Impact of Government Subsidies on Renewable Energy Adoption in South Africa

Abstract

Purpose: The aim of the study was to assess the impact of government subsidies on renewable energy adoption in South Africa.

Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries.

Findings: The study indicated that subsidies can reduce the cost barriers associated with renewable energy investments, making them more financially attractive to consumers and businesses. These subsidies often take the form of tax incentives, grants, or low-interest loans, which help offset the higher initial costs of renewable energy infrastructure. As a result, countries with robust subsidy programs have seen accelerated growth in renewable energy capacity and reduced reliance on fossil fuels. However, the effectiveness of these subsidies can vary depending on factors such as policy stability, the availability of financing, and the maturity of the renewable energy market. Overall, the research suggests that well-designed and sustained government subsidies play a crucial role in driving the adoption of renewable energy technologies.

Implications to Theory, Practice and Policy: Diffusion of innovations theory, public choice theory and resource dependency theory may be used to anchor future studies on assessing the impact of government subsidies on renewable energy adoption in South Africa. In practical terms, it is crucial for practitioners to tailor subsidy design to address specific market barriers, technological challenges, and sectoral needs. Policymakers play a crucial role in ensuring the success of subsidy programs by ensuring policy coherence and alignment with broader sustainable development goals.