Economies aim to grow over time, which usually implies the need for increased
energy availability. Governments can use their procurement of energy to increase benefits in their
economies via certain policy tools. One such tool is local content requirements (LCRs), where the
purchase of goods prescribes that a certain value has to be sourced locally. The argument for this
tool is that spending is localised and manufacturing, as well as job creation, can be stimulated
because industry will need to establish in the host economy. However, this practice is distortionary
in effect and does not create a fair playing ground for global trade. Furthermore, if the local content
definition is weak, or open to manipulation, the goals of such a policy may not be achieved at all.
The objective of this study is to determine how LCRs would ultimately impact on the
overall procurement programme.
This study took place as South Africa commenced with large scale development of the
renewable energy sector. This was largely achieved via the State run Renewable Energy
Independent Power Producer Procurement Programme (REIPPPP).