Beyond solar and wind, it offers enormous potential for the African continent
As a trusted adviser, we’ve partnered with Seriti to continue its just energy transition through the purchase of the Windlab Africa Platform. The deal allows Seriti to harness wind and solar assets to reduce its carbon footprint and ensure sustainability as a diversified renewable power producer.
Traditional values. Innovative ideas.
ENGIE was the first Independent Power Producer in South Africa. At present, we have an installed capacity of 1.3 GW, with another 425MW in advanced development and a pipeline of over 2GW. We have implemented a Green Hydrogen solution* in mobility – a global first, piloted in South Africa.
Our purpose is to accelerate the transition towards a carbon neutral economy through reduced energy consumption and more environmentally friendly solutions. This purpose brings together the company its employees its clients and its shareholders and reconciles economic performance with a positive impact on people and the planet.
We leverage off our international expertise and partner with local entities to ensure we implement the best energy solutions for South Africa.
AfricaCommunications@Engie.com Scan
8 ENABLING THE PRIVATE SECTOR TO SOLVE THE ENERGY CRISIS
International law firm Allen & Overy shares their perspective on the country’s energy situation, and what they think needs to happen from a legal and commercial standpoint.
11 HOW A DIRTY INDUSTRY IS GOING GREEN
Mining is rapidly cleaning up its image and making a positive contribution to carbon reduction.
13 MOVING BEYOND LEGACY THINKING
To deliver effective energy access in Africa, we need to consider new ways of doing things, like utilising mini-or micro-grids.
16 ELECTRIC VEHICLES DELIVER!
Electric vehicles are proving enormously successful for short-distance deliveries, such as those performed by retailers for their online goods.
21 WHY EVERYONE SHOULD WANT AN EV
A man-in-the-street view of what it’s like to drive an EV, and the benefits it offers over internal combustion engines.
24 TRANSITIONING TO MANUFACTURE EV S
South Africa is at risk of losing export markets for our automotive industry, unless we begin to transition to EV production.
28 BUILDING A STRONG EXPORT SECTOR
The African continent is well positioned to be an exporter of green hydrogen – experts discuss how SA can capitalise on this.
29 SA’S GREEN HYDROGEN NATIONAL PROGRAMME
Looking at the challenges facing SA’s Green Hydrogen National Programme, and the benefits that might spin out of this.
33 SA’S GREEN HYDROGEN CORRIDOR
What the MoU between the Western Cape and Northern Cape means for the establishment of a green hydrogen corridor.
34 IMPACT RENEWABLES CAN HAVE IN AFRICA
Unpacking the role that renewables have to play in improving lives and boosting economies in Africa.
39 ESTABLISHING A CARBON-NEUTRAL GRID
With massive carbon emissions globally, electric utilities play a crucial role in achieving a low-carbon future, so it is crucial they decarbonise their grids.
42 FINANCING OUR ENERGY FUTURE
How financing sources and structures could drive South Africa’s future energy mix.
44 THE NEW CLIMATE FINANCE PARADIGM
How the Just Energy Transition Investment Plan will work, and what it will cover.
45 OBTAINING INVESTMENT IN A RENEWABLE PROJECT
Taking a look at what investors seek when investing in renewable energy projects.
48 A NET-ZERO FUTURE IS A COLLECTIVE RESPONSIBILITY
To help mitigate the growing climate crisis, we urgently needs smart solutions, and every organisation, government and individual has a role to play.
48 WASTE-TO-ENERGY IS AN IMPORTANT PART OF THE JUST ENERGY TRANSITION
Much of the waste going to landfills, if managed effectively, could be reused as alternative resources in the form of waste-to-energy solutions.
49 THE IMPORTANCE OF RECYCLING LEAD-ACID BATTERIES
As we move away from using lead-acid batteries, it becomes crucial for users to ensure the correct disposal of these items.
49 PROTECT YOUR HOME FROM ENERGY VAMPIRES
Smart technologies offer homeowners the opportunity to nimbly automate household devices in ways that enable them to save on electricity costs.
50 THE IMPORTANCE OF ESG CREDENTIALS FOR IPP S
Renewable energy IPPs can be the enablers of ESG for the rest of the market – if they share the right credentials.
51 UNMANAGED ENERGY CONSUMPTION IS A REAL THREAT
If businesses don’t know what is contributing to their electricity bills, it becomes very difficult to reduce costs.
52 WHAT WILL OUR FUTURE ENERGY MIX LOOK LIKE?
Material planning is going into what SA’s future energy mix could look like, and this planning is also considering costs and funding sources. EY’s expert unpacks the details.
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The majority of South Africans have not felt so powerless since the advent of democracy, as rolling blackouts impact businesses, individual homeowners and the nation as a whole.
Clearly, energy is of the highest concern right now, and following President Cyril Ramaphosa’s State of the Nation Address, we asked international law firm Allen & Overy to share their perspective on the country’s energy situation, and what they think needs to happen from a legal and commercial standpoint.
But despite the many areas of challenge this sector faces, it is not all doom and gloom, as we look at how mining, a traditionally “dirty” industry, is transitioning to renewables and making a positive contribution to carbon reduction. In addition, we look at new ways of thinking, such as implementing micro-grids to supply energy to the under-serviced.
Despite the country’s electricity generation woes, electric vehicles (EVs) are gaining in popularity, especially as short-range delivery vehicles for retailers. We get a behind-the-wheel view of what it is like to drive one of these cars, and a stark warning that our automotive industry urgently needs to transition to manufacturing EVs – or risk losing our export market.
Beyond solar and wind, green hydrogen offers enormous potential benefi ts for South Africa and the continent as a whole. In fact, the Western Cape and Northern Cape have signed a memorandum of understanding to create a green hydrogen corridor. Similarly, we consider the potential benefi ts and challenges of South Africa’s Green Hydrogen National Programme. We also look into the
possibility of African nations working together to build a strong export sector for this product.
Renewable solutions such as solar and wind form a big part of the Just Energy Transition Investment Plan (JET IP), so we consider how the plan will work and exactly what it will cover. We also gain insight into the role that renewables have to play in improving the lives of citizens and in boosting economies in Africa, along with taking a deep dive into exactly what investors seek when choosing to invest in renewable energy projects on the continent.
A number of experts in the fi eld also write for us, discussing legal aspects like power market reform and the JET IP, and the importance of renewable energy independent power producers demonstrating solid environmental, social and governance credentials. We also look deeper into environmental concerns like utilities establishing a carbon-neutral grid, recycling lead-acid batteries and the vital role of waste-to-energy conversion in the overall JET plan.
An expert cautions that a net-zero future is a collective responsibility, with every organisation, government and individual having a role to play, while another notes how vital it is for companies to be able to understand exactly what is contributing to their electricity bills, in order to reduce costs effectively.
We also look at what South Africa’s future energy mix could look like, while providing advice to homeowners on how certain smart technologies can help them reduce their household electricity expenses.
It appears that while our immediate future will be impacted by ongoing rolling blackouts, much is at least being done to implement the JET IP, bring more renewables into the mix and plan for a long-term green energy future.
Hopefully, we are not too far from our country’s greatest dream: returning power to the people!
COPYRIGHT: No portion of this magazine may be reproduced in any form without written consent of the publisher. The publisher is not responsible for unsolicited material. Energy is published by Picasso Headline. The opinions expressed are not necessarily those of Picasso Headline. All advertisements/advertorials have been paid for and therefore do not carry any endorsement by the publisher.
Rodney Weidemann Editori doubt any reader will be surprised to learn that in the midst of the current crisis, Eskom itself refused to respond to our request for comment.
South Africa has been facing significant challenges with electricity supply for many years, which has resulted in frequent power outages and load shedding. Ageing infrastructure and the growing demand for electricity have exacerbated the problems. The need to implement load shedding to manage the electricity supply and demand imbalance is significantly impacting our households, businesses, and the economy.
The complete electricity value chain, from generation to transmission to distribution and to the customer, is dependent on accurate measurements to operate and function optimally. If the measurements are inaccurate, the evaluation and control of the electrical energy system cannot be precise. Likewise, energy-efficiency initiatives are also informed and facilitated by accurate measurements. The study of measurement, measurement science, is called “metrology”.
The National Metrology Institute of South Africa (NMISA) has technical expertise in electrical measurements to verify, validate, and ensure that electrical measuring equipment and related devices are accurate to the highest level, thereby supporting reliable operation and maintenance
of electrical systems and fair energy trade/billing. Accurate measurements are an indispensable link in the value chain, as monitoring and control of electrical systems are always informed and enabled through measurements.
