The South African economy finds itself at a cross roads as it has done at certain junctions in the past. Call it another “crossing the Rubicon” moment. The implications of the decisions taken and their effects on society beyond the economic realm cannot be under estimated given the immense challenges to build a cohesive society. Sustainable development in the form of the green economy is touted as a fix it all for all of South Africa’s ailments; poverty alleviation, job creation, modern access to services, under investment, declining foreign exchange from energy intensive industries, current account deficits etc. Yet underpinning these well intentioned solutions is the need to understand how we can manage such a transition. From a renewable energy and energy efficiency perspective, there is a general perception that the costs of transitioning are expensive with the benefits only experienced years thereafter. Global initiatives like the City of Los Angeles street light retrofit program and local ones such as the City of Joburg’s smart metering system go some way towards dispelling these preconceived notions.

A review of these initiatives and others find that cohesive planning and coordination of implementation by the nominated actors is key to realizing a positive bottom line for a city’s finances. There exist many funding mechanisms to finance the green economic transition. Often times these funds are starved of commercially viable projects. Put simply, there are a lot of well- conceived but not good packaged project proposals and a sizeable portion of funds available. The challenge seems to be more a case of preparing good proposals especially from the local government sector, to match the available funds. Underpinning this are the processes and regulatory hurdles involved including reporting requirements especially from a municipal perspective. The need for decisive leadership in meeting policy objectives cannot be understated.

Neogesi Consulting was appointed by the South African Cities Network (SACN) to undertake research on the financial implication of transitioning to the green economy by cities. The paper focuses on renewable energy and energy efficiency within South African municipalities. The SACN intends to use this input into the chapter on energy for the upcoming publication on the State of City Finances, 2015. This Paper is one of the three commissioned during 2013/14 financial year for the same intention.