/ 21 October 2024

Ramokgopa outlines plans to ‘de-risk’ energy generation

Ramokgoba
Minister of Electricity and Energy Kgosientsho Ramokgopa at the Windaba Conference in Cape Town. (Photo: X)

Minister of Electricity and Energy Kgosientsho Ramokgopa aims to “de-risk energy generation” and have multiple generators of power in South Africa.

Ramokgopa made the remarks while presenting an update on Monday about the Independent Power Producer Procurement Programme (IPPPP). 

He said that the programme, which started in 2011, was a disciplined way of the government “going out into the public” through a transparent, competitive bidding process to procure cleaner forms of electricity generation.

For Ramokgopa, Monday’s briefing signalled a significant moment “because now we’re pivoting away” from only “focusing on the performance of the grid that is largely Eskom”.

Instead, the aim was to update South Africans about other initiatives underway to build the conditions for energy sovereignty. 

“We are able to ensure that we obtain an optimum mix in relation to the fuel sources that power the economy but also try to illustrate to the country that we are doing everything possible to ensure that we are able to exploit the reforms on the generation side … and also to illustrate we are doing everything possible to achieve our nationally determined contributions [NDCs],” he said. 

NDCs are a set of voluntary targets the country has set itself to ensure it can “green its economy” and ensure its commitment to reducing greenhouse gas emissions

It is important that the country keeps its promises to the international community and to its citizens, the minister said.

“We do have an appreciation that the issue of climate change and its relationship to greenhouse gas emissions is something that has been established by a rich body of science. We also know that it [climate change] is devastating large parts of the country. 

“KwaZulu-Natal is exposed to extreme weather occurrences; we have seen this in parts of the Western Cape … in parts of the North West and, in fact, across the length and breadth of the country. It is our collective responsibility to ensure that we transition and reduce greenhouse gas emissions,” Ramokgopa said.

Achieving the targets the country has set for itself requires the “accelerated onboarding of renewables” as part of the aggregate energy mix.

Eskom, he said, has continued to register the kind of performance that is going to help the country’s economy recover. 

“It’s an anomaly for us to celebrate the fact that there’s 208 days of no load-shedding … We want to get to a point where we don’t even count the number of days without load-shedding because the expectation is that there shouldn’t be load-shedding.” 

On the IPPPP programme, the minister said there had been a cycle of nine bid windows since its inception with “trailblazing transformation” developed through its office. 

“We think that the opportunities are vast going into the future … Under the seventh administration, the energy and electricity department is going to accelerate this procurement programme. We want to be aggressive,” Ramokgopa said.

Of the nine bid windows, 141 preferred bidders had been appointed, totalling 13 422 megawatts. 

“That is significant but it doesn’t necessarily follow that the entire amount is operational and, in fact, of that figure, 7 335MW are operational, coming from 95 projects.”

The minister said 1 897MW is in construction from 17 projects while there are 1 183MW from nine projects that are preparing to reach commercial and financial close. 

There is 8 231MW capacity currently in the market to be evaluated between now and next year. “You can see there’s a ramp-up of this programme,” he said. 

Still, it’s not enough. “We should be multiplying this. What that multiplication is, is a conversation we’re having with the IPP office, with all the players in the ecosystem. 

“One of the things that w achieved in the first few days of the seventh administration was our ability to exploit our convening power and call everyone in this space into one room so we can critique … the nine bid windows and see how best each and every one can contribute to the very efficient and seamless procurement of the renewable energy procurement programme,” Ramokgopa said.

He said R272.5 billion in investment was attracted from renewable energy projects that reached financial close in all of the bid windows, of which R50.3 billion was from foreign investors. This was enabled by the growth potential, the programme’s transparency and government support.

The minister was confident that within the next four to five weeks, “we will come out to market with a degree of certainty in those reforms we are introducing [and] the improvements that we are making to ensure that we are able to accelerate this programme.

“It’s important because we have said to the rest of the world we see ourselves contributing a reduction of anything between 350 to 420 millions tons of CO2 equivalent per annum going into the future as part of our ambition to decarbonise …. 

“We must accelerate this and we are going to de-risk energy generation just from a monopoly as Eskom and then we’re able to have multiple generators of electricity in the country. We’ve seen what are the downsides of a monopoly. When a monopoly fails, it drags the entire country with it.”

Ramokgopa said there is about 8 250MW of this project either in operation or construction and what is revealing from the geographic mapping is that “there’s been an oversubscription” in the Cape provinces — Northern Cape, Western Cape and Eastern Cape. 

This is because “that’s where you find your optimal renewable energy sources; your radiation levels in the Northern Cape are exceptionally better than any other place in the country. The wind speed, the efficiency there, your Cape provinces are exceptionally better than any other parts of the country and you can see that there has been a concentration of investment in those areas.”

Most projects are there “but we know that we’ve got capacity in other parts” of South Africa, he added. The IPPPP programme was “going into the next generation of battery storage”, which would help fully exploit the benefits of renewables. 

“An important feature of what we observed when we started with regards to solar, a kilowatt hour was coming in at about R4.66. Today, it’s 56 cents a kilowatt hour, so there has been a decrease of 88% over that period of time.”

For wind, the first generation bid window one was coming in at about R1.93 per kilowatt hour and is now 58 cents a kilowatt hour. 

This is important because beyond greening electricity generation, it will translate into cheaper electricity over time. 

“The effectiveness and efficiency are illustrated by just our own experiences in South Africa; we draw from other international experiences and, of course, couple this with battery storage. I think we can get maximum value out of this.”

Ramokgopa said he “acknowledged the technical limitations” including the non-dispatchable nature of this technology and that it is intermittent. 

“But we’ve been able to illustrate as a country that it can be done in a transparent and competitive procurement process. 

“The prices have been coming down. Now we are introducing battery [storage]. We are de-risking electricity generation away from Eskom and finding new sources of electricity generation and, hopefully over a period of time, we’ll see the benefits trickling down to the end consumer.”

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