In recent years, the field of electrical precision measurements has received more attention, mainly due to the advancement of science and technology as well as the evolving needs in the electrical industry. The importance of accurate measurements will be amplified in the electricity supply space in the very near future, considering that there will be bidirectional trade of energy where customers who are usually the consumers of energy will also sell back into the grid. As such, both seller and buyer of electrical energy will need to have confidence in the measurements of the energy meters. NMISA
ensures that confidence in energy meters through its internationally comparable electrical measurement standards.
THE DANGERS OF INACCURATE MEASUREMENTS
NMISA is mandated under the Measurement Units and Measurement Standards Act, No 18 of 2006, to keep and maintain internationally recognised national measurement standards (NMS). NMS have proven traceability of calibration and measurement capabilities to the International System of Units (SI units) in their accredited laboratories. The SI base units include meter, second, mole, ampere, kelvin, candela, and kilogram. Many SI-derived units, for example, volt, watt, and joule, are obtained from the base units.
The NMS are disseminated to industry, for example, the electrical power industry, through
Accurate measurements are indispensable for reliable monitoring and sustainable control and maintenance of the national power grid, writes NIMSA
ACCURATE MEASUREMENTS ARE AN INDISPENSABLE LINK IN THE VALUE CHAIN, AS MONITORING AND CONTROL OF ELECTRICAL SYSTEMS ARE ALWAYS INFORMED AND ENABLED THROUGH MEASUREMENTS.
calibration of related electrical measuring instruments and devices used in the electricity value chain. Calibration involves comparing (and transferring) the accuracy of a known NMS, which is the reference, to another device. The accuracy and correctness of the electrical measurements obtained through the NMS are essential to all stakeholders, such as energy producers, transporters, distributors and consumers, as well as for the reliable operations of the electrical power systems.
There are several consequences of inaccuracy, for example:
• If measurements are inaccurate (for example, in metering systems), then fair trade is inhibited since the billing is not trustworthy.
• If power quality measurements are inaccurate, dirty power can enter the grid and cause instabilities.
• If a sensing element in the electricity network is not operating accurately, important warning information on the state of a network structure may be missed.
• If boiler temperature is not accurately measured, then the control of the boiler flow temperature cannot be correct and energy efficiency can be compromised. Ultimately, if measurements are not accurate, then monitoring and reliable control cannot happen, and proper maintenance or operation of systems can be compromised. If measurements are inaccurate, operation of instruments and systems within the allowable limits according to standards and regulations cannot be verified. Thus, accurate measurements are the cornerstone of proper operations in the electrical power industry and, by extension, in every facet of our daily lives, such as health and safety, manufacturing, environmental protection, and energy security, among others.
To this end, within the electrical industry, NMISA promotes and supports the accuracy of electrical measurements that satisfy the relevant technical specifications of the respective electrical measuring instruments and devices by performing internationally comparable calibrations. NMISA offers calibration and measurement services in a wide scope of electrical quantities for the electrical industry as depicted in Figure 1.
devices operate within the relevant technical specifications, national and international regulations, and related codes of practice in the electricity industry. Furthermore, NMISA has technical experts who provide relevant measurement expertise and consultation relating to electrical measurements, calibrations, and test equipment.
These services are provided through calibration with high-end NMS, equipment and systems that are regularly compared against international measurement standards.
Some of the industries served by the NMISA electrical laboratories include energy meter manufacturers, power utilities, electrical component manufacturers, municipalities, and accredited laboratories.
The NMISA electrical laboratories perform calibrations and measurements that verify if electrical measuring instruments and
Scan this QR code to go directly to the NMISA website.
For more information: info@nmisa.org www.nmisa.org
During the State of the Nation Address, President Cyril Ramaphosa declared a national state of disaster in the energy crisis.
ALESSANDR A PARDINI and ALEX ANDR A CLÜVER (partners in A&O’s Projects practice); BENJAMIN MBANA (head of Tax); and ALEX ANDR A FELEKIS (counsel in the firm’s Projects practice) of Allen & Overy unpack what this means
These issues have been known to the government for years. They know what to do. Now they just need to do what they have been planning to do, which is to implement the separation of Eskom and supplement the failing aspects with private-sector solutions. Enable, enable, enable – that’s what they must do. Look what happened when they raised the generation licence cap from 1 to 100 megawatts.
It is clear that the private sector in South Africa is good at “self-solving”, and well positioned to assist in solving the grid capacity issue. At the moment, with grid capacity being limited, it is hampering the private sector from adding more power to the mix.
The declaration by President Cyril Ramaphosa of a national state of disaster related to the electricity crisis during the State of the Nation Address has raised both cheers and concerns. In it, he announced the return to a dedicated energy ministry, promised the fast-tracking of renewable energy into the national grid, and outlined tax incentives for households and businesses that switch to renewable energy –all in an effort to solve South Africa’s intractable energy crisis.
But are these measures achievable and are they enough to get the country out of this crippling crisis? International law firm Allen & Overy is the most prominent source of advice on energyrelated matters to both the public and private sectors in South Africa, including the renewable energy and mining sectors. These are our perspectives on the country’s energy situation, and what we think needs to happen from a legal and commercial standpoint.
First of all, Eskom is made up of three divisions that ideally – as the government has acknowledged – need to be separated: transmission; distribution and generation. The first two are functional, with high availability levels but current constraints in respect of capacity. This indicates that future planning and strengthening are at serious risk.
The critical issue at present is generation, which has traditionally been the profitable division of Eskom’s business, but which has been failing in the absence of proper maintenance and skilled operators. It appears the only viable solution for generation moving forward is the privatisation of key assets.
Allen & Overy’s lawyers have been instrumental in evolving the country’s legal system to allow for a sustainable energy future. We know Eskom can’t generate enough power, therefore we need to pump more privately generated power into the national grid. But the grid is actually not yet in a state to receive all the private power that could be generated. As a country, we first need to add capacity to the transmission system.
The state is now in a position where it will probably be forced to source more power from power ships, as some other energydeprived African countries do. These seem like an inevitable short-term solution, so chances are good that the government will procure power from foreign power barges because it can be done quite quickly. We hope such procurements will be done only on a short-term basis.
The state of disaster will truncate procurement pathways for alternative sources of power, which cynics will say is a recipe for corruption, but which pragmatic optimists like us will say is necessary to find shorter routes to a solution to the energy crisis. COVID-19 has taught us that if red tape is cut, we can find quicker solutions to our greatest collective challenges.
Mining and energy never belonged in the same portfolio. With the two combined, energy –especially of the renewable sort – will always play second fiddle. The reality is that South Africa’s gross domestic product is heavily reliant on mining, which is still heavily reliant on coal for power generation.
The state is now in a position where it will probably be forced to source more power from power ships, as some other energy-deprived African countries do.Alessandra Pardini Alexandra Clüver
That creates a conflict with South Africa’s carbon neutrality agenda. So, if we want to start taking renewables seriously, the energy portfolio must have its own minister and director general, to prioritise implementation over the coming years.
South Africa’s base load energy will come from coal in the foreseeable future because the country does not have natural gas, and importing liquefied natural gas (LNG) for base load power is too expensive in light of current geopolitics.
We are witnessing more and more individuals and companies turning to solar and their own power generation in order to alleviate the difficulties posed by the ongoing power crisis. The introduction of tax incentives to allow households and businesses to tap solar energy, using rooftop panels, will serve as a means of incentivising taxpayers to help alleviate pressure on the national power utility’s grid.
In 2016, National Treasury introduced tax legislation that provides for an acceleration of depreciation on machinery, plants or utensils, owned or acquired by companies and used in the purpose of trade, to generate electricity using solar energy. This legislation does not serve as a
A burgeoning battery market and value chain in the country could generate up to R36-billion in revenue a year by 2032, as well as tens of thousands of jobs.
tax break, but instead provides a time value of money benefit, in relation to tax deductions to which corporate taxpayers would be entitled. When this legislation was introduced, National Treasury and government had not foreseen the extent of the power crisis that has unfolded since 2016.
Accordingly, to give effect to the proposed tax breaks, a revision of the current legislation is necessary in order to provide a meaningful tax incentive as opposed to what is currently available, and an opportunity for households also to benefit from personal electricity generation.
