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Localisation barriers to trade: The case of South Africa’s renewable energy independent power program

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  • James Leigland
  • Anton Eberhard

Abstract

South Africa’s Renewable Energy Independent Power Projects Procurement Program (REIPPPP) has been hailed as one of the most successful programmes of its kind, contracting 92 renewable energy projects totalling 6 328 MW and US$20.5 billion since its inception in 2011. Despite this success, the programme’s use of non-price factors such as local jobs, local black ownership, local content, and local community ownership in bid evaluation has generated criticism and controversy. Lessons learned in other countries about how and when to use policies like import substitution to promote sustainable economic development seem not to have been fully incorporated by the REIPPPP. We therefore offer a cautionary note that dramatic and impressive localisation results are not inevitable – especially considering the size of the South African market and accompanying investment uncertainties – and that there is bound to be a trade-off between price and non-price factors in these kinds of competitive procurement programmes.

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  • James Leigland & Anton Eberhard, 2018. "Localisation barriers to trade: The case of South Africa’s renewable energy independent power program," Development Southern Africa, Taylor & Francis Journals, vol. 35(4), pages 569-588, July.
    • Handle: RePEc:taf:deveza:v:35:y:2018:i:4:p:569-588
    DOI: 10.1080/0376835X.2018.1487829
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    Cited by:

    1. Tracy Ledger, 2019. "Charity begins at home: The political economy of non-tariff barriers to trade in Southern Africa," WIDER Working Paper Series wp-2019-61, World Institute for Development Economic Research (UNU-WIDER).
    2. Lema, Rasmus & Bhamidipati, Padmasai Lakshmi & Gregersen, Cecilia & Hansen, Ulrich Elmer & Kirchherr, Julian, 2021. "China’s investments in renewable energy in Africa: Creating co-benefits or just cashing-in?," World Development, Elsevier, vol. 141(C).
    3. Hansen, U.E. & Nygaard, I. & Morris, M. & Robbins, G., 2020. "The effects of local content requirements in auction schemes for renewable energy in developing countries: A literature review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 127(C).

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