Renewables key to driving a sustainable energy sector in South Africa

South African President Ramaphosa in his State of the Nation address (SONA) in February this year underscored the issues related to the country’s power sector. In this respect, the government has launched various measures to increase generation capacity via renewable energy.

Global renewable energy player, Enel Green Power, believes that the Government’s Integrated Resource Plan (IRP) of 2019, which is currently in its implementation phase, could provide steady growth for renewable energy and the overall energy industry within the country.

“We remain optimistic that this will translate into action this year, especially given the President’s announcement that the government will soon be initiating the procurement of an additional 11,800MW of power – including from renewable energy and battery storage,” says Manuele Battisti, Enel Green Power Southern Africa Head of Business Development.

Renewable energy sources are key to driving sustainable growth and – now more than ever – can drive post COVID-19 economic recovery in the country, a “green recovery”. South Africa’s Renewable Energy Independent Power Producers Procurement Programme (REIPPPP) is a flagship programme that, since commencing in 2011, has seen four allocated bid windows.

The REIPPPP forms part of the implementation of the IRP with a fifth bid round on the cards for this year.

The REIPPPP’s fifth bid window is highly anticipated in the renewable market. In fact, the expedited bid window (i.e. Round 4.5) was launched in 2016 with no contracts awarded. The Request for Proposals for the fifth bid window, which will deploy 1,000 MW of solar PV and 1,600 MW of wind power, was issued in March 2021, with a possible sixth bid window to be announced before the end of the year.

Programme and project implementation timelines can, however, be affected by several factors. It is particularly important, after a long gap of more than four years since the last REIPPPP bidding round was launched, to plan the RFP rules carefully so that the different aspects of the programme can interact optimally and all players in the energy environment can work together to achieve success. “Success means ensuring a sustainable energy sector in South Africa, underpinned by predictable and clear rules, which allows investors to plan,” adds Battisti.

The REIPPPP also supports the government’s mandate to foster the local economy and industrialisation with the inclusion of local content and designated local content obligations.

Unfortunately, the four-year hiatus of the REIPPPP has meant that most of the operations that could supply key components such as solar PV panels have either closed down or moved their factories elsewhere. However, South Africa’s renewable supply industry can be relaunched via a medium-term holistic strategy which, starting by acknowledging the status of the industry, includes realistic obligations in the next REIPPPP round.

The possible increasing of local content targets over time should allow for the creation of sustainable momentum for local productions to stabilise and become more effective. Renewable industry localisation targets should avoid becoming the hurdle that hinders electricity generation growth and cost-effective electricity prices for taxpayers.

Battisti points out that renewable technologies represent the most cost-effective way of producing electricity. “South Africa is blessed with an abundance of natural energy sources, such as sun and wind, which makes renewable energy the obvious choice for a cleaner and more sustainable Country’s growth. The renewable industry also represents a sector that attracts local and global investments by creating many reliable and highly diversified jobs.”