South Africa still lacks the necessary investment to join the green revolution
Although there is optimism that the new Renewable Energy Feed-In Tariff (Refit) will boost renewable energy in South Africa, the country still has little to show by way of flagship renewable projects.
A big player in getting renewables up and running is the Central Energy Fund (CEF), but despite its big plans, its cupboard looks bare at the moment.
There are lots of projects in the pipeline. CEF Sustainability, which bought a huge renewable project from Valli Moosa’s Lereko Holdings in Port Elizabeth, promises a green utopia for the residents of Nelson Mandela Bay.
This week the CEF also announced a partnership with Sasol to build a R900-million plant to manufacture thin-film solar panels, developed by Professor Vivian Alberts of the University of Johannesburg, in Paarl in 2012.
And it will be rolling out solar geysers in Ekurhuleni and Port Elizabeth in conjunction with the municipalities to encourage ordinary South Africans to join the solar revolution.
But for now the CEF doesn’t have a poster child for renewables in South Africa. Manny Singh, chief executive of the CEF, blames the economic realities of setting up a new industry. He said that compared with the European Union South Africa might look as though it is behind, but renewables are still very much a fledgling industry.
“The renewable project has to make economic sense,” he said. “It must go through a vigorous process of evaluations to succeed. The reality is that if a project fails it will be so much harder to attract investors into the sector again.
“The European Union has got very specific targets they can work with and the necessary legislation,” he said.
Peet du Plooy, trade and investment adviser at WWF South Africa, said the country should be concerned about falling behind nations such as China, India and Brazil in developing renewable energy sources.
“While our developing nation peers like China and India are competing for global leadership in the fast-growing renewable energy industry, South Africa has, in six years, met only 4% of its 2013 renewable energy target.
“The massive investment, growth and job creation potential of the sector remains untapped,” he said.
Hermann Oelsner, chief executive officer of Darlipp and the Darling wind farm, openly accused the CEF of “killing” renewables in South Africa. Oelsner is embroiled in a legal battle with the CEF over the wind farm. The CEF owns 49% of the wind farm, the Development Bank of Southern Africa has a 25% stake and Oelsner’s company, Darlipp, owns 26%.
In April the wind farm ground to a halt because of a squabble between the CEF and Darlipp. Technical problems also led to a dispute with the turbine supplier, German firm Fuhrländer.
Du Plooy said the renewable feed-in tariff will probably be the injection that kick-starts public-private partnerships.
“There is a clear role for state-owned entities to develop projects that may not be immediately profitable, but are of strategic national importance. As a developer of renewable energy projects, the track record of state-owned enterprises has been modest. A feed-in tariff incentivises the private sector to share the investment and financing burden for new clean energy capacity with state-owned enterprises like Eskom and CEF.”
Singh is optimistic that the new feed-in tariffs will revolutionise renewable investment in South Africa. But concerns remain about the contradictions between legislation and regulations and the transparency of the proposed bidding system.
Greenpeace says there is no alternative for South Africa but to go with renewables. In a report on renewables the organisation said South Africa needs aggressive investment in renewable power generation and energy efficiency.
his investment could provide three-quarters of South Africa’s electricity by 2050, slashing more than 200-million tonnes of carbon dioxide emissions annually, the equivalent of 10 coal-fired power stations.