OVERVIEW
Energy Generation exemption has changed the energy landscape. Medupi power station is one of the largest engineering projects in South Africa’s history. Credit: Eskom
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n June 2021 President Cyril Ramaphosa announced that private entities could go ahead and produce electricity without a licence, raising the threshold from 1MW to 100MW at a stroke. Intensive energy users such as mining houses had been arguing for this policy initiative for a long time, as had manufacturers in the sugar and timber milling industries, which produce vast amounts of biomass which can be turned into energy. The presidential announcement was almost universally welcomed by interested parties, including the CEO of national utility Eskom, which is struggling to keep South Africa supplied with sufficient power. Mining companies such as Sibanye-Stillwater and Gold Fields want to marshall renewable energy resources to power their own operations. Another big game-changer in the South African energy landscape will be the unbundling of Eskom. An Independent Transmission System and Market Operator was set to be established by 31 December 2021, assuming that all the documents are signed by that date. Companies such as Earth & Wire are preparing to become independent utilities in a more flexible energy environment. However, the move away from fossil fuels is not as straightforward as might be assumed. Despite the emphasis on renewables in South Africa’s latest integrated resources plan (IRP), South Africa’s energy mix is still weighted towards coal. Two huge new power stations, Kusile and Medupi, are being built by Eskom and 1 000MW has been allocated to private producers to build coal-powered stations. Koeberg nuclear power station is due to be decommissioned soon after 2045. The Minister of Mineral Resources and Energy, Gwede Mantashe, is a former coal miner and he has unapologetically argued the corner of the coal
SOUTH AFRICAN BUSINESS 2022
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SECTOR INSIGHT A green hydrogen industry could transform South Africa. industry, pointing out that South Africa still has vast reserves of coal. This fact, and the need to make what has been called a “just transition” to green energy, underpin the creation of the Presidential Climate Change Coordinating Commission (PCCCC). Led by Valli Moosa, a former minister of the environment who famously campaigned against the proliferation of shopping bags, the PCCCC aims to look beyond the jobs lost by a switch to greener energy options and consider issues such as the effects of climate change on vulnerable communities. Renewable energy development zones (REDZ) are intended to contribute to mine rehabilitation and to support a just energy transition.
