There is a profound shift under way in global energy markets driven by rapid technological development, which has seen prices of solar, wind and storage technologies fall dramatically over the past decade. Onshore wind prices have fallen by 68%, solar PV 88% and batteries 90%.
The push towards low-carbon and renewable energy was initially driven by the need to cut carbon emissions, but as systems have scaled up and the technologies have become mature, renewables and associated storage technologies are becoming the energy source of choice for economic and energy security reasons.
The International Energy Agency (IEA) has reported that investment in clean energy and associated grid services is now 1.6 times that of fossil fuel investment and that by 2030 (that is, in six years) 80% of new generation capacity will be renewable energy. This surge underscores the broader trend: the energy transition is an economic opportunity that is triggering a profound shift in the way our societies generate, distribute and consume power.
The technological innovations driving this shift are facilitating a move away from centralised, state-run monopolies towards more decentralised, competitive and flexible market structures. Barriers to entry for new market participants are far lower.
The decentralised nature of renewable technologies allows a diverse range of participants, from households to small businesses and large corporations, to engage in energy production.
This is a significant departure from traditional energy systems, where entry barriers are high and the market has been dominated by large vertically integrated state corporations. While private ownership has been instrumental in driving the initial phases of the renewable energy boom — mobilising capital, fostering innovation and driving down costs — we should be careful about making it the only option.
Despite their advantages, private ownership models prioritise profitability over public goods and tend to underemphasise societal benefits such as job creation, community development and equitable access to energy, leading to market gaps and even failures. A more diverse set of ownership models is essential as we want to maximise the benefits of this transition.
The transition to renewable energy offers an unprecedented opportunity to reshape not only our energy systems but also our economic structures and social fabric
The global experience with social ownership models in renewable energy offers valuable lessons and insights into their potential benefits. In various parts of Europe such as Denmark, Germany and Scotland, citizen-owned wind farms have not only contributed significantly to the region’s renewable energy capacity but have also kept profits within local communities, fostering local economic development and social cohesion.
There are many successful developing country examples as well. In Brazil, community wind projects in the state of Ceará serve as a model for community participation in renewable energy ventures. These projects are partly owned and managed by local communities, which ensures that a portion of the revenue from power production is used for local development initiatives, thus directly benefiting the communities involved.
More than 4-million solar home systems have been installed in Bangladesh through a programme facilitated by the Infrastructure Development Company. This programme involves various NGOs and local companies that sell solar systems to households, often through microfinance schemes. This model has not only increased energy access but also empowered local communities economically and socially.
While primarily commercially owned, Kenya’s Lake Turkana Wind Power Project has significant community engagement and investment aspects. It provides a share of its revenue to the local community trust, which funds education, health and infrastructure projects, thereby ensuring the community benefits from the project's success.
In SA, the Renewable Energy Independent Power Producer (IPP) Procurement Programme has played an important role in integrating community ownership into the renewable sector.
The programme has been criticised because of its limited scope, the lack of control by minority shareholders, and the long time periods before benefits accrue to communities. Nevertheless, the initiative has illustrated the potential of renewable energy to include social considerations and deliver local benefits, and has built up a track record of experience by communities in collaborating on renewable energy projects.
On a more ambitious scale, fully community owned projects such as the one in Kwazakhele, Gqeberha, have not only improved local energy security but have spurred economic activity and job creation within the community, offering a replicable model for community-owned energy initiatives.
The recent study and recommendations from the presidential climate commission (PCC) have emphasised the importance of expanding social ownership models within the renewable energy sector. By advocating for a mix of community-owned projects, worker ownership models, co-operatives and municipal partnerships, the PCC aims to ensure that the transition to renewable energy is inclusive and beneficial for all segments of society. These models promise to distribute the economic benefits of renewable energy more equitably, ensuring local control over energy resources and fostering economic resilience at the community level.
However, realising the full potential of these social ownership models requires targeted interventions and supportive policy frameworks. This includes creating conducive environments for community and worker participation in renewable projects, establishing financial models that facilitate investment, and providing incentives and access to finance for diverse ownership structures. Capacity building and education are also vital to equip communities with the necessary skills to engage effectively in the renewable energy sector.
The expansion of the renewable market, fuelled by technological advances and the growing push to cut emissions, presents a unique chance to democratise energy production
Local authorities have important roles to play in supporting local ownership models. They now have the ability to purchase electricity from IPPs, and can implement measures such as feed-in tariffs and net-metering that allow households and businesses to sell spare electricity back on to the municipal grid. Municipalities also have an array of local planning, housing and infrastructure functions that can be used to support local renewable energy projects, including worker and community owned projects.
As renewable energy continues to grow, both globally and within SA, the importance of diversifying ownership models becomes increasingly clear. By doing so we can ensure that the benefits of this expansion — reduced carbon emissions, affordable and accessible electricity, increased energy security, and economic growth — are shared equitably, contributing to a just and sustainable energy future for all.
The transition to renewable energy offers an unprecedented opportunity to reshape not only our energy systems but also our economic structures and social fabric. The expansion of the renewable market, fuelled by technological advances and the growing push to cut emissions, presents a unique chance to democratise energy production.
The experience of countries around the world, alongside initiatives such as SA’s Renewable Energy IPP Procurement Programme and the PCC’s recent recommendations, highlights the path forward — one that embraces a diversity of ownership models to ensure the renewable energy boom benefits everyone.
In doing so, we can harness the full potential of renewable energy to create a more sustainable, equitable and prosperous world.
• Olver is executive director of the PCC.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.