One must, however, caution that the provision of tax breaks will likely only serve as a short-term solution to the power crisis. Furthermore, using tax incentives is not always an effective means of influencing taxpayer behaviour.
Due to the intermittent nature of renewable energy, additional sources of stable generation are required to meet South Africa’s energy needs. A short- to medium-term solution is the introduction of energy storage systems on the grid, or the integration of these solutions
with wind and/or solar projects. According to a new report by the World Bank, South Africa is expected to show rapid growth in energy storage demand over the next five years. A burgeoning battery market and value chain in the country could generate up to R36-billion in revenue a year by 2032, as well as tens of thousands of jobs.
In order to maximise the commercial viability of energy storage systems, the network operator should create a procurement model in terms of which it can enter into service and response contracts and/or capacity contracts with energy storage providers on an expedited basis.
The long-awaited gas-topower procurement, in terms of which imported LNG will be used as a fuel source, seems like the obvious answer, but affordability and environmental considerations make this a complicated solution.
Hybrid power solutions, including wind and solar power and battery storage, are the next step in terms of private power generation for South Africa’s mines and their ability to sell power back into the national grid. We need security of supply, price arbitrage, revenue stacking, reverse auctions and prioritised procurement – but we are not there yet.
Enpower Trading (Pty) Ltd is a licensed private electricity trading company with the mission to provide unique and innovative energy supply solutions for the future of energy in South Africa. The first energy trader to secure a license from the National Energy Regulator (NERSA) in over a decade, Enpower Trading will play a critical role in accelerating private investment in new generation capacity, putting power back in South Africa’s hands.
Leveraging electricity wheeling and trading will be instrumental in increasing the generation capacity on the Eskom and Municipal network grids which will stabilize the electricity supply industry over time. “Electricity wheeling” is the buying and selling of generated power, which includes the transportation of additional electricity produced by power producers to a buyer using utility-owned power grids.
Wheeling has since evolved from being merely a one-to-one transaction to allow for multi-lateral transactions which facilitates the transportation of electricity on behalf of Independent Power Producers (IPPs) to multiple off-takers.
The many-to-many or many-one offering is the ability to aggregate energy supply from multiple generators, consolidating and blending any form of renewable power available in the energy mix. This allows for the aggregation of a specific customer’s total energy demand across their multiple sites under one offtake agreement.
A blended energy mix offering increases the customer’s total renewable energy penetration % as more renewable energy sources are added to the Enpower Trading portfolio. Through aggregation, a blended offering can deliver a full renewable energy solution which can support our customers with their ambition to reach ‘net zero’ over time.
The trader model therefore provides risk diversification for both customer and generator - as they are not locked into a long-term deal with one specific supplier - whilst also providing fixed annual escalations and flexible contracting terms. As such, Enpower Trading is able to deliver utility- scale solutions to assist in alleviating the generation shortfall in South Africa and reducing the need for loadshedding over time.
Whilst there are several challenges hindering access to the market, the gradual unbundling of power generation, transmission and distribution in South Africa means that customers now have the choice to buy privately generated electricity from reliable sources, enabling competition and increasing generation capacity through multiple sources.
This is the first step toward unleashing the merchant market where demand is met through dynamic trade and Enpower Trading is uniquely skilled and well positioned to facilitate market enablement as South Africa transitions to a more open and competitive energy sector.
As South Africa and the world grapple with the transition to a low-carbon future, our mining sector can support this move in a number of ways. Mines are producing more critical minerals that underpin renewable energy production and battery manufacturing – key pillars in moving away from carbon-based technologies. They are also are coming up with innovative ways forward that embrace energy efficiency and renewable energy sources.
On the production side, Africa contributes mainly through mining copper, cobalt and tantalum in Central Africa, while platinum group metals are mined in Southern Africa. According to SRK Consulting director and principal consultant Andrew van Zyl, these commodities come from regions that have contributed relatively little to the carbon emissions hastening climate change. “Despite this, African countries are, through their mining industries, making a significant contribution to supplying the minerals for a global energy transition. There are also possible reserves of lithium in Zimbabwe, and perhaps in the Democratic Republic of Congo, Namibia and Ghana.”
Van Zyl notes that mining companies in Africa, as elsewhere, have focused increasingly on environmental, social and governance (ESG) compliance. This includes climate change and resilience, which drives efforts to reduce mines’ carbon footprint. At the level of mining operations, there is growing momentum in raising energy efficiency as a route to cutting carbon emissions. There are also efforts to substitute fossil fuels with renewable sources of energy.
Following the South African government’s landmark decision in late 2021 to increase the licensing threshold for embedded generation projects from 1 megawatt (MW) to 100MW, mining companies in South Africa are expected to spend as much as R65.2-billion on renewable energy projects in the near term.
The industry plans to introduce up to 3 900MW of solar, wind and battery energy projects. Several mining companies in Southern Africa have already implemented plans to develop solar photovoltaic (PV) plants, with a combined capacity of 585MW.
Sibanye-Stillwater has proposed a three-project plan to introduce 175MW of renewable energy across its platinum group metal (PGM) mining operations in South Africa, which will consist of an 80MW solar PV project at its Rustenburg Platinum Mines Complex, a 65MW solar PV project at its Karee Complex and a 30MW solar PV project at its Bushveld Complex. Accounting for approximately 39 per cent of the group’s energy demand, Sibanye-Stillwater’s South African PGM operations are equivalent to around 310MW.
Gold Fields has finalised plans to construct a 40MW solar PV plant at its South Deep gold mine near Westonaria, 50km southwest of Johannesburg. The project currently comprises 116 000 solar panels. The plant will supply the mine with a fifth of its power needs.
The first phase of Harmony’s renewable energy journey consists of a 30MW solar energy plant in the Free State. In phase two, the company will build an additional 137MW of renewable energy at its various longer-life mines, while phase three is in the planning stage and progressing as anticipated.
One of the world’s largest producers of platinum has selected a South African independent power producer to assist with its renewable energy needs. A consortium comprising Pele Green Energy and EDF Renewables South Africa will build a 100MW solar PV plant at Anglo American Platinum’s Mogalakwena mine in Limpopo. The plant is expected to become operational by the end of 2023.
“The ESG-linked financial transactions that we have concluded, alongside the construction of the solar energy plants, are a watershed moment for Harmony and our host communities,” says Jared Coetzer, head of Harmony Gold’s investor relations. “Not only will these transactions help us to deliver on our environmental and social obligations and undertakings, but they will also de-risk the business and deliver many socioeconomic benefits. ‘Mining with purpose’ is ensuring that our investors and other stakeholders continue to derive value and positive returns in a global climate of energy uncertainty.”
Government has secured approximately R100-billion of investment in its Risk Mitigation Independent Power Producer Procurement Programme and the fifth bid window of the Renewable Energy Independent Power Producer Procurement Programme.
Source: Department of Mineral Resources and Energy
The mining industry has long had a reputation for being a polluting and dirty sector. However, it has a key role to play in the world’s low-carbon future, writes
BENJAMIN VAN DER VEEN
Section 153 of South Africa’s constitution places the responsibility on municipalities to ensure the provision of services, including electricity reticulation, to communities in a sustainable manner. Under Eskom’s buckling coal-fired fleet, this obligation (which municipalities have struggled to meet at the best of times) is becoming an evermore unrealistic challenge.
Servicing the electricity needs of South Africa’s mushrooming informal settlements is a particularly daunting task, but government can look towards several pockets of policy-making and renewable energy innovation in the Western Cape, as the country moves towards its Just Energy Transition.
Since its establishment in 2012, the award-winning iShack Project, from the Sustainability Institute Innovation Lab (SIIL), has provided a basic solar electricity service to six communities and up to 3 000 households in Cape Town and Stellenbosch.
The project came about after a 2010 Stellenbosch University study of government’s informal settlement upgrading policies found that the waiting period for many communities to receive formal services was often a decade or longer.
“The current state of Eskom means that the pace of connecting the growing number of un-electrified households to the grid is going to slow down even further,” says SIIL director Damian Conway. “Policies, such as the 2003 Free Basic Electricity policy, need to be updated to clearly direct and enable municipalities to adopt renewable off-grid technologies for low-income households, in order to meet their primary mandate of basic service delivery.”
