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South Africa – Energising Alternatives

In an attempt to reduce the negative environmental externalities related to heavy-coal-fired electricity generation, South Africa is stepping up efforts to increase the role renewable energy plays in its progressively overstretched electricity sector, pushing ahead with a series of programmes aimed at harvesting the nation’s infinite alternate resources.

The government has moved to bring the agencies charged with promoting this new sustainable energy use under one roof, launching the South African national energy development institute (SANEDI) on July 19. The new organisation, which will power the research and development of indigenous green-energy innovations in partnership with science councils, universities and private industry, combines two previous bodies, the National Energy Efficiency Agency and the South African National Energy Institute.

The country is already adapting to reinforce the contribution of renewables to its energy sector. The Department of Energy (DoE) is in the final stages of sealing up to 28 renewable energy proposals that were first accepted back in December 2011, with the signing of implementation, connection and power purchase agreements for a raft of projects set for August.

The initial projects – the first part of the department’s Renewable Energy Independent Power Producer Programme (REIPPPP) – is comprised of 18 solar photovoltaic projects with a total capacity of 631.53 MW; two concentrated solar power projects, with 150 MW of combined capacity; and eight onshore wind developments, representing 633.9 MW.

An addition round of 19 projects were assessed in May and a call for the third series of proposals will be issued in the near term, part of the government’s programme to be creating at least 3725 MW of renewable energy and have the tools installed by 2016, with the first projected forecast to come online by 2014.

While the government is keen to promote renewable energy, the delays in its first round of REIPPP projects do highlight difficulties, including financial backing for less-conventional and smaller-scale developments.  Investors may take a renewed outlook on later generations of renewable power generation depending on how successful these initial round of REIPPP projects can prove to be.

However, while SANEDI and schemes such as REIPPP represent the government’s commitment to green energy, the country is keen to maintain as diversified a portfolio as possible, not only to avoid repeats of the load=shedding issues it faced in 2008 but also to reduce exposure to potential swings in commodity prices.

This is most evident in the government’s continued efforts to expand nuclear power generation in the country. Dipuo Peters, the minister of energy, used the introduction  of the new SANEDI agency to underscore the government’s commitment to nuclear energy, as well as with the more traditional use of coal as an energy source.

“We need to use and will continue using nuclear energy for feeding, healing, energy and water provision,” Peters said.

South Africa has plans to construct nuclear power stations with a combined capacity of 9.6 GW by 2030, with at least six such plants being considered along with the sole station already in operation, with their output dwarfing that of the proposed alternative energy programme. Firms from Russia, China and South Korea are among the contenders for the lucrative contracts that will stem from South Africa’s atomic energy programme, with Russian state-owned nuclear energy group Rosatom opening a local office in mid-July to promote its interests.

Coal currently dominates South Africa’s energy mix accounting for 73.4% of primary energy and 90% of electricity in 2010, whilst diversification is a primary, the carbon-based fuel will likely maintain it’s primary position for decades to come. The DoE estimate that coal will continue to be used for the next 100 years, with the minister saying it was indispensable, “as long as we want to keep the lights on”.

South Africa’s push for the promotion of renewable energy is attracting interest from abroad as Chinese firm Powerway Renewable Energy announced it would be investing $1.2m to build several factories and produce mounting and tracking systems for solar photovoltaic plans in July.

Benson Wu, the CEO of Powerway, said the investment aimed to take advantage of the anticipated growth in solar energy in the South African market, with his firm foreseeing the need to supply mounting structures for over 500 MW of solar farms annually.

If the government can sustain the private sectors thirst for alternative energy projects and lure financers in to back such schemes more developments will get up and running in the years to come. However, the challenge will ensure the survival of the project through to its formative and stages and the ability to expand into businesses that generate profits, as well as power.