JAN FOURIE: Renewable energy is SA’s most effective load-shedding mitigation strategy
The secret to solving SA’s power-generation problems lies in how quickly and effectively we harness our nation’s abundant renewable resources
Despite its ongoing electricity woes, SA is well positioned for effective renewable energy generation. The country’s abundant sun and wind resources, combined with the quick turnaround of establishing renewables-based projects, make for the most effective and sustainable solutions to the energy risks SA faces.
Electricity generated from renewables is not subject to the same pricing volatility as the fossil fuel-based alternatives. It is not linked to international commodity prices, nor the currency it is quoted in. Hence, electricity generated from renewable sources offers pricing predictability and affordability. The benefit to the buyer of renewable power is clear — all pricing exposure transfers to the seller on the date of contract signature, except for standard inflation-linked increases.
However, the same cannot be said when it comes to procurement of electricity generated from fossil fuels, as typically fuel prices, the carbon tax and other costs all remain the burden of the buyer. So it is self-evident that the risk allocation between the buyer and seller vastly differs from renewables to fossil fuel sources. If one compares the already attractive prices of renewable energy with the fully inclusive prices of fossil fuels commercially, renewable energy is a no-brainer. Buyers of electricity need be alive to this subtle but important nuance as a lot can happen in 20 years.
While liquefied natural gas (LNG) is a feasible power-generation alternative, limited domestic production means the bulk of liquid gas is imported and vulnerable to disruptions caused by problems with the international supply chain, volatile exchange rates, and commodity prices. Recent news of discoveries of natural gas in and near SA will take years to mobilise and will require vast infrastructure and capital investment before making complete sense.
Recent developments in tech and innovation in the renewable energy sector have led to the viability of on-demand power generation at a stable cost over the long term, making it a safer and more cost-effective solution for the country. This was a key requirement of the last year’s Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP) procurement guidelines, stipulating the need for dispatchable energy capacity that can supplement the national grid. Dispatchable power means that electricity can be dispensed on-demand to the grid, that is at the request of Eskom’s National Control Centre at the required output level and duration to ensure the lights stay on.
In the RMIPPPP Scatec was awarded 150MW of contracted capacity to be dispatched daily between 5.30am and 9.30pm, in a technology agnostic energy auction. Scatec was the only company to be awarded projects in RMIPPPP that is solely reliant on renewable energy technologies.
The best thing about dispatchable renewable electricity is arguably the fact that it is already in reach for SA. Dispatchable renewable energy generation is actively being pursued as an energy resilience strategy that can support local energy grids by mitigating the impact of load-shedding. In March, Norfund and British International Investment also committed R600m to renewable energy development in SA, a significant backing and indication of confidence in the renewables agenda.
The secret to solving our power-generation problems lies in how quickly and effectively we harness our nation’s abundant renewable resources. This will future proof a vital sector in the country that will first stop our economy’s growth-haemorrhaging load-shedding, stabilise the economy, and catalyse growth through attracting foreign investment and industrialisation, which in turn would result in job creation at scale.
The time to act is now — the renewable sector is ready and investors are ready. All we need is the green light and we will offer the solutions to fight load-shedding at the lowest cost to SA.
Fourie is GM for Sub Saharan Africa at energy and renewables company Scatec.
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