‘SA green energy projects can plug power supply gap’
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SOUTH Africa had about 184 “shovel-ready” renewable energy, storage, transmission and distribution projects that collectively could add 10.3 gigawatts of capacity to plug the country’s electricity supply gap and increase its total generation capacity by about 18 percent, according to a study by EY-Parthenon.
Serge Colle, EY global energy adviser, said yesterday the report highlighted the potential to accelerate the private sector’s investment in renewable energy by applying government policies and regulatory frameworks, through global collaboration between governments and the private sector.
“This multi-country report, that has taken a bottom-up approach, maps the pipeline of ‘shovel-ready’ investable projects that could be unlocked to enable a green recovery,” said Colle.
The global study, which was commissioned by the European Climate Foundation, found that 13 000 renewable projects around the globe were shovel ready, amounting to $2 trillion (about R28.7trln) in investment opportunities. This was set to contribute to one terawatt of renewable generation capacity.
It said the visible project pipeline could create up to 10 million jobs locally and in the supply chain.
The research covered 47 countries, and as such lays out only part of the total global opportunity, which was considerably larger.
The visible project pipeline would close emission-reduction targets for 2030 for the 47 countries covered in the report.
South Africa, which was the world’s 12th-largest emitter of greenhouse gases, has been contending with load shedding for more than a decade, in part because of breakdowns across its ageing fcoal-fired power stations.
According to the findings of the report titled “A clean Covid-19 recovery”, deploying the available pipeline of renewable energy projects would enable South Africa to increase its total generation capacity by about 18 percent and substantially increase the availability of reliable electricity and improve energy security.
EY-Parthenon studied South Africa’s clean-energy prospects alongside a global report on renewables.
It was said that although the pipeline required investments of more than $37 billion (about R526bn), the vast majority of the funding could be sourced from the private sector. “This capital injection was the equivalent of two-thirds of the economic output South Africa lost in 2020 amid the worst of the Covid-19 pandemic and another bout of load shedding.”
Most of the identified projects in the country were in the transmission and distribution, onshore wind, and solar segments, with storage and hydro projects accounting for the remainder of the pipeline.
Private organisations were the primary driver behind the size of the pipeline, with most of the projects still in the permitting phase. Most projects were expected to reach financial close in the next 24 months.
South Africa’s pipeline of projects had the potential to create 155 000 jobs, the report said.
Of the 94 generation projects, 53 fell within the new 100 megawatt licensing exemption threshold. President Cyril Ramaphosa recently announced that the government would amend Schedule 2 of the Electricity Regulation Act to raise the threshold for companies to produce their own electricity without a licence to 100MW.
The project pipeline was said to be likely to allow South Africa to reduce its emissions by 40 megatons of carbon dioxide equivalent per year, a 9 percent reduction in the country’s total emissions.
South Africa’s Presidential Climate Change Co-ordinating Commission recently recommended that the government set more ambitious emission-reduction targets in a bid to attract climate finance and for the country to remain competitive in global trade. The commission recommended a 2030 target of emissions between 350 megatons and 420 megatons of carbon dioxide equivalent.
EY-Parthenon said although abundant capital was available in the private sector for the project pipeline, and there was strong appetite for investing in renewables, additional policy measures were needed to unlock the full potential of private investment.
“For instance, the government could increase the size of allocations in future renewable energy procurement rounds, while ensuring consistency in the timing of bidding windows. It could also implement binding off-taker contracts to create greater certainty for developers and return confidence to the market.”
It said that infrastructure upgrades were also required, particularly to increase the capacity of transmission links connecting the renewable resource-rich Northern Cape with major metropolitan areas. Steps to develop manufacturing capabilities for renewables could help South Africa to realise a far greater proportion of the job potential in the supply chain.