Just Energy Transition should redistribute wealth and energy ownership

Lindiwe Johnson is a project manager, Employment Strategy and Economic Diversification at the Presidential Climate Commission. Photo: Supplied

Lindiwe Johnson is a project manager, Employment Strategy and Economic Diversification at the Presidential Climate Commission. Photo: Supplied

Published Nov 8, 2023


By Lindiwe Johnson

South Africa’s economy is characterised by concentration of wealth and income and high levels of energy and overall poverty. A core element of just transition in the post-apartheid context aims to address this concentration and ensure restorative and distributive justice.

As one way of progressing this ambition, the Just Transition Framework calls for affordable, decentralised, diversely owned renewable energy systems and for a broadening of ownership of productive assets in support of the just transition.

Ownership relating to energy could apply across the value chain: from the raw material (such as coal), the power plant, the transmission and distribution infrastructure, associated industries (like component manufacturing), and shares in the respective companies.

There are three main categories of ownership: state owned (national/municipal); privately owned; and socially owned. Within these broad models there are various combinations, and all ownership categories can apply from small, residential scale projects through to massive, utility scale operations.

One way of addressing this practically, it is suggested is by through social ownership in the just energy transition and ultimately a net-zero energy value chain. This follows calls over many years from social partners for including social ownership as means of ensuring energy security and access whilst building social capital.

The Presidential Climate Commission (PCC) has recently conducted a study on Social Ownership of Renewable Energy (SORE) exploring models of social ownership of renewable energy that will conform to the ‘just transition’ imperative.

The literature review summarises and analyses the experience of SORE globally and in South Africa. SORE is a response to the question about the appropriate organisation of society in a Just Transition and the relations between classes in South Africa.

Broadly unpacked, social ownership refer to a wide diversity of ownership models, including state ownership at different levels (for example, municipalities), employee ownership, co-operative ownership, citizen ownership of equity in private companies or vehicles, individual ownership, and collective ownership (and management) in a particular industry or service sector.

Social ownership therefore includes multiple options, including enhanced participation in private utility scale renewable energy, household use with or without grid feed in, community-owned use and feed-in, or worker and community ownership shares.

The model that should be chosen will depend on community identified problems and associated needs, be it local investment and jobs, income-generation, poverty alleviation, energy security, and participation in and management of assets.

The purpose of the study was to undertake an initial literature review and consultation regarding social ownership models for the energy transition, leading to the development of a work programme to develop viable models for diverse ownership of new electricity generation assets and increased community ownership in renewable energy.

In the review dissected by various local and international researchers the PCC has outlined experiences of social ownership models globally and domestically to understand the extent to which distributed, socially owned renewables can offer low-income households both access and revenue generating opportunities, if financial (e.g., affordability and access) can be addressed.

Within South Africa the review shared experience of local community and workers ownership models and the extent to which these have constituted viable projects for further rollout. In addition, community ownership as part of the Renewable Independent Power Producer Programme since 2011 is analysed, including the extent to which projects have delivered benefits through allocating shareholding to entities representing communities.

The just transition is based on the principle of procedural justice, which means that the views of those most affected by the transition need to be considered in planning processes.

Accordingly, this work on social ownership was developed in a consultative manner with social partners and support agencies needed the success of socially owned renewable energy models.

According to initial research commissioned by the PCC, the models outlined the measures required to develop alternate forms of ownership of energy generation assets with the potential to contribute to inclusive growth in new low-carbon sectors and bring benefits for vulnerable groups.

Amongst others, the report and suggested the diversity of ownership models for further exploration, including options for community participation in utility-scale renewable energy projects; options for household/cooperative/community ownership; and related options for small-scale enterprises.

The PCC as we bring this work into fruition for piloting and trial, we will continue to work with municipalities around guidelines on their participation in new models of generation, institutional planning to enable them to participate actively in public ownership.

Importantly, we will need to continue to understand the dynamics around financing modalities, institutional and other barriers, the scalability in differing social and geographic circumstances and innovation and learning in the development of new ownership models with the purpose of advancing inclusivity and benefits to vulnerable groups. But ultimately, we need a new way of equity in the just transitions common wealth.

Lindiwe Johnson is a project manager, Employment Strategy and Economic Diversification at the Presidential Climate Commission.