South Africa's economy
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Anyone familiar with South Africa’s concept of time will understand the varying timeframes of ‘now’ (with urgency), ‘now-now’ (shortly), and ‘just-now’ (maybe later).

Originally published in the ESI Africa weekly newsletter on 2019/12/04

It explains why Bruce Whitefield, a financial personality, said: “We don’t have the South African timeframes to fix SA’s problem. We can’t do it just-now or now-now. We have to do it now!”

He uttered this warning at the SAIEE gathering last week. The SAIEE—a South African professional body, dedicated to the electrical and electronic engineering sectors—decided to address the country’s energy sector shortcomings at their inaugural event in Sandton.

Core to the discussion is the shift to renewable energy being inevitable. However, let’s not allow this shift to side-line fixing the country’s existing generation arm of the ESI. These assets – as unreliable as they currently are – still hold value in the economy. These power plants make up the majority of the generation capacity on the national grid, which employs large numbers of unskilled and semi-skilled people.

The reason for this generation monopoly is that when renewables emerged, South Africa’s focus was elsewhere. The failed nuclear deal, the push for acquisition of new coal-fired assets, and years of the Gupta-Zuma saga. The saving grace was the then-enviable renewable energy IPP procurement programme (REIPPPP), which is set to make a lofty comeback. Under the IRP2019, new solar PV (6,000MW) and new wind power (14,400MW) capacity is intended to be commissioned by 2030.

At the core of fixing South Africa are two intertwined elements: providing on-demand power supply and reducing unemployment rates. We must, therefore, move cautiously on achieving a 'just transition', which is dictated in the IRP. This phrase speaks to the move to less carbon-emitting technologies, without leaving workers and communities in affected areas, as far as possible, in a worse off position.

No matter how attractive transitioning to a cleaner economy is, focussing entirely on increasing renewable energy on the grid is not the immediate solution. It must be a long-term transition that steadily decommissions the country’s current power station fleet over 20 years or more. The IRP2019 does address this, although not to everyone’s satisfaction.

Another puzzle to solve, in terms of fixing South Africa’s economy, is how to create a manufacturing (not just assembly) sector for renewable products (panels, blades, batteries, etc.) and an export market for resources such as synthetic fuels, coal (yes, coal), and hydrogen.

South Africa, along with other African nations, is sitting on a goldmine of opportunity; as the global growth of solar panels, wind turbines, and battery storage escalate so too will the demand for several of the continent’s rare earth mineral resources needed in their production.

A sticking point, raised at the SAIEE forum, is the need for policies that are coherent between the departments of energy and mineral resources, the regulator, and National Treasury. Without a united front, fixing South Africa will continue on a just-now timeline!

Until next week.
Nicolette

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