Column: Ensuring a just energy transition is complex

Column: Ensuring a just energy transition is complex

28 May 2023 - Imraan Valodia

Focusing on the dynamics in the electricity sector, Professor Imraan Valodia outlines the challenges South Africa is facing and what can be done.

An energy transition involves shifting away from coal-powered electricity generation, as well as the use of other fossil fuels such as oil and gas, which we rely on for transport and various industrial processes.

South Africa's electricity crisis is reaching its peak in the context of a warming climate, which necessitates urgent decarbonisation of the economy. We also face high levels of unemployment, inequality, and poverty. These challenges are all significant and require careful policy and action to ensure that in addressing the prior concerns, the latter are not exacerbated. At the Southern Centre for Inequality Studies(SCIS) we are researching these issues to recommend appropriate policy responses.

A just energy transition is required to balance the social and economic issues with the environmental imperative to decarbonise. Energy provisioning is fundamental to a successful economy, shaping it in many ways, and making an energy transition inherently political.

The role of the state is therefore important to navigate the transition. In line with most other countries, our energy system is largely centralised, with Eskom key to the generation, transmission, and distribution systems. From a generation perspective, the system is regionally concentrated in the Mpumalanga province, which is responsible for about 60% of total generation capacity.

Energy poverty

The problems in the energy system are, however, not restricted only to issues of generation and loadshedding. A just energy transition must also address energy poverty, which is a problem for many South Africans. Energy poverty is defined as a lack of access to or the inability to afford energy, and is calculated by assessing the proportion of household income spent on energy.

Although 84.7% of South Africans can access the national grid, there are many people who cannot afford electricity tariffs, which have increased dramatically over the past few years (Stats SA, 2019). Research in 2021 shows that the rate of energy poverty in South Africa was 58%, which has significant impacts on health and well-being, as well as limiting income generating activities.

Thus, addressing the crisis in all its complexity involves regulation that governs the generation, transmission, and distribution of electricity and other forms of energy, and how energy is priced and consumed by all South African businesses and households. The shifting regulatory system will have implications for access to electricity and the Free Basic Electricity framework may need to be revised to ensure comprehensive coverage for impoverished populations.

Equitable energy geography

There is also a complex set of spatial issues, since the shift to renewable energy means a decentralisation of generation from Mpumalanga, to the solar and wind energy hotspots in the country, specifically the Northern Cape and the Western Cape, which are more efficient for solar and wind generation.

Decentralisation of generation impacts the transmission of electricity via the national grid because the grid has been built to deliver electricity from Mpumalanga to the rest of the country. The grid is not easily able to deliver electricity in the opposite direction. This is the reason for the announcement in December 2022 that the Renewable Energy Independent Power Producer Procurement Programme Bid Window 6 was only able to proceed with six projects, despite many more being eligible.

The lower uptake of projects in Bid Window 6 is also due to the expansion of private generation on the grid, which has occurred since the lifting of the cap of 100MW in 2021, but the failure to plan for grid capacity upgrading now constrains the system. This type of failure in planning does not bode well for the energy transition. The privatisation of electricity generation requires an overhaul of policy and regulations to ensure that energy poverty is not exacerbated.

The coalface of job losses

The decarbonisation of the electricity sector will involve the decommissioning of coal power stations and will result in the loss of jobs and livelihoods associated with the coal value chain. Data from 2019 suggest that the number of people employed in the coal value chain is over 120 000. While the development of renewable energy power plants will create jobs, these jobs will be in different locations, require different skills, and will be largely in construction, which usually means temporary employment. While planning has started on supporting workers, too often informal workers, who are likely to be women, are not factored into these plans. Therefore, there is an urgent need for action to support those who will lose their livelihoods in the form of social services, economic diversification, and social protection.

More broadly, the energy transition could have the effect of fundamentally changing South Africa's industrial structure, with major implications for the nature of the country's mining and industrial sector. Our economy is currently based on the use of cheap, coal-based electricity in mining and downstream industries, such as the chemical and metal industry. As the global economy shifts to non-carbon energy, the demand for certain minerals, such as platinum, is likely to increase significantly. It is imperative that researchers and policy-makers start to understand what these changes are likely to be, and for our regulatory system to be adapted to ensure that the transition is indeed just. 

• Professor Imraan Valodia is Pro Vice-Chancellor: Climate, Sustainability and Inequality and Director of the Southern Centre for Inequality Studies (SCIS) at Wits. The SCIS is a multidisciplinary cross-country initiative for research and policy-change to promote greater equality in the Global South. A Professor of Economics, Valodia's research interests include inequality, climate justice, competition policy, employment, the informal economy, gender and economic policy, and industrial development. He is recognised nationally and internationally for his research expertise in economic development. Valodia is a member of the Presidential Economics Advisory Council and the Competition Tribunal.

• This article first appeared in Curiosity, a research magazine produced by Wits Communications and the Office of the Deputy Vice-Chancellor: Research and Innovation.
• Read more in the 15^th issue, themed: #Energy. We explore energy research into finding solutions for SA's energy crisis, illuminate energy needs of people with disabilities, address the energy and digital divide in an unequal society, and investigate the origins of fire control.

Public link

Please use the above public link if you want to share this noodl on another website.