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The energy sector in South Africa is a rapidly evolving and fast growing sector, spurred by the desire for companies to reduce costs in the wake of yet another 25% electricity price increase and the growing need for companies to reduce their carbon footprints, of which South Africa’s primarily coal generated electricity, is a significant contributor.
South Africa is a significant emitter of greenhouse gasses, the majority of which come from our electricity sector. Proposed carbon taxes, amongst other government initiatives were tabled in 2011 to encourage the reduction in emissions throughout the country. Many companies see energy as the key area for emission reductions, including the national electricity provider, Eskom, and the government. To this end, we have seen an increased commitment to renewable energy generation, both from the utility and from private companies.
South Africa and the World Bank signed a $250-million loan agreement for the two utility-scale Eskom projects. The Eskom package has been secured through the Clean Technology Fund and will help finance a 100 MW concentrating solar power plant in Upington, in the Northern Cape, and a further 100 MW wind power project known as Sere, in the Western Cape. The ‘soft loan’ had a 40-year tenor, a ten-year grace period and a 0.25% yearly service on disbursed amounts. The loan complements the $260-million provided to Eskom for the Upington and Sere projects as part of the $3.75-billion World Bank loan approved in April 2010, which mainly supported the funding of the Medupi and Kusile power projects. Eskom has also secured $100-million of Clean Technology Fund assistance through the African Development Bank, which has also provided direct support of $265-million. In addition, Agençe Francaise de Développement had also extended $151-million in support
NERSA, the national energy regulator, also ended the Renewable Energy Feed in Tariff (REFIT) program that was very unsuccessful and replaced it with a far more open offering in the form of a competitive bidding process. Private companies are now able to put in a competitive bid for the sale of renewable energy to Eskom. It is anticipated that this will lower the costs of generation, increase the number of projects in the pipeline and promote growth in the renewable energy sector to aid in meeting the policy laid out in the Integrated Resource Plan for Electricity volume 2 (IRP2) that was published this year by the Department of Energy. The IRP2 lays out a plan to increase the contribution of renewable energy to the national electricity mix by 2030. This fast growing sector of the future will be a significant contributor to the 300,000 jobs that the South African government has committed to create through the green jobs accord.
The energy efficiency program in South Africa has once again showed positive results in 2011, with increased commitment and funding by Eskom of the Integrated Demand Management (IDM) program. New funding mechanisms were introduced by Eskom, to assist in financing energy efficiency projects with trusted technology. The standard product program has significantly reduced the turnaround times of funding proposals. In addition to this, rebates for solar water heaters were increased, rebates for low flow shower heads and heat pumps were made available and large scale energy efficiency performance contracts were signed with significant technology providers
Whilst there is still a concern over the quality of many of the energy saving products, as South Africa is currently used as a dumping ground for products not suitable for the European market, the number of skilled energy professionals continues to grow, indicating that the health of the professional sector is improving and the unskilled product salesmen are being weeded out, albeit slowly. Load shedding has been largely minimised in South Africa this year, although predictions for 2012 are not as bright as the lights are expected to go off more often. Eskom will continue to face a significant energy shortfall that it will need to manage, however unlike in 2008, the utility is preparing for this shortfall and is already taking measures to minimise disruption to consumers.
To conclude, South Africa is working to decouple energy consumption and economic growth and to this end have partnered with Sweden, who has successfully achieved this. There is more funding available now than ever before for energy efficiency projects in South Africa and with the continuous price increases is becoming an extremely attractive investment to companies, who often see returns on investment of over 50% and payback periods of less than 1 year.
The renewable energy sector is rapidly approaching an exciting time, where large scale independent power plants should soon be coming online and producing clean, renewable energy into the grid.
Overall, the future is looking bright for the energy sector in 2012 and I wish you a Merry Christmas and a good rest before the exciting year of 2012 is upon us.
Ken Ross PrEng CEM
GCX: Head Engineer |
