Energy policy innovation and dynamic capabilities in renewable electricity firms in South Africa

Abstract

Rolling blackouts and global calls for lower carbon emissions have spurred South Africa to deploy renewable energy policy instruments that pressure and propel the behaviour of renewable electricity firms. Against this backdrop, this study investigates how renewable electricity firms navigate a shifting policy landscape to stay competitive while advancing a just energy transition. Most studies in the literature reviewed have focused on technological innovation in developed economies, with far less attention to broader, including product and organisational, innovations in developing economies facing evolving regulations. This misalignment between compliance and agile innovation threatens policy goals and firm strategy. Thus, the objective of the study was to investigate and compare how a multinational independent power producer and domestic electricity trader, innovate to secure competitive advantage when renewable energy technology instruments are deployed. Adopting a theory-guided, qualitative design, the research combined 19 in-depth participant interviews, policy-document analysis, and the lenses of dynamic capabilities, social constructivism, and just energy transition objectives. The framework emphasised sensing, seizing, transforming, and aligning technologies with operations and customer needs to deliver competitive advantage and a just energy transition. Findings reveal that the target IPP leverages ambidextrous structures, technological congruence through trial and error, and cross-regional knowledge transfer, while the target trader emphasizes contractual innovation, portfolio liquidity, and bespoke digital platforms. Implications for policymakers highlight crafting instruments that spur firm-level innovation aligned with just energy transition goals. The study contributes to such practices by clarifying how policy design can unlock technological and non-technological firm level innovation in developing economies. Finally, it calls for future research to test these renewable energy technology policy designs and implementation processes to deepen understanding of renewable electricity firms’ influence on innovation and achieving the just energy transition objectives.