Economic Growth in South Africa through the Decentralised Green Energy Miracle

Abstract

Decentralised green energy presents new growth prospects for developing economies, driven by the deregulation of the electricity market. In March 2023, the South African government enhanced the Section 12B Tax Act, and in August 2024, the Electricity Regulation Amendment Act was signed to support the energy generation market. These policy initiatives have attracted financial support from investors, businesses, and the government, signalling the onset of an economic boom reminiscent of the Witwatersrand gold rush. Consumers will soon be able to freely choose retail electricity suppliers, while market entities face increasing competition due to the influx of new entrants. In this context, forecasting changes in generation capacity as market share stabilises is crucial for stakeholders making investment and business decisions. This paper contributes by proposing a system dynamics and Markov chain-based methodology that accounts for the varying causal relationships across different states of the economy, offering decision-making and policy implications for investors, businesses, and government.