Client
Expertise
Venture acceleration
Impact
Helping cities make market-informed decisions to support South Africa’s energy transition.
Challenge
How can cities support South Africa’s green energy transition?
South Africa's energy supply is largely dependent on coal, making the country one of the highest emitters in Africa. This presents an urgent need for the country to transition to cleaner energy to reduce emissions and drive economic growth.
South Africa also experiences challenges relating to unreliable energy systems and an ongoing energy crisis. Consequently, businesses and communities alike are impacted by load-shedding, where the utility implements rolling blackouts which can last up to eight hours in a day, affecting day-to-day living. These challenges have seen a few businesses shifting to renewable energy to secure a clean and reliable energy supply.
Where there is a challenge there is opportunity: two South African cities identified the increased shift to renewable energy and sought to explore the option of selling green electricity to the market. Doing so, they hoped to retain customers and support the country's green energy transition, further reducing reliance on the national grid.
Solution
Assessing local market interest in clean energy
Before municipalities develop a plan to sell green electricity to the market, they first need to understand the current appetite among customers to purchase green electricity. To get an understanding of the current markets for the two cities, we undertook a market research study. We:
Conducted research on the current energy landscape, and existing mechanisms to get green electricity in South Africa. We also shared learnings from international cities, which have implemented a similar mechanism and offer green electricity.
Surveyed customers. The survey captured the market potential and identified the typical customer profiles that may switch, or have already switched, to green electricity.
Discovered any market concerns among potential customers. Customers, for example, want to understand the traceability of green electricity. Therefore, being transparent about where green electricity is being sourced from is important.
Impact
A foundation for an actionable green energy implementation plan
Our analysis of the responses shows that there is a market demand in purchasing green electricity from cities. These findings can boost the cities’ aspirations of developing a product that is designed through informed data and further guide them into key actions that need to be considered for implementation. With these findings, the two cities can:
Design a market-informed product using the findings on customer drivers and needs. This will save cost and time in the long run.
Establish clear insights upon which next steps can be built. For example, the findings showed that customers would not want to pay a premium, meaning municipalities need to develop a cost-effective solution to meet this need.
Define a unique selling point for a green product – such as a green tariff, which has potential to be a well-designed product in comparison to other competitor options. This alongside the evident appetite among locals will allow for easier uptake and inspire other municipalities to follow.
This has been an opportunity for cities to have confirmation of their pursuits to provide clean energy. Our research will also help them with market-informed data that provides a clearer understanding of potential customer profiles and the current energy landscape in South Africa:
Over two thirds of respondents said they would be very interested in a green energy tariff, demonstrating a clear market appetite.
Based on responses, locals could purchase just over 75% of their annual consumption from green electricity provided it is sold at an affordable rate.
The Carbon Trust’s expertise and work allowed our two cities to have a full view of the market demands and perspective for green tariff implementation. The work that the team conducted has provided the cities with an important step in widening their renewable energy offerings to customers. At C40, we appreciated the technical expertise the Carbon Trust brought, as well as its wide network in the private sector, which allowed for robust engagement.
