-193.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }