Green energy coordination headache
The state's plan to green the economy is going to test the government's ability to coordinate departments and agencies.
The state’s plan to green the economy is going to test the government’s ability to coordinate departments and agencies. The revised industrial policy action plan (IPAP2), which is the key to the government’s broad economic policy framework, the new growth path, lists ambitious plans to boost renewable energy and local manufacturing of green technologies. But the department of trade and industry, in all its major plans of action in the IPAP2, lists the necessary support of other departments and state agencies.
Industry experts have recognised the potential of localising green and energy-efficient production and have welcomed it, but they point out that the co-ordination of policies and programmes across state entities is crucial.
Already the implementation of a renewable energy feed-in tariff (Refit) to procure electricity from independent sources has proved to be problematic as a result of a decision by the National Energy Regulator of South Africa (Nersa) to revise the tariffs, reducing them significantly since they were first published in 2009.
A working Refit is critical to a number of the IPAP2’s primary programmes, including the development of solar and wind energy, biomass energy and plans for waste and water treatment.
Nersa’s move, long in coming, has now created uncertainty in the sector, just when the department of energy, with the treasury, was poised to launch the first round of procurement of energy from green sources—as outlined in the government’s integrated resource plan (IRP), the country’s 20-year energy road map.
The green technology industry has warned that the proposed reduction in tariffs could delay the procurement process and undermine confidence. Earlier this week the South African Wind Energy Association, the Southern Africa Solar Thermal and Electricity Association and the South African Photovoltaic Industry Association said in a joint statement that any further delays would mean that South Africa would find it difficult to meet the renewable energy targets established in the Integrated Electricity Plan and would further compromise the security of supply.
Thembani Bukula, the electricity regulator at Nersa, said the review was planned annually and had to incorporate a reduction in the costs of some technologies and take the strength of the rand into account. He said the regulator could not place the interests of investors and the industry above those of the consumers, who would ultimately buy the power.
Power purchase agreements
The department of trade and industry has incorporated localisation specifications, particularly in the solar sector, in the IPAP2’s first Refit power purchase agreements.
Nimrod Zalk, the department’s deputy director, said the department was closely engaged in the Refit process. “The purchase of renewable energy needs to be clearly linked to localism and industrialisation. It needs to be integrated into the supply chain.”
He said that, although it would have been ideal to have the Refit finalised, the department had the utmost confidence that the work was being done in a technically solid and “expedited” way.
South Africa’s hosting of the United Nations framework convention on climate change, COP17, at the end of this year could help to move things forward, Zalk said, since the country had to show progress in its green policy. “In a way it brings the same kind of pressure and focus that the World Cup brought,” he said. “The delays are undeniable, but the pressure is mounting and substantially imminent.”
Chris Haw, the managing director of Aurora Power Solutions, a project development company, said that the government had made a “considerable effort” to align departments in the Refit process and could improve on this. It could also be more transparent and communicate more regularly with the industry.
“The global [renewables] market is growing at 30% per year; in [photovoltaics] it’s been almost double that in the last five years,” he said. “If we are to be competitive in manufacturing equipment for green industries we need to start yesterday.”
The proper integration of the IPAP2 and the IRP into the new growth path announced by Economic Development Minister Ebrahim Patel is also essential. Patel announced in his budget vote this week that the green industries would get an injection of R22,4-billion over five years from the Industrial Development Corporation.
Peet du Plooy, the programme manager for sustainable growth at the trade and industry research institution TIPS, said the IRP had created a demand for renewable energy from several sources and the IPAP2 offered incentives to local manufacturers to meet that.
Du Plooy said that although inter-governmental co-ordination was crucial the IPAP2 was one of the few government policy documents that detailed where specific departments would work together.
Given the role of the department of trade and industry in the economic cluster there was also room to address co-ordination issues at ministerial level, he said.
The department of energy did not respond to requests for comment.