South Africa’s renewable energy shift

6 November 2012

The government has signed the first round of agreements with independent power producers that will see an initial 1 400 megawatts of renewable energy being added to South Africa’s energy mix, while bringing an estimated R47-billion in new investment into the country.

The signing ceremony, involving 28 approved bidders from the first window of the Department of Energy’s renewable energy programme for independent power producers, took place in Pretoria on Monday.

While the majority of the bidders are foreign companies, 67 South African companies have formed partnerships with them.

The 28 projects, involving an estimated R47-billion in new investments, are spread across some of South Africa’s most rural and least developed provinces, including the Eastern Cape, Northern Cape, Limpopo, North West and the Free State.

The wind and solar projects are expected to be integrated into the country’s national energy grid during 2014.

Social development, job creation

The commitments the bidders have undertaken include community development initiatives within a 50-kilometre radius of each project. The bidders have collectively committed R2-billion towards socio-economic development, and R1-billion towards empowering women in the energy field.

“We will watch this [development] like a hawk,” Energy Minister Dipuo Peters said at Monday’s signing, adding that the participation of black people in the projects was important as the government did not want to have to call for transformation of the sector.

“In total, these bidders will spend R12-billion over the duration of the implementation agreements on South African contractors, including empowered enterprises, small and women-owned businesses,” Peters said.

According to the government’s Integrated Resource Plan, a 20-year projection on electricity supply and demand, about 42% of electricity generated in South Africa – about 3 725 megawatts (MW) – will be required to come from renewable resources.

The plan places specific emphasis on broadening electricity supply technologies to include gas, imports, nuclear, biomass, and renewables (wind, solar and hydro) both to meet the country’s future electricity needs and to reduce its carbon emissions.

‘Milestone for South Africa’

Eskom executive Kannan Lakmeeheran said the signing ceremony was a significant milestone for South Africa, adding that the state power utility could not meet the country’s energy requirements on its own.

“The electricity industry, as we increasingly see, will be one of a hybrid nature, with Eskom still retaining a significant position but a vibrant private sector developing too,” Lakmeeheran said.

“The industry will be driven by the need for security of supply and climate change concerns, energy efficiency and technological advancements. It will look very different in 2030 to the way it looks now.”

Lakmeeheran added that Eskom, which would be signing power purchase agreements with each of the bidders, looked forward to connecting the new power producers to the national grid and buying power from them.