Power Crisis as an Impetus of the Green Transition: an Empirical Study on South Africa’s Mining Industry

Abstract

South Africa presents a unique case study for green energy transitions on a macroeconomic scale. The world has financially rallied behind the South Africa to support its move away from coal, which is historically the backbone and cornerstone of their financial, social, and political economy. This paper evaluates the economic impact of rapidly diminishing electricity access on renewable uptake through an empirical study on South Africa’s mining industry. Given bureaucratic restrictions, bottlenecks, and pervasive corruption, prospects of un-bundling the state-owned utility monopoly, Eskom, are highly unlikely. For independent power producers, such as mining companies part of the South African Minerals Council, this presents a unique opportunity for self-generation specifically in the renewable energy sector. Bolstered by foreign investment and international agreements to achieve carbon neutrality, South Africa is gathering global attention as a prospective playground for the future of green energy infrastructure. This paper adds a unique perspective to the current literature on South African energy economics by demonstrating a positive and feasible impact of alternative energy sources using econometric techniques to incorporate energy supply shocks into total factor productivity modelling and cost-benefit analyses. The models I construct can be used to evaluate various macroeconomic trends in the energy-economics context.