One such updated policy is that of Stellenbosch Local Municipality, which amended its indigent policy to better enable the provision of subsidised
South Africa needs to move beyond legacy thinking if it is to meet its constitutional obligations to provide electricity. DALE HES investigates how this can be achieved
solar electricity to off-grid households, in partnership with iShack. Through the policy, a R150/month subsidy gives households in two informal settlements free basic solar electricity that they can access voluntarily by paying a small installation fee.
“This makes the service affordable for all households and it gives the municipality the benefit of time to plan and budget for eventual grid-electrification,” says Conway. “Unfortunately, other municipalities have been slow to emulate or build on this innovative and financially sustainable approach.”
In Cape Town, Zonke Energy delivers solar energy to off-grid households in Khayelitsha and Philippi, using solar towers to provide centralised generation, metering and storage. Clients are billed at daily, affordable rates for a fixed maximum daily consumption.
Zonke Energy CEO and founder Hendrik Schloemann points to the need for updated policy and government funding support. “In order to scale, social enterprises in the energy access sector require suitable finance options, and would benefit from updated and supportive government policies to regulate this growing sector.”
Conway agrees, saying that iShack has tested a range of funding and pricing models with some “interesting results”. “We have concluded that the service is difficult to scale without some form of government support.”
While government has approved a R147-billion investment plan to accelerate the country’s transition away from coal and towards clean energy, Conway said that it is crucial that all sectors of society are included in the Just Energy Transition. “We often think of renewables either in terms of big infrastructure to help solve the Eskom capacity crisis, or as a means for wealthy households to ‘Eskomproof’ themselves. The Just Energy Transition, which is a laudable concept for the country’s move to renewables, carries the risk of ignoring energy justice for the millions of people who are most in need of basic energy support.”
With contingency measures in place to mitigate two levels of Eskom load shedding in the City of Cape Town, the Western Cape is undoubtedly leading South Africa’s renewable energy pack, and energy resilience is topping the provincial government’s agenda in 2023.
Speaking at a green energy session in the Overberg in December, energy analyst Clyde Mallinson said that the Western Cape alone could theoretically be able to resolve nationwide load shedding through renewable energy. A caveat, however, is that it would require the province to build 7.5 gigawatts (GW) of solar PV, 4.5GW of wind and 3.2GW of storage capacity, at a cost of R256-billion.
“The current state of Eskom means that the pace of connecting the growing number of un-electrified households to the grid is going to slow down even further.” – Damian ConwayThe iShack Project has provided an affordable, innovative energy solution to more than 3 000 households. Zonke Energy provides centralised generation through solar towers.
At Norton Rose Fulbright, we have extensive experience in the energy sector and a dedicated team that can advise and assist on all legal aspects of this fast-developing industry shares
Norton Rose Fulbright South Africa
Norton Rose Fulbright South Africa has a dedicated and skilled projects and project development team. In addition, we can call on extra expertise and experience from our global practice. We have been a driving force behind an unprecedented number of successful transactions in the South African energy transition, delivering regulatory expertise, corporate and fi nancing transactional advice, intuitive South African business law acumen
and a competitive edge to sponsor and lender clients in the energy sector.
Our experience in the energy sector has been gained by advising on all aspects of the development of the industry, its diversity refl ecting the changes in the sector through privatisation, new models of regulation and fi nancing, and increasing internationalisation.
We are market leaders in the South African government’s various energy procurement programmes. Over the various
Norton Rose Fulbright South Africa
is one of the top legal practices in Southern Africa with close to 200 lawyers and offices in Johannesburg, Durban and Cape Town.
We are a proud level 1 BEE-certified company with a strong and experienced team of lawyers behind our name. We handle a rising tide of cross-border transactions on behalf of banks, development financial institutions, government bodies, major domestic and international corporates, large mining concerns seeking energy security, and multinationals.
bid submission phases of the South African Renewable Energy Independent Power Producer Procurement Programme (REIPPP Programme), of all the bidders selected as preferred bidders to date, we have advised on more than half of these projects on a mix of sponsor, lender and contractor mandates.
We offer a leading commercial legal practice throughout Africa, one of the fastest-growing economic regions in the world. We have an award-winning presence on the continent, having been voted African Alliance/Network of the Year by the African Legal Awards in 2021. We are active across key industry sectors, including power, oil and gas, renewable energy, infrastructure, mining, transportation, food and agribusiness, technology and healthcare. Our lawyers have experience working in more than 45 common law- and civil law-based African jurisdictions. They advise on groundbreaking projects and transactions and assist our clients with their ongoing commercial operations across Africa and internationally.
Complementing our energy practice are robust project fi nance, project development, infrastructure, and mining teams who, together, deliver an unsurpassed, full-service legal solution.
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Electric vehicles (EVs) may be hugely expensive to import to South Africa and our local industry isn’t yet producing them at scale, but leading retailers like Woolworths and Checkers have realised that the switch away from combustion-engine delivery vehicles is the future. After all, EVs are more sustainable, responsible and efficient, and they’re already making inroads in the local delivery space.
In June 2022, Woolworths formed a partnership with logistics group DSV and mobility specialists Everlectric, to use electric panel vans (EPVs) to deliver online purchases in Gauteng, Cape Town and Durban.
The partnership has Pretoria-based Everlectric providing the EPV fleet to DSV and Woolworths in a solution termed “EVs-as-a-service”. DSV receives fully maintained and insured EVs, charging infrastructure and green electricity that covers a specified number of kilometres over a set rental period, using the Everlectric solution to operate a dedicated green logistics fleet for Woolworths, to support last-mile deliveries.
“For over 15 months, we trialled two electric online delivery vehicles to validate performance and suitability,” says Woolworths mobile and online director Liz Hillock. “One is still currently in operation, as we wait with much anticipation for the arrival of the first batch of our EV order, which is on track to land in the first quarter of this year. Thereafter, additional batches will land at four- to six-monthly intervals. We are aiming to replace around 70 per cent of our current online scheduled-delivery fleet, which comprises more than 75 vehicles, in the next 6–18 months.”
Woolworths has invested more than R1-billion in its digital capabilities over the last three years, to meet the evolving needs of its customers. “This has differentiated our services, resulting in an exponential growth in online sales,” says Hillock. “This latest investment in EPVs enables us to continue growing our online business and deliver the Woolworths difference, but with a lower carbon footprint.”
The move comes on the back of record fuel prices last year, and is proving inspired in the face of escalating stages of load shedding this year. “Load shedding has minimal-to-no impact, as the vans have substantial overnight downtime available for charging,” explains Hillock. “As far as possible, electricity from renewable sources
will be used to power them, maximising the opportunity to utilise solar on site and additional chargers co-located at strategic Woolworths store locations. Should there be any exception to renewables recharging, DSV and Everlectric will work with an audit firm to procure renewable energy certificates, to offset any indirect grid energy emissions.”
During testing, the fully imported EPV saw one charge lasting for a full day of deliveries, at about 240km, with a maximum range of 300km and a governed top speed of 120km/h. The vehicle has already been successfully homologated and licensed in South Africa.
“The vehicle can come in various configurations, including a panel van, a chassis cab and an isolated, fully electric refrigeration unit,” says Hillock. “We opted for EPVs over electric motorcycles, as the vehicles are scheduled to fulfil online home-delivery orders within a 5km radius of stores.” She notes that there are some routes where the route parameters are not ideally suited to the EVs and are thus unlikely to be converted. “There are, however, other service channels that might suit different types of electric vehicles, like electric motorcycles.”
Initial estimates were that the switch to EVs had the potential to save 700 000kg of tailpipe carbon emissions a year, but Hillock says the actual saving will ultimately depend on the
load shedding’s best efforts, South Africa’s retailers are proving that the delivery vehicle’s future is electric, writes TREVOR CRIGHTON
“This latest investment in EPVs enables us to continue growing our online business and deliver the Woolworths difference, but with a lower carbon footprint.” – Liz Hillock
Liz Hillock
Woolworths’ switch to EVs for home deliveries is estimated to have the potential to save 700 000kg of tailpipe carbon emissions a year, demonstrating the impact that might be achieved should all other retailers follow suit.
S ource: Woolworths
volume of orders the company can move into its EV fleet. “Each EV that we deploy delivers immediate savings on C02 emissions and reduces our overall environmental impact. In the longer term, these savings are certain.
“In 2021 we announced bold new sustainability goals and ambitions, which included the goal to have zero net carbon emissions by 2040. We are very much looking forward to being the first retailer in South Africa to embark on such an extensive roll-out of EPVs to support our growing online business.”
