Improving the Institutional Structures for Disseminating Energy Efficiency in Emerging Nations: Energy Agencies in South Africa

Emerging nations are typically characterized by high energy intensities despite significant energy efficiency potentials and numerous project oriented efforts to introduce energy-efficient technologies. The paper argues that successful technology dissemination needs appropriate institutional structures to reduce the related transaction cost. While a project-by-project approach risks to evaporate after completion, an energy agency would allow to bundle the know-how and information gained, ease access to funding and thus reduce information search cost and increase availability of efficient technologies. In a case study for South Africa, we examine the appropriateness of this concept for emerging nations. We discuss the underlying incentive problem from a New Institutional Economics perspective and suggest an approach to the design and implementation of operable energy agencies.Energy efficiency, energy agency, emerging nations, South Africa, New Institutional Economics

Improving the institutional structures for disseminating energy efficiency in emerging nations: Energy agencies in South Africa

Emerging nations are typically characterized by high energy intensities. Dissemination of energy efficient technologies is far below expectations despite significant potentials for their adoption. Successful energy efficiency strategies are closely connected to institutional efficiency to increase access to information and finance. However, capacities of government are limited, and transaction cost are high. As a tool to improve dissemination of energy efficient technology and innovation we suggest to improve the institutional setting by implementing a network of central and decentral energy agencies (EA). Experience from Europe - but also from some emerging nations such as Mexico - suggests that EAs allow to cut energy consumption significantly by strengthening the links between energy policy, financing and implementation, and the final consumer. In a case study for South Africa, we examine to which extent the suggested concept can be transferred to emerging nations. After a theoretical discussion of the underlying incentive problem, based on new institutional and evolutionary economics, the paper reflects experiences from a consultation project in South Africa, based on a co-evolutionary approach: Successful projects need more than 'theoretical' designs, in particular an implementation process which empowers local stakeholders to implement the project