© 2008 International Institute for Sustainable
Development (IISD)
Published by the International Institute for
Sustainable Development
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Suryapratim Roy
Tsidiso Disenyana
Sheila Kiratu
June 2010
This paper is a product of IISD’s
“Bali to Copenhagen” Trade
and Climate Change Project.
Clean Energy Investment
in Developing Countries:
Domestic barriers and opportunities in South Africa
Clean Energy Investment in Developing Countries: Domestic barriers and opportunities in South Africa
i
© 2009 International Institute for Sustainable
Development (IISD)
Published by the International Institute for
Sustainable Development
IISD contributes to sustainable development by
advancing policy recommendations on international
trade and investment, economic policy, climate
change and energy, measurement and assessment,
and natural resources management, and the enabling
role of communication technologies in these areas.
We report on international negotiations and
disseminate knowledge gained through collaborative
projects, resulting in more rigorous research,
capacity building in developing countries, better
networks spanning the North and the South, and
better global connections among researchers,
practitioners, citizens and policy-makers.
IISD‘s vision is better living for all—sustainably; its
mission is to champion innovation, enabling
societies to live sustainably. IISD is registered as a
charitable organization in Canada and has 501(c)(3)
status in the United States. IISD receives core
operating support from the Government of Canada,
provided through the Canadian International
Development Agency (CIDA), the International
Development Research Centre (IDRC) and
Environment Canada; and from the Province of
Manitoba. The Institute receives project funding
from numerous governments inside and outside
Canada, United Nations agencies, foundations and
the private sector.
International Institute for Sustainable Development
161 Portage Avenue East, 6th Floor
Winnipeg, Manitoba
Canada R3B 0Y4
Tel: +1 (204) 958–7700
Fax: +1 (204) 958–7710
E-mail: [email protected]
Web site: http://www.iisd.org/
Clean Energy Investment
in Developing Countries:
Domestic barriers and
opportunities in South
Africa
Suryapratim Roy
Tsidiso Disenyana
Sheila Kiratu
June 2010
IISD‘s Bali to Copenhagen project carries
out research, analysis and networking on
trade and climate change in six thematic
areas: border carbon adjustment;
liberalization of trade in low-carbon goods
and services; investment; intellectual
property rights and technology transfer;
subsidies for greenhouse gas reductions; and
fossil fuel subsidies. For more on IISD‘s
work on trade and climate change see
www.iisd.org/trade/crosscutting, or contact
Aaron Cosbey at [email protected]
We gratefully acknowledge the generous
support of the governments of Denmark,
Finland, Norway and Sweden.
http://www.iisd.org/trade/crosscutting
mailto:[email protected]
Clean Energy Investment in Developing Countries: Domestic barriers and opportunities in South Africa
ii
Table of Contents
1. Background ..................................................................................................................................................... 1
2. Country Background ...................................................................................................................................... 3
2.1 Trends in energy supply and demand .................................................................................................................................... 3
2.2 A brief background on clean energy in South Africa .......................................................................................................... 5
2.3 Energy policy ............................................................................................................................................................................ 11
2.3.1 White Paper on Renewable Energy, 2003 ............................................................................................................... 13
2.3.2 The National Energy Act, 2008 ............................................................................................................................ 16
2.3.3 The Independent Power Purchaser Regulations, 2009 .............................................................................................. 18
2.3.4 The role of provincial and local governments ............................................................................................................. 19
2.3 Investment trends .................................................................................................................................................................... 23
2.3.1 Global trends: An overview ..................................................................................................................................... 23
2.3.2 South African trends ............................................................................................................................................... 25
2.4 Environmental regulation ...................................................................................................................................................... 28
2.4.1 Relevant environmental legislation ............................................................................................................................ 28
2.4.2 Long Term GHG Mitigation Scenario Building Process ......................................................................................... 30
3. Obstacles to Clean Energy Investment ..................................................................................................... 33
3.1 South Africa‘s investment climate ........................................................................................................................................ 34
3.2 Barriers to clean energy investment ..................................................................................................................................... 36
4. Incentives for Clean Energy Investment .................................................................................................. 40
4.1 Feed-in tariff ............................................................................................................................................................................. 40
4.2 Tradable Renewable Energy Certificates ............................................................................................................................. 46
4.3 The Technology Transfer Guarantee Fund ........................................................................................................................ 48
4.4 Subsidies .................................................................................................................................................................................... 49
4.4.1 REFSO: One-time capital grant ............................................................................................................................. 49
4.5 Other incentives ....................................................................................................................................................................... 49
4.5.1 Taxes ...................................................................................................................................................................... 49
4.5.2 Solar Water Heating Programme ............
