The energy crisis in South Africa stemming from the embattled power utility Eskom, which is facing a shortage of generation capacity due to a combination of maintenance and unplanned breakdowns, has urgently highlighted the pressing need for the urgent implementation of the energy action plan outlined by the government in July, earlier this year.
While in South Africa, the current energy crisis has resulted in years of load shedding, many of the challenges behind this are not unique to South Africa, according to Janice Foster, managing director – Energy at a leading consulting engineering and infrastructure advisory firm, Zutari.
“Globally, we see different parts of the world facing an energy crunch that might look different but are based on some of the same fundamental issues,” Foster told Business Report.
The action plan, announced by President Cyril Ramaphosa at the time, sent a strong and positive message to the market, industry and private investors looking to invest in renewable energy.
“What was great about the President’s speech was that he has opened the energy challenge to a shared solution with opportunities for everyone to have an impact, no matter how small,” Foster says.
“President Ramaphosa’s acknowledgement that the country faced an electricity shortage of 6 000 MW is important because a problem cannot be fixed until it is identified,” adds Foster.
While the large scale renewable projects mooted are long-term interventions, Foster says she is “optimistically confident” that the action plan “sets us up to make the right decisions and move us in the right direction. However, for these to start having an impact, they need to be implemented with the utmost urgency.”
A highlight of the plan is doubling the new generation capacity for wind and solar power for Bid Window 6 of the Renewable Energy IPP Procurement Programme (REIPPPP), from 2 600 MW to 5 200 MW, the submission date of which has been extended to 3 October to allow for the registration of additional bidders.
Zutari says it has supported client projects in all REIPPPP Bid Windows to date, including the latest.
“Raising the threshold to 100 MW last year has already unlocked a pipeline of more than 80 confirmed private sector projects which are now starting to reach financial close. With a combined capacity of over 6 000 MW ,“this is a significant increase in capacity for private off-takers,” says Foster.
“Preferred projects in Bid Window 5 are facing a number of obstacles to achieving financial close. A way to resolve the hurdles so that they can move forward into construction needs to be found,” adds Foster.
Another important move by government is the announcement of an Eskom feed-in tariff for small-scale embedded generation.
“That is a real signal of incentive to Eskom’s commercial users and private residential customers that they can also contribute and support their own needs at the same time,” says Foster.
While municipalities like Cape Town are already forging ahead in this regard, it applies to utility customers at present.
It is also positive that the government is reaching out to the private sector to assist with expertise and skills.
“Yes, while there are consulting firms like us that can provide that support, there are also possibly a number of individuals who have left the industry entirely for whatever reason who can be attracted back and add value. I think it has definitely sent a message acknowledging the need for everyone to contribute in whatever way they can. It is a shared problem, so we can make it a shared solution,” says Foster.
The planned battery energy storage to supplement Eskom’s capacity represents a multifaceted approach to the energy crisis.
“This opens up the energy storage market to private investment. The addition of Battery Energy Storage Systems (BESS) will support the grid by catering for peak shaving, providing network stability,” adds Foster.
These systems will enable greater penetration of renewables into the future.
“The bulk of our power supply is still coal-based. As we transition away from fossil fuels, we need to ensure there are opportunities for participation of all stakeholders, especially the thousands employed in the coal-mining industry. Our energy crisis is a relatively solvable problem from a technical standpoint, but the number of social and institutional challenges it brings are equally, if not more, important,” stresses Foster.
“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. It is both an energy security challenge as well as the need to reduce the carbon footprint of our energy supply,” she concludes.
BUSINESS REPORT