Energy Transition in South Africa using a linked energy-economic model

Abstract

In this paper an improved energy-economic model is used to analyse the transition away from coal and toward renewable energy in South Africa. The model enhancements presented in this paper allow for a more accurate assessment of changing coal costs on potential energy and emissions pathways for South Africa. The better representation of the coal sector provides insights on the timing and magnitude of coal mine and power plant retirements, which are a crucial part of information in developing policies required to ameliorate any negative impacts resulting from the energy transition.These negative impacts currently form a social obstacle to change in energy policy. To illustrate the model advances two potential power generation pathways for South Africa are compared: a least-cost energy mix which does not include new coal power plants; and one where renewable capacity in the power sector is constrained, resulting in ~25GW new coal-fired power plant capacity. A comparison of these scenarios shows that, with rising coal costs and lower coal export demand, persisting with coal-based power generation does not “save jobs” in South Africa at the aggregate level, as higher powerinvestment is required in the constrained scenario. This, combined with the higher electricity price experienced in the constrained scenario, negatively affects the rest of the economy, offsetting any positive gains from continued coal-based power generation.