By Bridgett Majola, Director: Banking and Finance and Head of Project Finance: Energy and Infrastructure at law firm CMS South Africa & Gavin Noeth, Senior Consultant at law firm CMS South Africa

On 4 December 1996, The Constitution of the Republic of South Africa was approved by the Constitutional Court before coming into effect in February 1997. Widely considered one of the most progressive and comprehensive in the world, it has influenced the constitutional development of several countries, particularly in Africa. Given the high regard in which the Constitution is held, it’s easy to forget how much violence and upheaval preceded its adoption. Throughout the early 1990s, the country teetered on the brink of a civil war. All the while, people who believed that there was a better way to collaborate debated, and hammered away at a document that would come to be the cornerstone of the country’s democracy.     

Today, the country finds itself at a similar inflexion point. This time, however, the battle isn’t how to enshrine citizens’ rights but ensuring that they have constant, affordable access to electricity. While it’s easy to be depressed by South Africa’s power woes (especially with load shedding already having hit record levels in 2023), there are many people working on solving the problem. 

From the people helping South Africans with rooftop solar panels to the companies building major renewable energy projects and those working to make homes, offices, and factories more efficient, all are contributing to a greener, more power-secure South Africa. Implemented correctly, all of these initiatives could see South Africa once again become a model for the world to follow. But in order for that to happen, the right legal framework needs to be in place. 

Fostering economic growth, saving lives 

Before digging into what that framework might look like, it’s worth reminding ourselves of exactly why South Africa’s energy transition is so important. 

To start with, it’s clear that load shedding has had a devastating impact on the economy. With the higher stages of scheduled blackouts costing the economy upwards of R1 billion a day and hundreds of businesses shutting down, it should hardly be surprising that the economy grew by a modest 0.4% in the first three months of 2023.        

But even if Eskom had consistently managed to keep the lights on over the past 15 years, there would still be a strong case for moving to new forms of energy. The utility is, after all, the world’s most polluting power company. In time, that could make it difficult for South Africa to receive investment, particularly from countries and investment funds with strict environmental criteria. And of course the country will still attract penalties due to the cross border carbon taxes many countries are introducing to tax goods and services produced with energy from fossil fuels, the dirtiest of which are to be taxed the highest, thereby reducing our competitiveness. That’s to say nothing of the almost 80 000 people some researchers estimate could die by 2025 as a result of breathing in the emissions from Eskom’s coal-fired power stations.   

It should be clear then that the current moves to broaden South Africa’s energy mix would always have been a necessity. The difference is that there’s now an unprecedented opportunity to accelerate that transition. But, in order for it to make a positive impact on the lives of most ordinary South Africans, a comprehensive legal framework is critical. 

Building the right framework 

Make no mistake, that framework really will be critical. Without it, there’s a risk of energy prices spiralling out of control (as has been the case in the UK and Europe since Russia’s invasion of Ukraine) and of skilled workers being added to the country’s already dire unemployment statistics. 

Such a framework should, therefore, work to ensure that electricity is affordable to all South Africans by ensuring that the electricity energy market remains competitive both for Eskom and private producers. Additionally, it should provide legal clarity on how to achieve a just transition, particularly when it comes to ensuring that workers in the traditional space aren’t left high and dry. 

Fortunately, South Africa has a good base to start from on that front. From a policy and regulatory perspective at least, the country’s independent power producers (IPP) programme with its economic development targets and criteria is widely recognised as being among the best in the world. If the same thought and application is given to a legal framework for the country’s energy transition, then the world could once again look to South Africa for models to be followed just as it did when the Constitution was first ratified. 

Broad cooperation needed 

If, on the other hand, businesses, organisations, state departments, and government officials only work towards their own ends, then the country will miss a golden opportunity. It’s critical, therefore, that they realise how significant this moment in time is and the continuing collaboration through the National Energy Crisis Committee (Necom), which was set up last year to tackle loadshedding is given the highest priority to achieve the best results. Given the environmental and energy contexts both locally and globally, we are at a point that could be just as significant as the signing of the Constitution. But if that’s to be the case, all role players need to recognise this moment and play active roles in building a framework that could prove an inspirational model for the rest of the world.