Woolworths’ key learnings so far are that the EVs were able to meet the majority of online delivery requirements, speed, reliability, range and cargo space sizing. Indications are that, at current fuel price levels, these are cheaper to operate than the equivalent internal combustion engine vehicle. “We believe that EVs are the future, in that they reduce carbon emissions substantially,” says Hillock. “Each one deployed to replace an internal combustion engine vehicle saves an average of one tonne of urban C02 emissions per vehicle per month.”
She believes that operating an EV fleet will inevitably have an impact on consumer adoption of EV vehicles. “When the consumer begins to appreciate the positive impacts of our adoption of EVs, there will be greater pressure for driving adoption by other channels and other operators.”
The Shoprite Group is piloting the operation of a heavy-duty Scania battery electric vehicle (BEV) for local deliveries. The refrigerated truck can
hold approximately 16 pallets and is powered by nine batteries, with solar panels fitted to its roof and a fully electric cooling system also powered by the vehicle’s battery packs. The vehicle is recharged using renewable energy generated by the group’s existing solar installations.
“The Shoprite Group places significant focus on reducing its environmental impact across operations,” says Andrew Havinga, chief supply chain officer for the group. “One of the ways we’re doing this is by increasing the energy efficiency of our truck fleet.”
Havinga says the acquisition of one of the world’s most advanced electric trucks is another major move in this direction. “Our continued investment in Euro V-compliant vehicles demonstrates the group’s intention to intentionally introduce more fuel-efficient and clean-burning engine platforms to its fleet, meeting both international and local environmental targets to reduce our carbon footprint. Lessons learned from this pilot will help guide the strategy going forward.”
The truck’s special glow-in-the-dark signage makes it more visible when travelling at night. When exposed to sunlight, the signage absorbs and stores particles that are emitted in the dark. More than 1 041 of the group’s existing vehicle trailers are also fitted with solar panels, enabling the refrigeration and tailgate lift to run on solar power even when the engine is not running.
Over the past 12 months, the Shoprite Group has increased its installed capacity of solar photovoltaic systems by 82 per cent to 26 606 kilowatts peak. The 143 674m2 of solar panels at 62 sites is equivalent in size to 20 soccer fields. The group also has EV charging stations at selected sites and plans to expand this further.
Local EV distributor and importer Enviro Automotive has announced local production plans for leading Chinese vehicle manufacturer DFSK Motor’s EVs. Local production will reduce acquisition costs and make commercial EVs more affordable and sustainable for South African transport operators.
“We have years of experience in the renewable energy market, which influenced our decision to start our local assembly programme with the production of battery packs for EVs,” says Gawie Brink, technical director of Enviro Automotive and founder of Solar Europe. “This will reduce the acquisition costs of our vehicles and strengthen our competitive position in the fast-growing local EV market.”
Enviro Automotive MD Gideon Wolvaardt points out that the company’s commercial electric vehicles (CEVs) are currently in testing with many last-mile delivery transport operators, like Takealot. “CEVs are purpose built for last-mile deliveries to create massive cost savings. That is what transport operators want to see – a direct saving on fuel or energy and a low total cost of ownership over the lifespan of their fleet vehicles.”
Wolvaardt explains that the biggest misconception around CEVs is that Eskom’s problems will hamper their operations. “This isn’t true. Many delivery warehouses already support solar power to escape load shedding. These facilities can be used to charge CEVs, either AC or DC charging, depending on the type and number of CEVs being used.
“The response in the last few months has confirmed our initial market research, suggesting that transport operators involved in last-mile deliveries want cheaper and more sustainable solutions for their businesses. Our decision to invest in a local assembly operation indicates our confidence in the growing CEV market,” concludes Wolvaardt.
“Commercial electric vehicles are purpose built for last-mile deliveries to create massive cost savings.” – Gideon WolvaardtA Woolworths electric panel van ready to make deliveries EV charging
Electric vehicles (EVs), we are told, are the future, and while the principles behind them seem great – no more fossil fuels, less maintenance and greater comfort – many remain sceptical of their true effectiveness. Until recently, I was one of those sceptics.
However, having been afforded the opportunity to test drive the Audi e-tron SUV, with its state-of-the-art electric drive, I can confirm all the good things the converts say about these vehicles, and more.
The first thing to note when driving an EV is the simplicity of starting the car with the push of a button. The second, more unusual thing to note is that upon ignition, you know the car has started because the electronic touchscreen and dashboard light up, not because you hear the engine roar.
Driving a virtually silent vehicle is an initially eerie experience for anyone used to the noise of a petrol car. With an EV, pulling off makes no sound at all, even with the phenomenal power beneath you.
A driver of 30 years’ experience, I was nonetheless unprepared for the incredible torque and the speed at which the e-tron was able to go from zero to 60km/h. It makes overtaking slower vehicles on the highway a pleasure, and ensures one feels ever so slightly like a Formula One driver every time you put your foot down.
I can also confirm that the EV couples its power with a smooth ride, stable handling and
A plug-in electric vehicle, the e-tron also recovers and stores energy during normal driving, allowing for greater range. The current range is approximately 300km on a full charge, which, while significantly less than the range of a conventional diesel-powered SUV, is far healthier for the environment.
regenerative braking, which slows the vehicle immediately when you take your foot off the accelerator, requiring you to apply the actual brakes only when you want to come to a complete stop.
The first thing one notices about the car is the virtual exterior mirrors, which are in fact cameras, with the image they project shown on a high-contrast display mounted on the inside of the door.
The e-tron comes equipped with a digital infotainment system that is run through dual touchscreens. The upper screen provides access to the standard Apple CarPlay and Android Auto apps, as well as the audio system, while the bottom screen is mainly used for controlling the climate settings.
A third display, the Audi virtual cockpit, allows you to choose an optional heads-up display, which made this particular user feel a little like he was at the controls of a fighter jet. Along with several power points, the system also features a subscription-based Wi-Fi hotspot and a wireless charging pad on the centre console.
The vehicle also has clever charging and range calculators, allowing you to plan your journeys, view the public charging station network, and manage your charging account as an e-tron owner.
The number of charging stations continues to increase, and utilising these is neither as difficult nor as complex as it might initially appear. Although my first attempt at charging the vehicle, at Fourways Mall, was a little confusing and required a bit of learning, it turned out to be quite simple in the end.
Moreover, with just a little bit of planning, it is easy to combine your charging period with a trip to the shops for an hour or two, killing two birds with one stone.
Charging options include:
• At home, you can use 230V and 400V sockets with the charging system compact, which allows them to charge with a maximum of 11kW.
• A wall-mounted 7kW home charger can also be installed, enabling you to charge the battery in around nine hours, a third of the time it takes using a standard three-pronged plug.
• Public chargers offer an even quicker option: 150kWh that can charge the battery from 20–80 per cent in as little as 30 minutes. In conclusion, I have been driving for decades, and have experienced motor cars, SUVs and even light trucks before, and I can say without a shadow of a doubt that my experience with an EV has proven to be the most exciting time I have had driving. The Audi e-tron is powerful, drives incredibly smoothly and has every kind of extra you could ever hope for.
After test driving a high-end electric vehicle, RODNEY WEIDEMANN reports that these cars outperform petrol cars by an order of magnitude
Driving a virtually silent vehicle is an initially eerie experience for anyone used to the noise of a petrol car.
South Africa’s automotive industry faces losing 50 per cent of its production volume if it doesn’t transition to producing electric vehicles – now.
By TREVOR CRIGHTONThe South African automotive industry contributes around 4.3 per cent to GDP, with the industry’s R207.5-billion in exports of vehicles and automotive components representing 12.5 per cent of the country’s total exports in 2021. The manufacturing side of the industry alone employs about 110 000 people, with 900 000 involved across the value chain.
The lack of impetus in switching its focus from internal combustion-engined (ICE) vehicles to electric vehicles (EVs) puts at least 50 per cent of the country’s production volume at risk from 2025. This is due to the banning of ICE drivetrains in almost all European countries, where over 60 per cent of our production is exported.
Ingolstadt automaker Audi has announced that it will only be launching all-electric vehicles from 2026, and will cease selling ICE vehicles from 2033. Although Audis are full imports to South Africa, the Volkswagen Group has a long-established manufacturing and sales base in the country.
