The government’s energy action plan sends a strong message to industry and investors

The action plan announced by President Cyril Ramaphosa in his July 25 national address to address the country’s energy crisis sends a strong and positive message to the market, industry and private investors looking to invest in renewable energy, said Janice Foster, the market’s general manager. – Energy at Zutari, a leading engineering and infrastructure consulting firm. “What was great about the president’s speech was that he opened up the energy challenge to a shared solution with opportunities for everyone to have an impact, no matter how small.”

President Ramaphosa has revealed that the country is facing a 6,000 MW power shortage. “That recognition in itself is important because a problem cannot be solved until it is identified,” Foster says. While large-scale renewable energy projects will take time and require buy-in from multiple stakeholders, Foster says she is “optimistically confident” that the action plan “prepares us to make the right decisions and move forward.” in the right direction”.

One of the highlights of the plan is the doubling of new wind and solar power generation capacity for IPP Renewable Energy Procurement Program (REIPPPP) tender window 6 from 2,600 MW to 5,200MW. Zutari has supported client projects in all REIPPPP auction windows to date, including the last one.

Another important step is to remove the built-in production capacity threshold entirely. Raising the threshold to 100 MW last year has already unlocked a pipeline of over 80 confirmed private sector projects with a combined capacity of over 6,000 MW. “This is a significant increase in capacity for private buyers, which we expect to see begin to come online in the coming months,” says Foster.

She points out that preferred projects in Bid Window 5 should be prioritized, “because they have already been awarded and would theoretically be the fastest to go live if we can overcome the hurdles to those who make it to financial close.” . However, Foster adds that projects in Bid Window 6 should factor these constraints into their cost and delivery.

Another important government initiative is the announcement of an Eskom feed-in tariff for small-scale embedded generation. “It’s a real incentive signal for Eskom’s commercial users and private residential customers that they can also contribute and meet their own needs at the same time,” says Foster. While municipalities like Cape Town are already moving forward in this regard, this currently applies to utility customers.

It is also positive that the government is reaching out to the private sector to contribute its expertise and skills. “Yes, while there are consultancies like us who can provide that support, there may also be a number of people who have left the industry completely for whatever reason who can be drawn in and add the value. I think it definitely sent a message acknowledging the need for everyone to contribute in any way possible. It’s a shared problem, so we can make it a shared solution,” says Foster.

The battery energy storage planned to supplement Eskom’s capacity represents a multifaceted approach to the energy crisis. “This opens the energy storage market to private investment. The addition of Battery Energy Storage Systems (BESS) will support the grid by supporting peak shaving, ensuring grid stability,” adds Foster. These systems will enable greater penetration of renewable energies in the future.

While the current energy crisis is the result of years of load shedding, the situation is not unique to South Africa. “Globally, we see different parts of the world facing energy challenges that may look different but are based on some of the same fundamental issues.” One of them is the just energy transition, which the government relies on to invest in the grid and reallocate power plants that have reached the end of their viable life.

“It is a global imperative for the world to reduce its reliance on carbon-intensive energy solutions. This is a problem likely to be with us for the foreseeable future. This is both an energy security challenge and the need to reduce the carbon footprint of our energy supply,” says Foster.

A “just” energy transition is probably the most important consideration from a local perspective. “Most of our electricity supply is still coal-based. As we move away from fossil fuels, we must ensure that there are opportunities for participation for all stakeholders, especially the thousands of employees in the coal industry. Our energy crisis is a relatively solvable problem from a technical point of view, but the number of social and institutional challenges it brings are just as important, if not more so,” concludes Foster.

Government action plan to deal with the energy crisis

  • Improve the performance of Eskom’s existing power plant fleet
  • Accelerate the acquisition of new production capacities
  • Massively increase private investment in production capacity
  • Enable businesses and households to invest in rooftop solar, and
  • Fundamentally transforming the electricity sector and positioning it for future sustainability

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