New direction for renewables
An energy revolution is happening in South Africa, with thousands of megawatts of renewable sources creating a new industry while lowering the country’s carbon emissions. This upbeat message flowed powerfully through the recently-held South African International Energy Conference in Cape Town.
Such?events?would?have been impossible?a?decade?ago,?when?South Africa’s only serious renewable energy source was the 8MW Darling Wind Farm that had just come online. The only mention of wind and solar farms was in environmental plans, where government worked to meet climate change commitments.
In?2008, however, rolling blackouts shaved billions of rands off the economy, thanks to coal shortages and failures at Eskom’s mainly coal-fired power stations. Government — through the department of energy — quickly promulgated an ambitious new energy plan: the Integrated Resource Plan 2010. This stated that renewable energy sources would supply 40% of the country’s power by 2030. In two decades, the country would have to build an entirely new industry.
At the 2009 Copenhagen climate conference, government also committed to reduce its carbon emissions by 42% by 2025. At that time 90% of power generation came from coal-fired stations, which were responsible for half the country’s carbon emissions. In four years 6 300MW of renewable energy has been allocated, and 1 900MW has already been built. The goal by 2030 is to have 18 000MW of renewables.
To get to that target, the department of energy created the Independent Power Producer Programme, a world-first in its design — a transparent public-private partnership to develop renewable energy. Government divided its energy needs into five windows. Each of these was further broken down into how much of which type of energy was needed, and provided rules about how much money had to be spent locally. Companies then bid on each window, saying how much they could provide at what price. The winning bidders then signed a contract with Eskom, guaranteeing them the sale of electricity at a set price for 20 years.
Importantly, with state power utility Eskom carrying around R250-billion in debt, all of the risk of the programme was taken up by private companies. These would invest in the projects and take all the financial risk. To date, over R50-billion has come into the country as Foreign Direct Investment (FDI) as a result — a third of the country’s total FDI in the last few years. The overall value of the projects is now nearing R200-billion.
The?design of this rollout attracted great attention at the International Renewable Energy Conference. Officials from the department of energy presented to audiences from the private and public sectors. Germany announced that it would follow a similar system in procuring more renewable energy in the future. Several other African countries have followed a similar path, thanks to technical assistance from South Africa.
The?inclusion of local procurement requirements, and the necessity for local people to have part ownership of each project has meant local economic development. Turbine production factories have been built in Cape Town and Port Elizabeth. Tens of thousands of jobs have been created in construction and in the wider renewable industry locally. A solar plant outside De Aar in the Northern Cape created 2?000 jobs during construction, and R1-million from the project went to black women in the area for the development of ostrich farms.
Speaking at the conference, South African Minister of Energy Tina Joemat-Pettersson said: “South Africa has taken off on a new trajectory of sustainable growth and development; there is no turning back.” A total of 92 independent power producers now have contracts to build over 6 000MW of new energy sources. These are split across every single province, from projects that produce less than a megawatt to 100MW concentrated solar photovoltaic projects that can store energy.
The programme has been driven by the vast wealth South Africa has in sources of renewable energy. In terms of solar radiation, parts of the Northern Cape receive one of the highest amounts of energy per square metre in the world, while wind proliferates along the coastlines of the Western and Eastern Cape.
Speaking at the conference, Christine Lins, executive secretary of the Renewable Energy Policy Network for the 21st Century, said: “Africa is blessed with huge amounts of sun, wind and biomass and South Africa’s example of putting in stable regulation should inspire other countries to scale up their renewable energy production.” The network is a multi-stakeholder unit that works at a global level to drive renewable energy policy.
A study released earlier this year by the Council for Scientific and Industrial Research found that 15 days of load-shedding were averted or delayed in the first six months of 2015 due to new renewable energy sources. The same report said Eskom had saved R3.6-billion in the times renewables had taken the load off its fleet of diesel and coal-fired power generation units.
But Eskom has also struggled to connect the new renewable projects to the grid. Many renewable projects are far from the utility’s normal power lines. These lines are also old; Eskom told Parliament last year that investment in this part of its infrastructure has lagged badly in the last decade. It now needs over R200-billion to upgrade its network so it can feed renewables efficinetly into the grid.
Similar problems have occurred in the utility’s storage network. With most renewables not working 24 hours a day and having no storage capacity, Eskom has been building pumped-storage schemes, which use water storage to create energy during peak demand. But these projects have been delayed for several years.
The utility has also stopped issuing budget quotes until 2018; these are specifications of what each renewable project needs to connect to Eskom’s power grid. Without these, the costing of the projects cannot be acheived and they cannot gain financial closure. It also means that the projects cannot sign the power-purchase agreement with Eskom that guarantees their sale of power to the utility at a set price for 20 years.