“The consideration of and inclusion of EV production in South Africa requires a focus on myriad elements across the ecosystem, from sourcing components to second life and recycling,” says Sascha Sauer, head of Audi South Africa. “If South Africa wants to remain relevant in the global automotive market and have access to the latest vehicle technology, all parties in the private and public sectors need to work together to meet these challenges and requirements with resourcefulness and determination. South Africans have proven time and again that these are characteristics they possess.”
Between a rock and a charge place Ravin Sanjith, automotive sector lead at Deloitte Consulting Africa, identifies five major challenges to EV production in South Africa: a lack of infrastructure; high costs; limited battery
production; lack of or limited government support; and limited consumer awareness.
“South Africa’s limited charging infrastructure makes it difficult for consumers to own and operate EVs,” says Sanjith. “Moreover, according to the Deloitte E-Mobility Congress of South Africa presentation, the starting vehicle retail price was R700 000, with the highest being R4-million. This makes them less accessible to many South African consumers.”
Import taxes on EVs are higher than those on ICE vehicles. Sauer says that Audi participates in various committees dedicated to the ongoing engagement with the government on the topic.
“Bringing the import tariff of EVs down to be in line with those of ICE passenger vehicles is a necessary first step. Introducing incentives beyond this, as in many other countries – whether directed at manufacturers or directly to consumers – would help accelerate adoption. It is time for South Africa, as a signatory to the Paris Agreement, to act on its promise to help grow EV sales and move to a more sustainable form of mobility.”
The Department of Trade, Industry and Competition currently has an Automotive Masterplan that is meant to support local manufacturers, with specific targets in place such as increasing the use of local materials from 39 to 60 per cent, and raising employment, among other objectives – but it has yet to include any policy on EVs.
Sauer says that the future of mobility also goes beyond the electric drivetrain consideration, incorporating a connected lifestyle and facilitating a seamless transition between home, vehicle and workplace, through the integration of digital technology. “We see a whole ecosystem developing around owning and using an EV. Just consider how an EV could contribute to improving the current energy crisis once it offers bidirectional charging, which feeds electricity back into the grid. Electric cars will be able to charge intelligently during off-peak times when electricity is cheaper and capacity is less strained. Furthermore, the future of mobility considers autonomous driving possibilities and the exciting impact this has on vehicle design, especially the interior space for our customers.”
In Sanjith’s opinion, the production of EVs is quite a long way away for South Africa. “Adoption will be constrained by the cost and probably remain below 2 000 units for 2023, with fewer than 100 charging stations. Load shedding will constrain high-urban consumer and fleet use. That being said, South Africa remains ideally placed to become the assembly and distribution hub for Africa, where there is a need for light commercial vehicle solutions throughout the continent.”
“It is time for South Africa, as a signatory to the Paris Agreement, to act on its promise to help grow EV sales and move to a more sustainable form of mobility.” – Sascha Sauer
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The shift to renewable energy systems relies on energy stores to ensure consistent electric supply. The two main stores of energy are battery storage and hydrogen in one of its forms – be that gas, liquid or ammonia.
According to Frank Blackmore, lead economist at KPMG, in striving for a zero-carbon energy solution using hydrogen, it is critical that the hydrogen be produced through use of renewable energy, rather than fossil fuels. “The green hydrogen production process would require a new industry to be established in South Africa. This would thereby assist in a just energy transition by absorbing labour, ensuring a clean environment, enabling energy independence and potentially boosting the export market.”
Blackmore says Africa as a whole is considered well positioned to be an exporter of green hydrogen. “As an emerging and developing continent, it does not use a lot of energy yet, even though this demand will grow as the continent develops. The current status, however, will allow for exports as investments in green hydrogen production are made. Moreover, Africa is endowed with a very suitable climate for the production of green hydrogen through abundant renewable means including solar, wind and water.”
Dr Roelof van Huyssteen, PwC’s energy strategy and law expert, points specifically to the north and south of the continent as being well placed to create green hydrogen abundantly. “From a localisation point of view, we have Sasol, which will be a key player in the green hydrogen value chain, as it is expected to be able
to produce valuable fuels for the aviation and maritime industries.
“We must remember that to develop a green hydrogen market, we need skills that are specific to this sector, namely around things like operating electrolysers and beneficiating platinum group metals. Therefore, it is vital that educational institutions expand their courses to include training related to green hydrogen.”
Becoming an exporter
Blackmore point out that certain major challenges still need to be overcome for South Africa to become a green hydrogen exporter. These include the establishment of a legal and regulatory framework outlining aspects like who may manufacture green hydrogen, how it should be transported safely and how it should be stored. “Markets for green hydrogen are already active abroad, but a successful industry would also need a local market to be established by, for example, investing in a fuelcell production industry, or by removing custom duties from electric vehicles (EVs) in order to establish more local EV demand, along with service and supply industries.”
Adding a proportion of green hydrogen into the existing gas infrastructure and through pipelines would also be a quick win, adds Blackmore, resulting in a higher energy release once combusted. “It is also worth noting that although costs for green hydrogen are still relatively high when compared to fossil fuel sources, these will quickly fall once the production market grows.”
Van Huyssteen says that key to a successful export market is increased stakeholder
Demand for hydrogen, which has grown more than threefold since 1975, continues to rise, although it is currently almost entirely produced from fossil fuels. This demonstrates the urgent need for a green hydrogen market.
Source: International Energy Agency
engagement between players like Sasol and Transnet around how best to develop the necessary infrastructure. “Also, given the size and complexity of the green hydrogen value chain, this would need new and innovative financing structures.”
He agrees with Blackmore about the need for an enabling regulatory framework, adding that the current one doesn’t really support the uptake of green hydrogen. “Perhaps we will need tax incentives, or to introduce regulations to support the increased uptake of green hydrogen. There is little doubt that these financing and regulatory issues need to be addressed properly before we can view ourselves as a potential exporter.”
In this context, says Van Huyssteen, it may be better for African nations to collaborate. “A lot of work has already been done in this regard in Namibia, while other countries like Egypt and Morocco also have relevant experience. It will be important for us to work with our African neighbours to develop a stronger communal market for green hydrogen exports.”
It’s imperative that South Africa follows through on this potential to become a green hydrogen exporter, concludes Blackmore. “The potential benefits of moving to a more pure hydrogen –as opposed to hydrocarbon – based energy economy are overwhelming. These range from a healthier local environment and planet to the development of new industries and technologies that will create jobs and allow exporters to earn an income, while in the longer term also becoming largely energy independent.”
Hydrogen is an important part of South Africa’s sustainable alternative energy plans, both in terms of the local and export markets, writes
RODNEY WEIDEMANN
“It will be important for us to work with our African neighbours to develop a stronger communal market for green hydrogen exports.” – Dr Roelof van Huyssteen
Depending on whose data you use, South Africa is either the 12th-or 13th-largest emitter of greenhouse gases, accounting for about 1 per cent of the global annual total. That’s more than double our contribution to global GDP, which stands around 0.4 per cent. Some would argue it makes more sense to look at per capita emissions instead. The Union of Concerned Scientists pegged our CO2 emissions per person at 8.1 tonnes in 2020 (latest data). That’s more than China or India, and far above the global average of 4.1 tonnes. Either way you look at it, South Africa needs to clean up its energy act.
Green hydrogen forms a big part of that clean-up plan, with government having identified a R300-billion investment pipeline under the country’s Green Hydrogen National Programme. The money will be used to accelerate the development of nine of the programme’s 19 projects, according to Masopha Moshoeshoe, green economy specialist and green hydrogen lead in the Investment and Infrastructure Office of the Presidency.
“Despite this already significant investment pipeline, South Africa as a full value chain green hydrogen investment destination still offers substantial additional investment opportunities,” says Moshoeshoe, “such as green shipping, green fertiliser production, electrolyser manufacturing (leveraging off of our platinum group metals mining), pipeline development, green field port developments like that at Boegoeberg Se Baai, and upgrades that may be required at other ports such as Saldhana Bay, the Port of Ngqura and Richards Bay.”
Moshoeshoe adds that a number of initiatives are underway to assist the current projects in developing from pre-feasibility to feasibility studies and ultimately to financial close. “These include securing concessional funding for feasibility studies, the negotiation of bilateral government-to-government agreements (which enable business-to-business linkages for offtakes, technology supply and transfer, fundraising and so forth), and supportive policy and strategy announcements such as the publication of the Hydrogen Society Roadmap, the Green Hydrogen Commercialisation Strategy, and the Just Energy Transition Investment Plan.”
