De-risking renewable energy investment towards a low carbon development pathway : the case of South Africa

Abstract

South Africa is a country that depends heavily on coal to produce energy. With the global outcry to address climate change challenges, a shift to renewable energy sources is critical. The change from large carbon footprint power sources (e.g., coal power stations) to renewable energy sources, comes with its own issues such as cost of production, energy transmission, barriers to entry, availability of power, power quality issues, resource location, information barrier, politics and intermittent nature of renewable energy options (Dey et al., 2022). The main dangers and obstacles to the growth of renewable energy are examined in this thesis. Focus was placed on de-risking elements that could be considered to encourage investment in renewable energy. Among these were financial, political, regulatory, and policy concerns are only a few of the hazards that have been highlighted. De-risking investments in renewable energy has been identified as one of the essential pillars for accelerating the adoption of renewable technology for many emerging nations. Using the De-risk Investment Framework and Financial Tool of 2013 from the United Nations Development Programme (United Nations Development Programme, 2015), this study examined the energy and policy landscape in South Africa. The study identified the financial risks and other barriers that discourage the deployment of renewable energy projects in Nkangala District of Mpumalanga, in South Africa. Furthermore, policy instruments that promote renewable energy investments in South Africa are evaluated. Finally, the study proposes sound and effective ways of de-risking renewable energy investment towards a low carbon development pathway in South Africa.