As the case of Eskom suggests, in practice it is the public sector rather than the private sector that leads on energy transition. One recent study of utility firm investments between 2005 and 2016 found that under the same policy environments, public utilities devoted higher proportions of their total investments to non-hydropower renewables (i.e. solar, wind, biomass and geothermal) than private utilities did.30 Between 2019–2020, public funds31 and households invested $376 billion into climate finance, including in renewable energy, climate mitigation, and adaptation to climate change. Public funds and households made up 60 per cent of all climate finance, exceeding total private investment.32
This dynamic has played out clearly in relation to the climate finance target established at the 2009 UN Climate Change Conference in Copenhagen (COP15), where it was agreed that by 2020, rich countries would raise $100 billion annually as climate finance for the global South. This target has yet to be reached. Of the $80 billion raised in 2019, $63 billion came from public sources.33
In Belgium, between 2005 and 2016 publicly owned utilities diverted 72 per cent of their total energy generation investment to non-hydropower renewables, compared to 51 per cent from Belgian private funds. In the Czech Republic, across the same period, while public utilities devoted 92 per cent of energy generation investments to non-hydropower renewables, no private firm invested in renewable capacity additions above 1 Megawatt (MW).34
Moreover, contrary to neoliberal ideology – according to which the public sector is ‘risk averse’ and the private sector is ‘innovative’ – research shows that public institutions are more likely to fund higher-risk transition sectors. For example, private sector research and development funding has tended to stick to established technologies such as wind and solar, whereas the public sector has led on technologies further away from commercialisation such as tidal and wave energy.35
A 2022 International Renewable Energy Agency (IRENA) study showed that state involvement in the electricity sector in the global South is currently increasing. IRENA write: ‘The drivers that in the past led to the predominance of regulated systems – such as intense grid expansion needs and a post-World War II reconstruction context – are gaining traction today as the transition progresses and socio-economic challenges are high on the agenda.’36
Indeed, some of the most impressive examples of energy transition taking place at the moment see state-owned utilities leading the way. In Uruguay, for example, a state-owned utility firm called UTE has been the key actor driving one of the most advanced energy transitions in the world, with the country running on 98 per cent renewable energy. UTE was awarded the highest investment grade AAA by international credit agencies. What’s more, it is one of the principal sources of funding for the Uruguayan state, with a significant proportion of its revenues being diverted to fund other public services.37