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South Africa's Energy Crisis

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Yale School of Management
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In October 2007, chaos ensued when traffic lights in South Africa’s famed commercial center, Johannesburg, failed without warning. That the cause was a power line fault only underscored how strained South Africa’s energy system had become.Severe blackouts continued until the summer of 2008, creating widespread socioeconomic damage and stifling the country’s growth.

In a belated response to warnings of shortages issued during the 1990s, the South African government adopted an aggressive plan to build two of the world’s largest coal power plants, Medupi and Kusile (pronounced “Kuseeleh”). The plants sparked fierce controversy. Proponents argued that failing to build them would cripple South Africa’s socioeconomic development. Given the abundance of cheap coal in South Africa, coal-fired plants appeared to be the least expensive source of urgently needed energy. Opponents contended that, for a country already heavily dependent on coal, the new plants would cause unacceptable environmental damage and endanger the health of the predominantly black and poor surrounding communities. They also disputed the cost-effectiveness of coal, arguing that if the health and environmental damage of the fuel were internalized in its price, then coal would actually cost more than most renewable options.

The World Bank had funded Medupi and the U.S. Export-Import Bank preliminarily agreed to fund Kusile on April 13, 2011. Environmental advocacy groups, such as Friends of the Earth (both its U.S. and South African chapters), decried both decisions, charging that the titanic coal plants would substantially increase South Africa’s greenhouse gas emissions and thereby contribute to adverse global climate change. These issues had become particularly salient and politically charged as South Africa prepared to host world leaders in late 2011 for the latest round of international climate-change talks.

Published Date: 21/04/2011

Suggested Citation: Constance E. Bagley, Haris Aqeel, and Eva T. Zlotnicka, "South Africa's Energy Crisis," Yale SOM Case 11-015, April 21, 2011  

Keywords: South Africa, Shortage, Women in Leadership