Renewables allure increases in SA

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Seydou Kane, MD of energy distribution solutions provider, Eaton Africa.
Seydou Kane, MD of energy distribution solutions provider, Eaton Africa.

SA is witnessing a “groundswell” in renewable energy consumption, as local businesses and households seek alternative sources for affordable and uninterrupted power supply.

This is the word from energy experts discussing the important role played by renewable energy as a potential solution to SA’s energy supply crisis.

Although SA's energy sector is still largely coal-driven, solar-powered energy systems that combine multiple sources of distributed energy, either embedded in national distribution networks or operating independently, are on the increase in SA.

These are driven by the rising electricity prices, potential power outages, awareness of the need to reduce greenhouse gas emissions, and decreasing technology costs, among other factors.

“We are seeing a massive groundswell of renewable energy use in SA, initially aimed at large-scale industrial and business use,” explains Arthur Goldstuck, World Wide Worx MD and chairman of Sasfin’s digital advisory council.

“We see massive windfarms rolling out in the Eastern and Western Cape, and vast solar panel energy facilities in desert areas. We are also seeing a more active commitment from government to integrating renewable energy providers into the grid.”

In February, SA was plunged into darkness when Eskom escalated its load-shedding schedule from stage two to stage four, after the embattled power utility "lost functionality" in six of its generating units.

Someone has to pay

Eskom, which supplies over 90% of SA’s electricity, is in a severe financial crisis and is struggling to pay the interest on its massive R419 billion debt out of the revenue it generates.

Seydou Kane, MD of energy distribution solutions provider, Eaton Africa, told ITWeb that SA is witnessing more organisations in the manufacturing, mining, agriculture and retail sectors, as well as home owners, opting for solutions such as micro-grid energy systems. With Eskom expected to significantly increase its tariff in the coming months, this will result in more businesses and home owners opting for renewable energy, he adds.

“The price of electricity in SA is expected to increase sharply in the next few years, because someone has to pay for Eskom’s debt.” The energy situation in Africa calls for the need to change the business model from the utilities sector, he notes.

“There are plenty of opportunities for distributed energy models, and we will see many scenarios whereby a number of micro grids, connected off the national grid, are disseminated throughout the country and used by both businesses and households,” explains Kane.

Distributed energy models, he points out, play an important role in lowering the price of electricity, preventing power interruptions, and providing an effective and efficient contribution to reducing the load on Eskom’s power grid, Kane explains.

According to renewable energy industry body, the South African Photovoltaic Industry Association (SAPVIA), the business case for renewables and photovoltaics (PV) in SA is becoming more attractive.

“There is sufficient market research and information available to substantiate that more local businesses are opting for renewables and PVs, as they offer a long-term solution for SA’s energy crisis in that they provide rapidly implementable capacity to the grid to make up for shortfalls,” explains a SAPVIA spokesperson.

“The falling price of renewables also means they provide a compelling price point that will create pricing surpluses for Eskom, or its replacement, in future, allowing it to pay down its debt.”

According to a report conducted by the Council for Scientific and Industrial Research (CSIR), although statistics for the penetration of solar PV distributed generation energy use are based on industry estimates, current data indicates the rapid growth of such systems is on the increase in SA.

“SA continues to experience an increase in consumers implementing solar PV distributed generation systems; a trend that can be traced as far back as 1921. The trend has only recently accelerated in earnest given the low electricity tariffs offered by Eskom prior to 2010.

“Current installations are visible across all segments, including industrial, agricultural, commercial and residential. Solar PV costs are forecasted to decline and continue along this trajectory well.”

Competitive costs

Ntombifuthi Ntuli, CEO of the South African Wind Energy Association, told ITWeb in an e-mail that SA is at a key stage of the national energy transition, as it has abundant wind resources to strengthen the country’s power mix, along with clear evidence that renewable power costs are competitive against that of coal.

“SAWEA has consistently lobbied government to take a bolder approach to investing in renewables. Referencing economic model outcomes, it has been able to illustrate that, by adopting an approach that both smooths out annual procurement and raises annual procurement limits on renewables, it can result in both job creation through construction and manufacturing projects and GDP growth,” explains Ntuli.

Winds of change

According to Ntuli, those in the wind industry believe it’s time to relook at how energy is supplied in SA and to evolve and adapt the country’s outdated systems.

“We need to shift away from a centralised monopoly to a more efficient decentralised generation model, which will increase competition and drive down energy prices, and will ultimately stimulate the economy and support the growth that SA is seeking,” she points out.

Goldstuck comments that due to the political patronage that has been invested in coal mining in recent years, Eskom has actively worked against the renewables industry, holding back its growth and potential.

“We now see a more active commitment to integrating renewable energy providers into the grid, but it often feels like one step forward, two steps back. Unless there is an active and even aggressive policy direction towards renewable energy, the industry will keep progressing despite government and utilities, and not because of them.”

However, Kane believes there are a few factors that will hinder the implementation of renewable energy sources.

“The three barriers hindering the use of renewable energy locally include access to information – the majority of people are still not well-informed about the sustainable and environmentally friendly energy options.

“Second are the financial constraints – renewable energy solutions don’t come cheap, although there is a significant return on investment for businesses using these. Thirdly, there is the lack of effective, facilitative laws to promote sustainable renewable energy. An energy regulatory framework will help encourage and support various sectors to implement more renewable energy projects in SA.”

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