As a nascent producer of green hydrogen, South Africa faces stiff competition from a number of potential green hydrogen hubs around the world, including Chile, Australia, the Middle East and North Africa.
“All of these production hubs have large-scale projects that are competing for a limited amount of early-stage, premium-demand and project-preparation funding,” explains Moshoeshoe.
“As such, the majority of projects in South Africa’s pipeline need assistance in securing offtakes and project preparation funding. This needs to be supported by a co-ordinated approach across multiple departments in
Aside from green hydrogen itself, which is emerging as an exciting new frontier for energy storage and transportation, South Africa’s Green Hydrogen National Programme projects encompass multiple derivative products with potential economic benefits, including green ammonia, e-methanol, sustainable aviation fuel, green steel, fuel cells, mobility and infrastructure.
Source: Infrastructure Office of the Presidency
government, the securing of concessional funding, creation of supportive green certification standards and further investment in skills development.”
Thankfully, the country also has numerous key structural competitive advantages, says Moshoeshoe, including the following:
• Some of the world’s best wind and solar irradiation
• Large tracts of land not suitable for food production or human settlements that can be used for renewable energy production
• Available water through the desalination of seawater
• A geographical position that enables us to supply both Europe and the Far East
• The largest industrial base on the African continent
• A deep and embedded knowledge of how to produce power fuels or e-fuels from hydrogen using the proprietary Fischer-Tropsch process
President Cyril Ramaphosa has said South Africa has the potential to produce 130 million tonnes of green hydrogen and derivative products by 2050. This will require 140–300 gigawatts (GW) of renewable energy, while the country has only procured 7GW of wind and solar since 2011 – a point of obvious concern.
Moshoeshoe says the development of the sector is not expected to be linear, with much of it to occur between 2040 and 2050 as green hydrogen reaches price parity with fossil fuels.
“What is required to capture the potential of the green hydrogen sector in the long term is for South Africa to establish itself as a commercially viable, reliable production hub by 2030. This requires the development of 3–5GW of electrolyser capacity supplied with 6–10GW to renewable energy by 2030, highlighting the importance of the current cohort of gazetted projects and the need to help the leading ones to reach financial close.”
In an effort to secure South Africa’s position as a leading producer of green hydrogen, government has secured a significant investment pipeline, writes
ANTHONY SHARPE
“Despite this already significant investment pipeline, South Africa as a full value chain green hydrogen investment destination still offers substantial additional investment opportunities.” – Masopha MoshoeshoeMasopha Moshoeshoe
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The Western Cape and Northern Cape are working together to establish a competitive green hydrogen economy, writes ANTHONY
South Africa’s biggest and most sparsely populated province, the Northern Cape, relies on mining and agriculture to drive its economy. However, with all that open space and the country’s highest volumes of solar radiation, it’s also an area of huge potential for solar photovoltaic (PV) projects, making it a hub for green energy development.
For that reason, the Northern Cape plays a pivotal role in government’s Hydrogen Society Road Map (HSRM), which was released in February 2022. The HSRM’s targets include installing 10 gigawatts (GW) of electrolysis capacity and developing 500 000 tonnes of hydrogen per year in the province by 2030.
The Western Cape also receives plentiful sunshine and is on a drive to reduce its reliance on Eskom’s fleet of ageing coal power plants. “Our energy supply and economy are far too dependent on coal, which exacerbates climate change, and impacts our efforts to live more sustainably and productively,” says Western Cape premier Alan Winde. “The energy crisis is immense for South Africa and much of the world, and we must pounce on any opportunity to help end it.”
In recognition of the enormous potential offered by renewable energy to both provinces, along with their roles in meeting South Africa’s broader
SH ARPEgreen hydrogen goals, the Western Cape and Northern Cape last year signed a memorandum of understanding (MoU) to develop a green hydrogen corridor and hub.
“The Northern Cape and the Western Cape have globally recognised potential for the production of green hydrogen, and for the export of green hydrogen derivatives and valueadded products,” explains Winde. “As a key contribution to developing the green hydrogen economy in South Africa, the intention of the heads of agreement (HoA) contained in the MoU is to progress from cooperation to collaboration between the two provinces.”
Winde says the HoA includes a range of focus areas, such as infrastructure development to support mega-scale renewable energy production, value chain development and community involvement, and priority market pathways and exports. “Apart from these principles and areas of cooperation, the HoA will also assist in unlocking financial support from local and international funding and financing institutions.”
The primary aim of the green hydrogen corridor concept is to set out the components of the overall green hydrogen developments in the Southern African Development Community (SADC) states along the west coast. To this end, government has initiated efforts to cooperate with Namibia, which also has enormous renewable energy potential.
Local governments aren’t the only ones committing to work together on green hydrogen. Sasol and ArcelorMittal
South Africa last year signed a joint development initiative to explore the Saldanha region’s green hydrogen export potential, and to study the possibility of using renewable electricity and green hydrogen to convert carbon captured from steel production into sustainable fuels and chemicals.
Source: Sasol
“The proposed SADC West Coast Green Hydrogen Corridor would connect the Western Cape with the Northern Cape and Namibia,” notes Winde. “This will help to optimise infrastructure development, build value chains and create transport corridors to develop the full green hydrogen potential of the subcontinent’s Atlantic Coast.”
The World Economic Forum identifies green hydrogen as a potential critical enabler of the global transition to sustainable energy, meaning that over and above the environmental benefits, it has enormous economic potential. Key to unlocking these benefits is a viable and efficient export strategy.
Last year, Transnet National Ports Authority started looking into the development of a deepwater port at Boegoebaai in the Northern Cape, just south of the Namibian border. The site has been designated a Strategic Integrated Project by the Presidential Infrastructure Coordinating Commission Council, citing its potential for producing and exporting green hydrogen and associated products.
With this project estimated to take five-toten years to complete, Winde says the Port of Saldanha has a major role to play in the green hydrogen economy, both in the interim and longer term. “Various international studies have identified Saldanha as a high-potential location for the future of green hydrogen, due in part to its location on the west coast. It has wellestablished port infrastructure suitable to serve as an export channel. The abundance of natural endowments such as sun and wind in the region also plays into its favour.”
Ultimately, Winde believes Saldanha will help establish South Africa as a future energy market global trader, securing foreign direct investment, earning foreign income, and creating economic growth and development.
“The Northern Cape and the Western Cape have globally recognised potential for the production of green hydrogen, and for the export of green hydrogen derivatives and value-added products.” – Alan WindeAlan Winde
Africa faces critical energy challenges that need be to overcome in order to improve lives and boost economies. ANTHONY SHARPE unpacks the role that renewables have to play in addressing these
Countries on the African continent have made progress in electrification, according to the International Energy Agency (IEA), with 57 per cent having electricity access in their homes in 2021, compared with 36 per cent in 2000. The pandemic greatly disrupted this progress, however, with the result that around 600 million Africans still lack electricity, severely impacting quality of life and economies across the continent.
The International Renewable Energy Agency (IRENA) found that more than 40 per cent of African firms cited lack of or unreliable power supply to be a major operational constraint, and estimated that this issue cuts two per cent of continental GDP through business interruptions and profit loss.
Presently, around 30 million new Africans are connected to the grid each year. To achieve universal electrification by 2030 will require triple that – with renewables an essential part of this energy mix. And yet, while the IEA reports that Africa has 60 per cent of the world’s best solar resources, it is home to merely 1 per cent of installed solar photovoltaic capacity.
It’s clear that Africa has the potential to be a solar powerhouse, so what is holding us back?
Aradhna Pandarum, acting research group leader for the Council for
Scientific and Industrial Research’s Energy Industry Group, says there is a general lack of government targets and prioritisation of technologies, which leads to loss of confidence among private investors. “Subsequently, enabling environments, including enabling institutions and resources, are insufficient. Other challenges include the fear of expected job losses in the fossil fuel industry, lack of local component manufacturing, high entry barriers for local industry into the sector due to low levels of competitiveness, lack of adequate skills, absence of sufficient grid capacity, and concerns around grid stability and integration issues that emerge with high renewables penetration.”
Pandarum says the first step towards addressing these challenges is setting targets at national government level, with a clear indication of how technologies and projects are prioritised. “Monitoring and evaluation processes must complement this so that the government is transparent about the progress, thus inspiring private investor confidence.”
