Many African countries struggling to keep up with energy consumption demands are scrambling to adopt integrated energy supply and demand systems, smart technologies, and partnerships with Independent Power Producers (IPPs).
According to Dr Jarrad Wright, principal researcher at the Council for Scientific and Industrial Research (CSIR), principles can be applied across Africa to ensure sufficient supply to meet ever-increasing energy demands. “This is where solar PV should likely play a significant role, considering the lead-time for investment, technology cost reductions, availability of favourable financing, and its ability to scale up and down.” However, “Key to solving the energy crisis is ensuring that enabling policies and regulations are developed with a focused and committed approach to the implementation of projects.”
While steps have been taken, such as the Department of Mineral Resources and Energy (DMRE) gazetting new regulations that commit to sourcing over 11 800 MW of power from IPPs over the next decade, there have also been calls towards giving greater independence to municipalities to produce or procure power directly from IPPs.
In May last year, draft amendments to the Electricity Regulations Act on New Generation Capacity were published proposing a conducive regulatory framework to allow this to happen for municipalities that have a good financial standing.
The efforts are slowly starting to yield results for City of Cape Town and City of Ekurhuleni who may be permitted to go ahead, subject to compliance of various regulations outlined in recent court rulings as well as the approval from the Minister of Mineral Resources and Energy to proceed.
Also, regulatory frameworks and policies must be developed to encourage greater Small Scale Embedded Generation (SSEG) across the public, private and residential sectors – with the ultimate aim of being able to feed electricity into municipal grids.
The rewards of renewable
A report published by International Renewable Energy Agency (IRENA) detailing the numerous benefits of renewables in urban spaces, acknowledged that most cities are largely bound by national frameworks and infrastructure systems.
However, it highlighted that what we are seeing in South Africa – effective cooperation and coordination of policies and initiatives between different levels of governance – can enable change at the local level. The results could lead to the unlocking of finance, capacity building and technical support, as well as the creation of new mandates to accelerate the transition to a sustainable future.
While much has been said about renewable energy’s potential to bolster our economy, it is not the silver bullet that will instantly solve all our developmental challenges. This is the view of Niveshen Govender, Chief Operations Officer at the South African Photovoltaic Industry Association (SAPVIA). Based on current projects, clean energy could make up 40% of the world’s power base by 2050.
While much has been said about renewable energy’s potential to bolster our economy, it is not the silver bullet that will instantly solve all our developmental challenges.
Govender explains that in President Cyril Ramaphosa’s address in 2020 on South Africa’s Economic Reconstruction and Recovery Plan, he outlined interventions to ensure that South Africa rapidly expands its energy generation capacity. “One of the key components of his plan revolves around the role that renewable energy will play in rebuilding the economy.”
Detailing the approach, Ramaphosa committed to finalising the IPP agreements to connect over 2 000 MW of additional capacity from existing projects by June 2021, as part of a medium-term goal of bringing around 11 800 MW of new generation capacity into the system by 2022.
But it’s not just about generating more energy; one of the biggest challenges that South Africa faces is grid reliability. The continuous bouts of load-shedding have wreaked havoc on business.
Acknowledging this issue, Ramaphosa said that the current regulatory framework will be adapted to facilitate new generation projects while protecting the integrity of the national grid. More significantly, it was noted that applications for own-use generation projects are being fast-tracked.
Sustainable finance has increased over the past decade, with nearly R5-trillion being invested globally each year. This has translated into extraordinary growth in wind and solar energy with the average prices dropping 73% and 22% respectively. In the car manufacturing industry, companies investing in batteries have seen their prices decrease by 80%, with a further 60% reduction predicted this decade.
Sustainable finance has increased over the past decade, with nearly R5-trillion being invested globally each year.
While solar and wind are a small part of the current total energy supply in economies, both the residential and commercial sectors are fast adapting to integrating renewable energy into the mix. In the US, for example, Google purchased 1 600 MW from 18 different providers in 2019. Locally, large businesses are doing the same – with Anheuser-Busch InBev connecting its South African breweries to 8.7 MW of distributed solar energy procured through power purchase agreements (PPAs) with local PV systems operator SOLA Group.
The United Nations Industrial Development Organisation (UNIDO) points out that approximately three-quarters of the energy used in the industrial sector is related to the production of energy-intensive commodities, such as ferrous and non-ferrous metals, chemicals and petrochemicals, non-metallic mineral materials, and pulp and paper.
With energy constituting one of the highest costs in overall production, companies are continuously looking at ways to drive these costs down – something that green power provides a solution to.
Businesses are seeing the value of embedded electricity solutions for their supply chains, adds Govender. “Apart from addressing energy shortfalls from national energy providers like Eskom, according to research by Deloitte, using renewable energy can help businesses across their supply chains by decreasing long-term costs, mitigating risk, driving new revenue, enhancing brand value, and improving employee engagement.”
Renewable energy will not be the expected all-in-one solution, but rather it will be the catalyst that capacitates municipalities, business and entire industry sectors – providing a cheaper and more sustainable source of energy that allows them to reinvest, build and ultimately contribute to economic growth in the country.
Greater decentralisation
According to the United Nations, 85% of the global population has access to basic electricity services, up from 73% in 1990. While this has largely been through governments’ efforts in extending national grids, there has been a sharp increase in the demand for off-grid decentralised solutions.
Govender says that, unlike the traditional energy economy, renewable energy is a lot more decentralised. “This has a greater economic benefit to developing countries, particularly in Africa, who can grow their indigenous low-cost energy sources while ensuring that the money stays largely in the region. Countries that were once importers of energy may become self-sufficient, even exporting electricity or hydrogen to other markets.”
With the right blend of policy and regulatory support, innovation and technical assistance, Africa will see the light and will have the power to shine.
Decentralisation supports the UN’s Sustainable Development Goals that require aligning new pools of capital, innovative decentralised distribution models, supportive public policy, and new technology applications. In rural and remote areas across the continent, the true potential of decentralised electrification solutions is realised – to provide cost-efficient and accessible energy where traditional grid infrastructure provides neither.
With the right blend of policy and regulatory support, innovation and technical assistance, Africa will see the light and will have the power to shine.
