Green neoliberalism, or the state of renewable energy in southern Africa
This week we will be looking at the economics of sustainable energy in southern Africa. We’ll see papers on
The role that mobile payments could play to extend solar electricity to the (informal) masses in Kenya
The financial creativity involved in getting (foreign) funding to integrate renewables into the mining-heavy electricity sector of South Africa
The increasing activity of rising powers like Brazil, India and China in both the renewable and hydrocarbon sectors of South Africa and Mozambique
The interplay between energy companies, government institutions and international donors in carving out Kenya’s energy path into the future
All articles focus on the power dynamics that wind up determining what capacity is built and who benefits and who does not. This perspective puts them into a constructive dialogue with the “socio-technical transitions” literature, which represent a major chunk of the total literature on sustainable energy. Some pit themselves against its “managerial perspective” (Newell and Philips), but in the end, each creatively engages with this literature, confronted with geographical contexts far beyond the purview of its earliest proponents.
The Gouda Wind Farm just outside of the town of Gouda in the Western Cape, South Africa
Beyond technology and finance: pay-as-you-go sustainable energy access and theories of social change
“There is an implicit (and often explicit) assumption that solving […] two dimensions ([technology] and [finance]) of sustainable energy access is enough” (2610).
Rolffs, Ockwell and Byrne (all from Sussex) would like to convince you that this is not so. Obviously, finance and technology are important, but “you’re doing it wrong”, basically, if you’re not looking at these things from a sociocultural perspective. Case in point: pay as you go (PAYG) solutions for home solar technology in Kenya.
Previous attempts at selling solar to households suffered from three major problems: high interest rate, limited availability (mostly for the formally employed middle-classes), and poor technical after-sales services. A new wave of PAYG companies attempt to solve the first through variable payments and energy on demand, broadening the market to include the informal sector (problem number 2), and making energy their core businesses to address problem number 3. The authors then argue (as do the companies themselves, actually) that this might just work because this solution ‘fits’ very well with the ‘sociocultural’ environment – that is to say, with how people are already used to paying for stuff (intermittent acquisition of energy-on-demand as well as increasing use of mobile payments). (See p. 2616ff. for more details.)
If you are interested in how to support such new business models (“niches”), then check out their concluding remarks on pp. 2620ff., in which they explain how this niche could soon grow into the mainstream (based on Strategic Niche Management categories of analysis).
Rolffs, Paula, David Ockwell, and Rob Byrne. 2015. "Beyond technology and finance: pay-as-you-go sustainable energy access and theories of social change". Environment and Planning A: Economy and Space. 47 (12): 2609-2627. https://doi.org/10.1177%2F0308518X15615368
The evolving role of finance in South Africa's renewable energy sector
For more experimentation with financial techniques and models, but on a wholly different scale, we head on down to South Africa. Lucy Baker (Sussex, one more once) analyses the financialization of – or: “the expansion and proliferation of financial markets” in (147) – the energy sector there. By various measures, it is happening apace in South Africa (148): a quarter of the economy is financial services, but liberalization has also led to high capital flight, so… there’s that.
In tandem, the renewable energy sector has rapidly internationalized, especially with a new auction system for concessions to feed renewable MWs into the grid. A number of bidding rounds have taken place, and with each round, it has become more difficult for national companies to offer competitive bids.
This has produced a number of tensions and contradictions in the energy sector, which can be
found between the short term nature of capital gains (Crotty, 2003), demands for project ‘bankability’ and the maximisation of shareholder on the one hand and on the other, the unique and potentially progressive requirements for community ownership and economic development that in South Africa’s case are needed to legitimise a renewable energy project.
As regards these latter, “potentially progressive”, goals, she singles out rules to promote Black Economic Empowerment (BEE), such as mandatory (partial) community ownership of energy. While these rules look good on paper, in this complex financialized and globalized energy market, they have every way of being diluted in practice (154).
Baker L. 2015. "The evolving role of finance in South Africa's renewable energy sector". Geoforum. 64: 146-156. https://doi.org/10.1016/j.geoforum.2015.06.017
The political economy of energy transitions in Mozambique and South Africa: The role of the Rising Powers
More global involvement in Southern Africa’s energy sectors up ahead, but now with special attention to the “rising” powers of tomorrow’s multipolar world, such as Brazil, India, and China. How to understand how African countries are responding to them?
The key question for Marcus Power (Durham) et al. is how much power countries have to chart their own course, as global financial institutions and an increasing diversity of donors and investors are peddling their particular energy interests. We’ve seen a little of how South Africa is trying (and increasingly failing?) to walk the line between different financial and political imperatives. In Mozambique, we find cross-cutting interests and multiple (potential) ‘pathways’: Brazil eyes its mining and biofuel sites, the EU insist on grid extension, Chinese companies are on the lookout for growth abroad, all intersect with the clientelist mode of operation of the Frelimo government.
With this perplexingly complex landscape, the authors don’t quite manage to flesh out their “political economy” overhaul over the multi-level transitions perspective either. It fails to ‘congeal’, but if you care about their overall question…
how energy regimes serve to promote the interests of some actors and interests at the expense of others and whether and how global institutions can support transitions that are both lower carbon and socially just (18)
…then they still gather an interesting a set of questions for you on p. 13.
Power, Marcus, Peter Newell, Lucy Baker, Harriet Bulkeley, Joshua Kirshner, and Adrian Smith. 2016. "The political economy of energy transitions in Mozambique and South Africa: The role of the Rising Powers". Energy Research & Social Science. 17: 10-19. https://doi.org/10.1016/j.erss.2016.03.007
Neoliberal energy transitions in the South: Kenyan experiences
We return to Kenya to close off. Under international pressure and with its utter failure to electrify the country, Kenya has liberalized its energy sector, while falling short of wholly privatizing it (42). The mixed governance structures results in similar kind of tensions as the once signalled by Baker in South Africa.
While on the one hand:
resource endowment [the East African Rift! Endless plains!], technological developments and institutional reforms have allowed a consensus to emerge around the idea that some indigenous sources of renewable energy can serve national development, growth and energy security as productively as conventional energy sources. (41)
on the other, the financing instruments structuring such investments provide little incentive to build a public utility capable of addressing Kenya’s abysmal service rates:
there is little appetite among either donors or government for redistributive measures that would ensure adequate levels of secure electricity supply to meet basic living standards or productive uses (46).
Newell, Peter, and Jon Phillips. 2016. "Neoliberal energy transitions in the South: Kenyan experiences". Geoforum. 74: 39-48. https://doi.org/10.1016/j.geoforum.2016.05.009
So.
The preliminary conclusion from these articles is that ceding control over energy infrastructure (which has taken place to varying but overall significant degrees) makes a just transition complicated. In summary: the market’s not going to do it, because it will only go where the purchasing power is. The state won’t be able to do it, because they are set up to be arbiters and facilitators of private enterprise, nothing more.
As we already concluded in last week’s edition, “green capitalism” might not look the way you’d want it to.
This concludes the first month of me spamming your inbox! In the coming week, I will circulate a little questionnaire with some questions about how you’ve experienced these issues and if you have some suggestions about how to go forward. Thanks!!