Research

Energy and Industrial Policy Failure in the South African Wind Renewable Energy Global Value Chain: The political economy dynamics driving a stuttering localisation process

In PRISM Working Paper, 2020

Abstract

This paper utilises a combination of a political economy approach and a GVC framework to analyse the dynamics of the wind energy value chain in South Africa. The paper focuses on the complex intertwined interplay between energy and industrial policy and shows how they negatively impacted on efforts to increase localisation of domestic manufacturing and services industries. It discusses the opportunities and constraints, success and failures of a localisation process contained arising from the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP). It finds that early modest industrialisation gains, linked to the local content requirements in the REIPPP auctions, notwithstanding the policy shortcomings, did have a notable localisation impact but fell short of the ambition in broader policy documents. Nonetheless, these signs of progress from foreign lead firms, large global 1st tier suppliers, and local firms, were substantially undermined, in some cases reversed, as a consequence of the political choices to suspend the renewable energy programme. It shows how political economy dynamics resulted in a failure to ensure continuity and predictability of the auction bidding process within REIPPPP, and how this cascaded down the wind energy value chain constraining the initial localisation processes. These dynamics also resulted in a failure of the South African government to prioritise, develop, and embed renewable energy within its industrial policy framework. As the economy emerges from the Covid-19 crisis this will pose political economy challenges as coalitions of South African stakeholders struggle over the task of breaking from a carbon intensive path dependency and inaugurating a new green industrialisation path.

Info

Working Paper, (pr)eprint, 2020

In PRISM Working Paper, 2020

UN SDG Classification
DK Main Research Area

    Science/Technology

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