Electricity policy is economic policy: The race for reliable power

Electricity policy, at its core, is economic policy. Nations that can produce abundant, reliable, and affordable electricity create the conditions for industrial growth, technological leadership, higher wages, and rising living standards. Those that fail to do so eventually discover that electricity shortages are a direct threat to national prosperity.

The world is at a pivotal moment. The rapid growth of artificial intelligence, advanced manufacturing, electrification, and data centers will require vast quantities of dependable electricity. Meeting demand requires more than slogans, subsidies, or politically fashionable technologies based on ideological movements. It requires a serious commitment to baseload power and laser-sharp focus on nuclear-generated electricity, including the development of advanced spent fuel solutions.

The challenge is not simply one of funding. Governments around the world have demonstrated that throwing money at electricity projects such as weather-dependent wind turbines and solar panels does not guarantee success. Two people cleaning a small shed instead of one may increase the time of success by twofold, but placing fifty people in the same small area will make the task nearly impossible. What needs to be done is the immediate creation of conditions where public policy and private-sector execution work together to deliver measurable outcomes.

History provides a useful lesson: South Africa once possessed one of the most respected electricity systems in the world. Eskom was established as a state-owned utility focused primarily on reliable power generation and infrastructure delivery. For decades, the organization functioned as a highly capable engineering and project management institution responsible for building the backbone of the country’s electricity network.

One of its biggest achievements in South Africa was the construction of the Koeberg Nuclear Power Station in the Western Cape. Unit 1 being synchronized to the grid in 1984 and Unit 2 in 1985; the power station has just been granted a 20-year life extension. Koeberg remains the only commercial nuclear power station on the African continent and continues to provide stable, low-emission baseload electricity. It has demonstrated the long-term value of nuclear infrastructure.

Electricity problems later emerged not because the country lacked assets or engineering expertise, but because governance and incentives deteriorated and changed over time. Following South Africa’s political transition in 1994, many critics argue that state-owned enterprises became increasingly influenced by political objectives rather than operational excellence. Inefficiencies accumulated, maintenance was deferred, and accountability weakened. The result was a predictable decline in electricity reliability and the ensuing correlated macroeconomic effects.

Losses generated by mismanagement from Eskom were socialized across society, while the benefits often accrued to politically connected insiders. As power stations became less reliable and new generation capacity failed to arrive on schedule, South Africa entered a cycle of rolling blackouts known locally as load shedding. The consequences extended far beyond the electricity sector. Factories reduced production, small businesses struggled to survive, and investors, domestic and foreign, became wary of committing capital to a country where electricity supply could not be guaranteed; as a result, economic growth slowed, and productive activity suffered. Note that this is in addition to the millions of people who still lack access to electricity in the country and who were certainly not prioritized during the process.

Against this backdrop, South Africa pursued weather-dependent wind turbines and solar panels procurement initiatives, resulting in the Green Economy Accord being signed in November 2011 as part of a broader effort to promote green industries, employment creation, and wind and solar development. The Accord emphasized partnership among government, business, labor, and communities while encouraging investment in renewable energy technologies. The employment creation promises of the Accord have failed dismally on their targets, and so has the impact on national grid infrastructure stability.

In tandem, the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) was also launched in 2011 to attract private-sector investment into wind and solar electricity generation through a competitive procurement process. The program was designed to stimulate wind and solar electricity development and bring private capital into the sector, which it has to some extent, but the pudding proof is the highest year of rolling blackouts recorded in 2023.

In 2023, the country experienced the highest level of rolling blackouts, with the South African Reserve Bank estimating the daily economic cost at up to R1 billion. Koeberg’s Unit 1 was out for maintenance at the time and frustratingly added a stage to every planned power outage (which refers to the frequency of how long you have to go without power – which in 2023, was up to 12 hours per day). None of the solar farms nor the wind assets could assist in solving this problem.

This is a clear lesson that a nation cannot subsidize its way out of its poor electricity policy. Reliable electricity is not optional infrastructure; it is the foundation upon which modern economies operate, and citizens of the economy are able to access and sell goods and services essential to modern life.

There are debates about the effectiveness and limitations of wind- and solar-generated electricity dependent on favorable weather conditions in addressing South Africa’s long-term electricity challenges. What is beyond dispute, however, is that intermittent generation alone cannot fully replace dependable baseload power in a modern industrial economy. Manufacturing plants, hospitals, mines, transportation systems, data centers, and AI infrastructure require electricity every hour of every day, regardless of weather conditions.

The reality of the limitations of wind- and solar-generated electricity has profound implications for the United States and the World. America’s future competitiveness will increasingly depend on an abundance of electricity. Artificial intelligence systems, semiconductor fabrication facilities, advanced manufacturing plants, and reshored supply chains will require unprecedented amounts of reliable electricity. Meeting those demands with intermittent resources alone will be difficult and increasingly expensive.

As experienced in South Africa, Germany, and even California. South Africa’s electricity prices have risen over 900% over the last two decades, a case study that should not be ignored when considering national sovereignty. South Africa and America have deep ties in both electricity and industrialization, with Anglo American, Hendrik Vanderbijl, and various other endeavors, including Koeberg and the Pebble Bed Modular Reactor project, alongside countries like the US, France, and Germany at the time. When the base factors of production (mining, mineral processing, energy) are outsourced to other countries, the result is dependency. This needs to be addressed as a policy matter forthwith.

Nuclear-generated electricity offers a different path: Advanced reactors, small modular reactors, and next-generation fuel cycle technologies can provide continuous baseload power while reducing emissions and strengthening electricity security. Equally important, innovations in spent fuel management have the potential to transform what many view as a liability into a strategic asset. Rather than treating spent nuclear fuel as a long-term burden, the United States should invest in technologies that can recycle, reprocess, and extract additional energy value from existing fuel inventories. Such efforts would strengthen domestic electricity independence, reduce waste challenges, and create entirely new industrial sectors. Substantial efforts are underway in France and Asia, and US interests are well aligned to capitalize on the opportunity when policymakers, states, and industry align.

Partnerships are essential: Governments should not attempt to become the operator, designer, and financier of every solution. Instead, it should create an environment where entrepreneurs, engineers, utilities, and investors can compete to deliver results. Public support should be tied to milestones, performance, and measurable outcomes rather than political promises, and politicians willing to champion pragmatic electricity policies will ultimately help unlock a new era of prosperity. Affordable and abundant electricity does more than keep lights on; it attracts investment, increases productivity, supports higher wages, strengthens national security, and expands economic opportunity. Abundant power leads to expanding industry and expanding industry leads to economic growth, which ultimately creates thriving communities.

The United States, despite watching the world’s 80 nuclear reactors under construction around the globe, together with its partners, has the technology, capital markets, engineering expertise, and industrial capacity to lead the world in nuclear innovation. The question is whether policymakers will choose a path defined by partnerships, accountability, and results. If they do, the reward may just be an age of genuine abundance powered by the most important resource of all, reliable electricity.

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