Stranding power sector assets in SA
Stranded assets are assets that “have suffered from unanticipated or premature write-downs, devaluations or conversion to liabilities”, arising from environmental regulation or other regulatory shifts, as well as market forces and other causes, including the falling costs of competing technologies and structural market decline.
This paper, by six ERC researchers for Mitigation Action Plans & Scenarios (MAPS), aims to understand the implications of South Africa reducing emissions as part of a global agreement to limit temperature rise to below 2oC and to examine the potential risks of stranded assets in the energy sector. Can South Africa meet carbon constraints without stranding assets? Given the structure of the energy sector and existing infrastructure, what are the potential effects of the country stranding energy assets to meet mitigation targets? What are the cost implications of investing in power plants that are later underutilised? What is the impact of ignoring non-electricity emissions on the costs of transition?
- Burton, A, Caetano, T, Hughes, A, Merven, B, Ahjum, F and McCall, B. 2016. The impact of stranding power sector assets in South Africa: Using a linked model to understand economy-wide implications