The transition from fossil fuels to cleaner energies is a global pursuit. But it’s faster and more intensive in some countries than others. Take the case of South Africa. Heavily dependent on coal, the country is proceeding with a more intense transition in which renewable energies are set to play a growing role.
Renewable energy technologies have recently established their role in the global energy supply mix. This is because they have begun to overcome two big hurdles. The first was concerns about high cost. The second was their inability to provide secure energy supply. A number of factors have improved their accessibility and affordability. These include technological improvements, economies of scale and increased competition.
The share of renewable energies in the overall energy mix will certainly have an impact on electricity market dynamics. This includes energy prices. Prices are the most effective signal to users and potential investors about alternative energy sources.
That’s why understanding how a higher share of renewable energy in the energy mix influences electricity prices can help policy makers.