Exploring the impact of institutional quality to South Africa’s transition to renewables

Abstract

Motivated by the need for transition toward cleaner and sustainable energy sources, this study delves into the relationship between institutional quality and South Africa’s renewable energy adoption. The objective is to examine how institutional factors influence the share of renewable energy in the country, recognizing that energy transition hinges not only on socioeconomic and technological determinants but also on political economy and institutional variables. This paper proxies institutional quality by the Corruption Perception Index (CPI), Regulatory Quality (REGQUAL), and Government Efficiency (GOV_EFF), on South Africa’s renewable energy share. We find that perceived institutional cleanliness, as measured by a higher CPI, positively affects the share of renewables. This can be attributed to the public’s growing association of corruption with government activities and fossil fuel-based electricity generation. Additionally, improved REGQUAL fosters a healthier energy market but paradoxically results in a lower share of renewable energy in the short term. While contributing to stability, government effectiveness can hinder renewables’ growth due to established industry interests and short-term priorities. The implications of these findings underscore the complex interplay of political and institutional dynamics in shaping South Africa’s energy landscape. This research highlights the need for integrated policies addressing environmental and socioeconomic objectives.