The South African renewable energy landscape is set to change rapidly in the next decade with the government targeting the sector as a possible source of employment opportunities. The strong procurement process in a relatively stable political environment, linked with long-term targets and proactive legislation from the government, will trigger expansion. Several major energy users are privately investigating the potential behind alternative energies and building these costs into their strategic plans.
Analysis from Frost & Sullivan finds that renewable energy is expected to account for more than 20% of South Africa’s total power generation capacity by 2030 in comparison to the less than 5% it currently contributes.
Global pressure, especially from developed countries where coal is increasingly less of a major part of the energy feedstock mix, will promote the use of clean energy in South Africa. Increasing climate change awareness and the enforcement of policies, such as the proposed carbon tax, will accelerate the shift to renewable energy.
“The South African government has identified the development of a green economy as one of the job drivers in the country, in turn, encouraging investments in renewable energy,” Frost & Sullivan consulting manager for energy and environment Johan Muller, says. “Over and above the necessity of direct jobs for building power plants, other jobs such as those for operation and maintenance, resource economists and experts on monitoring and evaluation will open up.”
Following the feed-in tariff initiative and the subsequent independent power producer tender process, South Africa has a host of renewable power initiatives in the pipeline. As market participants look to tap into this gap in the market, they face numerous teething problems. The slow implementation of the feed-in tariff, the unavailability of data, and the cost of the procurement process stall the market’s surge forward. Coal-fired electricity, even with the recent 25% price rise, is still more feasible than renewable energy, especially from a baseload perspective.
“From a private investment point of view, the main challenges included both the lack of local technical know-how and skills- however with more than 60 projects in different stages of completion this challenge is quickly being eroded,” Muller says. “Employing overseas transfer programmes can bridge the divide and integrating skills over time will ensure better control and competitiveness in the nascent market.”
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