Renewable energies offer energy security and a positive ripple effect for SA’s troubled economy

In a courageous step, the South African government launched an emergency plan for energy procurement last year to alleviate the current energy crisis and limit load shedding. The deficits are currently being partially remedied, albeit at great expense, since diesel-based open-cycle gas turbines are used on a large scale. [1]

Such fossil fuel based contingencies undermine our ability to reduce carbon emissions, curb global warming and achieve sustainable development.

The new plan, known as the Risk Mitigation Independent Power Producer Procurement Program (RMIPPPPP), differs from all previous interventions by the Department of Mineral Resources and Energy.

While the predecessors of RMIPPPP mandated certain technologies, any type of technology (or a combination thereof) in any location is considered if the proposed plans meet the department’s strict criteria for cost efficiency and dispatchability (the ability to get the right amount of electricity at the right Time to deliver) meet according to the needs of the electricity grid operator).

The RMIPPPP plan, which provides for a total capacity of 2000 megawatts of emergency power supply from independent producers, is aligned with the progressive energy goals of the Integrated Resource Plan (IRP).

The ambitious RMIPPP program follows the course of REIPPP (The Renewable Energy Independent Power Producer Procurement Program), a competitive tendering process for grid-connected renewable electricity that has attracted over R200 billion in private sector investment over the past 8 years. [2]

Since 2013, Independent Power Generators (IPPs) have proven to be resilient and reliable, and we’ve seen the plethora of benefits private power generators bring to the economy: they attract investment, stimulate the market, and ease pressure on the country’s treasury. They bring skills and jobs with them. IPPs also improve energy security and help diversify the energy mix.

“The RMIPPPP is a progressive step in South African energy history and, if successful, could revolutionize the way electricity is generated and procured in the country,” says Jan Fourie, General Manager in Sub-Saharan Africa of the Norwegian renewable energy giant Scatec.

Scatec’s pivotal proposals are remarkable in that they are the only successful offerings that focus solely on renewable energies.

“Projects based purely on renewable energies like Scatec’s offer economic benefits as all of their costs are embedded in the initial capital expenditure. No fuel is required to run the project, so there is no raw material or currency risk for the state and no CO2 tax, ”explains Fourie.

“This is exciting for Scatec as we now have the opportunity to demonstrate the viability of renewable energy generation and dispel any doubts about its cost competitiveness. Scatec is also honored to be able to contribute to job creation in South Africa with this project by creating several thousand jobs in the construction industry as well as many permanent positions in operations and maintenance, ”says Fourie.

In 2020, amid the COVID-19 pandemic, renewable energy was the only energy source that saw a surge in global demand. The rise in renewable energy popularity has been driven by broad government support, targeted procurement programs, and continuous innovation that reduces both technology costs and operating costs. [3]

“The trend is also shaped by landmark political changes around the world. Norway, for example, wants to end the sale of fossil fuel cars by 2025, many other nations like India, Canada, the UK and the EU will likely do so in the coming decades, ”says Fourie.

Globally, institutional funds are being withdrawn from fossil fuels, and coal-fired power plants no longer enjoy popular support. In recent years, much public and corporate support has focused on renewable energy. Leading companies in the coal and oil industry are also shifting their focus and are investing heavily in renewable energies.

Fourie commends the South African government for its progressive vision and admirable commitment to its goals. He notes that the country’s world-class infrastructure, which enables large-scale generation and distribution, combined with the Treasury’s full support for the new power purchase agreements, has created an attractive investment landscape.

Fourie adds that as Scatec expands its presence in sub-Saharan Africa, it will continue to educate itself to develop institutional scope and expertise. He says Scatec is currently looking into further advances in wind energy as well as other Power-to-X initiatives like green hydrogen and others.

“We become more agile by being technology agnostic and adapting our energy solutions to specific situations in specific areas and adapting our strategies accordingly to maximize efficiency,” concludes Fourie.

References

1. https://www.iol.co.za/business-report/opinion/breaking-new-ground-in-power-procurement-09e2677c-a870-4eec-a37b-60841aa3abda

2. https://www.sanews.gov.za/south-africa/renewable-energy-programme-attracts-r2094-billion-sa-economy#:~:text=4%20billion%20to%20SA%20economy,- Sunday% 2C% 20February% 2024 & text = The% 20REIPPP% 20is% 20a% 20competitive, period% 20it% 20has% 20attracted% 20R209

3. GreenCape RE ME

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