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Prudence needed in SA’s green future

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Many new jobs look set to be created at solar and wind plants, especially in the Northern Cape, Eastern Cape and Western Cape provinces of South Africa. Image credit:Pexels Kelly

Prudence needed in SA’s green future

The development of renewable energy in South Africa is urgent. However, it would not be prudent to abandon the country’s coal-fired power stations at a whim, says Jan Fourie, Southern Africa’s General Manager for Norwegian global renewables company Scatec.

The environmental damage caused by coal mining in places like Emalahleni in the Mpumalanga province is well known, yet coal mines and coal-fired power stations remain the lifeblood of many communities in the province.

“To suddenly abandon the coal mining sector will result in a landscape of ghost towns, and a human tragedy of mass unemployment. I therefore fully support the Department of Mineral Resources’ (DMR) plan to gradually repurpose these areas, preferably by retro-fitting existing coal-fired plants with renewable energy plants and/or battery storage solutions, and training people in new skills to ensure that jobs can be transferred,” says Fourie.

He says that the COP26 conference, which took place in Glasgow last month, could herald solutions to some of Eskom’s woes.

“The Paris Climate Agreement of 2016 acknowledges the duty of developed nations, who are responsible for the bulk of greenhouse gasses emitted thus far, to assist developing nations in their efforts to decarbonise, and mitigate risks associated with climate-change,” says Fourie.

“In what President Ramaphosa has called a ‘watershed moment’, at COP26 a coalition of developed nations (the EU, France, Germany, the UK and the USA), committed R131-billion to help South Africa – currently the continent’s biggest polluter, and 12th biggest globallyi – to affect a just, inclusive energy transition”.

Eskom in a vulnerable position

Faced with international pressure to decarbonise, and the local economic imperative to liberalise and allow competition-driven efficiency, South Africa’s state power utility initiated its unbundling process from a vulnerable position.

Saddled with R400-billion debtii, and an ageing coal fleet that is increasingly unable to meet national grid demands, the embattled utility plans to separate into three divisions for its three primary functions: generation, transmission, and distribution, with each entity expected to be allocated a portion of the debt. There are legitimate concerns around how these entities will raise capital and stay afloat while shouldering such great arrears.

“Our task now is to bridge the gap between a beleaguered parastatal and their progressive vision to achieve carbon-neutrality by 2050. The IRP 2019 outlines South Africa’s stepping-stones to reduce coal’s contribution to the energy mix to below 60%, in favour of renewables like wind, and Photovoltaic (PV) technologies, which would account for 25% of our energy mix by 2030iii,” says Fourie.

REIPPPP could create jobs

Fourie speculates that Municipal Energy Resilience (MER) funds, currently seeing success in the Western Cape, could be rolled out to facilitate municipal generation in other provinces.

“Although it’s a relatively small fund, only for preparatory work, by focusing on getting Independent Power Producers (IPPs) up-and-running, MER is giving the Western Cape energy sector a notable boost, bolstering domestic and industrial energy security, and bringing them into better alignment with the DMRE’s progressive decarbonisation and circular economy goals,” he adds.

The DMER’s Renewable Energy IPP Procurement Programme (REIPPPP) also heralds strong prospects for the renewable energy industry, and job creation in 2022. “REIPPPP projects have already created close to 40 000 jobs in South Africaiv, spread over about 100 sites procured by the IPP office during the first five rounds of IPP bidding.

“In accordance with its vision for a just, inclusive transition, REIPPPP project applications must include 20-year commitment plans, detailing the project’s projected socio-economic impact, and potential contributions to just employment and economic transformation,” Fourie explains.

He adds that, with Round 6 planned for 2022, and Round 7 to follow in late 2022 or early 2023, many new jobs look set to be created at solar and wind plants, especially in the Northern Cape, Eastern Cape and Western Cape provinces, where the bulk of South Africa’s renewable energy is produced.

All eyes on Scatec’s hybrid plant

Fourie is one of the executives at the helm of Scatec’s ambitious new RMIPPP-endorsed 150MW flagship twin hybrid PV-and-storage site in the Northern Cape. Sporting two million individual solar panels, and an initial Capex of around one billion USD, the plant will be one of the biggest hybrid plants of its kind in the world.

“Earlier this year, new policy amendments were announced that exempt IPPs with up to 100MW output capacity from the National Energy Regulator of South Africa’s (NERSA) previously onerous licencing requirements. This relaxing of red-tape, in conjunction with REIPPPP bidding coming up again soon, and the fact that renewables are now the most competitive generation source, present an exciting landscape for renewables in 2022 and beyond,” says Fourie.

“Entire markets may start to open up for embedded generation, energy wheeling and power brokerage, with new legislation allowing complex energy mixes and innovative financing models.

“Renewables present significant opportunities for investors who are eager for their place in the sun,” says Fourie.

“Government collaboration with the private sector and international stakeholders, who possess the capital and expertise to unlock the rich potential offered by renewables in South Africa is imperative. This will further create an attractive investment environment, in which long-term Power Purchasing Agreements (PPAs) between IPPs and state utilities provide predictable cash flows and yield regular dividend pay-outs for investors,” he adds.

“Industry players are cautiously optimistic that next year could herald an accelerated drive towards the just, inclusive energy transition enshrined in our IRP, in which all South Africans will be the beneficiaries of a cleaner, brighter future”, concludes Fourie.

Sources/ references

i https://www.news24.com/fin24/opinion/opinion-its-all-about-eskom-what-cop26-means-for-sa-20211103

ii https://www.miningreview.com/energy/the-evolution-of-south-africas-energy-landscape/

iii https://www.bbc.com/news/world-africa-59135169

iv https://www.investec.com/en_za/focus/investing/renewable-energy-the-infinite-investment-opportunity.html

Jan Fourie, General Manager Southern Africa at Scatec. Image credit: Scatec

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