She adds that funding needs to be set aside to develop skills and increase resource capacity, while there is a need for proper planning, design and mobilisation of resources, to focus on increasing grid capacity. “Incentives must also be put in place for projects and technologies that may offer other socioeconomic benefits such as reducing unemployment, inequality and poverty.”
Representing a shift away from traditional centralised power generation and distribution, energy-as-a-service presents an alternative model whereby service providers offer a suite of energy-related services. These might include:
• Installing renewable energy generation and storage systems and micro-grids, as well as retrofitting existing installations with energy efficiency devices
• Advice on energy solutions, including markets, technology and regulations
• Monitoring, automated control and optimisation of energy systems
Source: International Renewable Energy Agency
Renewable energy is inherently intermittent, meaning it requires storage to make it viable. Safeera Loonat, KPMG lead partner for energy and natural resources, says investment in battery storage is thus continuously increasing. “Investors see the development of low-cost, safe and long-lasting battery storage as the potential biggest return on investment in the energy sector. With increasing investment, development and demand, the costs continue to decrease.”
Loonat notes that this actually presents a unique opportunity for the continent. “The major minerals required for batteries – cobalt, nickel, graphite, lithium and manganese – are all found in Africa. If these are mined and the batteries are then produced here, they will be affordable. This requires producers to invest in local production, as the batteries have patents attached.”
Strategic investments in logistics frameworks could also help mitigate the significant logistics costs that flow from the continent’s immense size. Unfortunately, without local component manufacture, Africa remains at the mercy of imports and global logistics networks, states Loonat. “As the majority of the requirements for the construction of renewable projects are imported, there would be a significant cost impact on an already globally strained shipping logistics network,” she concludes.
“Investors see the development of low-cost, safe and long-lasting battery storage as the potential biggest return on investment in the energy sector.” – Safeera LoonatSafeera Loonat
Aradhna Pandarum
RODNEY WEIDEMANN spoke to Dr Derik Wolvaardt, nuclear engineering specialist at Lesedi Nuclear Services, about nuclear’s role in the country
With the drive to implement new energy solutions underway, what will nuclear’s role be in South Africa’s energy future?
The 2019 Integrated Resources Plan makes provision for the extension of the Koeberg Nuclear Power Station’s life, and the addition of 2 500MW of new nuclear generating capacity. The process of extending the Koeberg plant’s life by 20 years is progressing well.
It involves hardware upgrades, safety assessments, and a formal application to the National Nuclear Regulator for an extended operating licence, which should be granted by June 2024. This life extension is one of the most cost-effective ways of adding additional generating capacity.
The Department of Mineral Resources and Energy issued a request for information for 2 500MW worth of new nuclear units in 2020. The request for proposal is expected during the first quarter of 2023. It is anticipated that 2 000MW will be supplied by two conventional pressurised water reactor (PWR) units, while the remaining 500MW will be made up by small modular reactors (SMRs). Two 1 000MW PWR units could be located on the Koeberg site, with the first SMR installed on the NECSA premises. Should this procurement process succeed, close to 4 500MW nuclear power could be added to the grid by 2035. This is still small compared to South Africa’s current total installed capacity of around 58GW, according to a Wikipedia list of power stations in South Africa. Currently there is only around 25/26GW available daily with demand forecasted around 30GW daily, as reported on the Eskom Data Portal.
These policies should be modified drastically to allow significant contributions from the safe and cleanest form of base load energy – nuclear.
Considering how experts always talk about its high cost, is nuclear a feasible option for this country?
Koeberg Nuclear Power Station produces the cheapest electricity of all the Eskom power stations on the grid. It is also the most reliable.
It is not unusual for the units to run for 400 uninterrupted days between refuelling outages. It generates significant amounts of cash for Eskom every year. The initial capital cost for large nuclear power stations is high, but their low operating costs and high load factors lead to positive financial performance in the long term.
Nuclear is the dispatchable low-carbon technology with the lowest expected levelised cost of electricity. Only large hydro reservoirs can provide a similar contribution at comparable costs, but these remain highly dependent on the natural endowments of individual countries.
Compared to fossil fuel-based generation, nuclear plants are expected to be more affordable than coal-fired plants, as reported in the Projected Costs of Generating Electricity 2020 Edition, by the International Energy Agency, Nuclear Energy Agency Organisation For Economic Co-Operation And Development.
The advent of SMRs also allows the construction of nuclear stations in a modular way, avoiding the high upfront capital cost of a large station. So, for affordable, reliable, base load power production in the long term, South Africa cannot afford not to invest in more nuclear capacity.
With talk of sabotage at Eskom, is safety a concern as far as nuclear plants go?
All workers and visitors entering Koeberg Nuclear Power Station undergo police clearance checks and extensive fitness for duty training. A nuclear power station is designed around the concept of defence in depth, supported by redundant and diverse safety systems. This diversity and redundancy, as well as strictly controlled and monitored access to critical zones in the plant, make it impossible for a sabotage event to lead to a nuclear incident.
What energy mix do you think would be ideal for South Africa?
Coal is cheap and available in abundance in South Africa. It is unlikely it will be phased out as an energy source for electricity production
in the near to medium term. There is also good potential for solar and wind generation, but these sources are intermittent. Hybrid residential systems that include battery storage are becoming a trend – however, a large reliable base load generating capacity is essential to run a modern economy.
A sensible approach would be to replace decommissioned coal stations with nuclear. This approach will eventually lead to carbonfree electricity generation in South Africa, with nuclear providing the base load capacity. The average age of the Eskom coal fleet is around 40 years, so the construction of new nuclear must start immediately.
For more information:
+27 21 525 1300
info@lesedins.co.za
derik.wolvaardt@lesedins.co.za
www.lesedins.co.za
Omnia – a JSE-listed diversified chemicals group – is aiming big. Recently, the group announced the signing of a memorandum of understanding (MoU) with WKN Windcurrent SA, a listed subsidiary of German renewable group PNE AG (one of the most experienced project developers
of onshore and offshore wind farms), to explore the economic feasibility of developing a green ammonia production plant.
Ammonia is a key raw material required to produce fertilizers and explosives – two of Omnia’s product value streams – used in the agricultural and mining sectors.
Omnia group executive: manufacturing and supply chain Jona Pillay says: “For Omnia, building a green economy is right up our street. We’re currently heavily invested in hydrocarbons. For us, moving towards a carbon-neutral operating environment is almost a given. Making this shift means that the communities around our operations can have even cleaner air. It is important for the people who work in our facilities and the families who live near our plant to see that we are a responsible producer and operator.”
He adds: “Green ammonia will possibly percolate across the whole value chain of stakeholders – providing farmers with a
A green, decarbonised chemicals industry is the future, and OMNIA is stepping up to chart a path for it in Africa.
The idea is to build a 100MW of power through a combination of wind and solar initiatives externally to the Sasolburg plant.
Pillay says that Omnia intends to build 100MW of power through a combination of wind and solar initiatives externally to the Sasolburg plant. “Internally, we would like to install between 35 and 50MW of solar power tied to an electrolysis plant.
“Electrolysis is essentially a separation of H 20. Typically, there are few suppliers of this technology, we’re currently in talks with a big one. These units come in small 20MW modular units,” he continues.
These units will be able to produce green hydrogen, which will be combined with nitrogen from an air separation unit to produce up to 100,000t/y (tonnes per year) of green ammonia.
SOLAR OPTIONS
Pillay explains that Omnia has responded to such challenges in various ways. In January, the group announced the launch of a 5MW Sasolburg solar plant. Omnia also broke ground for the second phase of the plant, which would further reinforce the company’s stance on the future, heading towards renewable energy initiatives.
Upon completion, the 10MW solar plant is expected to save at least R12-million per annum
in energy costs and will supplement between 25 and 35 per cent of the group’s electricity requirements at its Sasolburg operations.
“Our solar plant allows us to replace the energy we cannot draw during load shedding. When curtailments occur, we switch the loads on the plant, using it to fill the gap created by the national grid not being able to supply power,” he explains.
STEAM GENERATION
COMMITTED TO A BETTER ENVIRONMENT
He concludes: “There is nothing better than having our own plant showcasing our commitment towards a greener environment and ESG priorities. At Omnia, we are putting our money where our mouth is in terms of a greener economy, in line with our business purpose, Innovating to Enhance Life, Together Creating a Greener Future .”
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Signing of MoU between Omnia Group and WKN Windcurrent SA, a subsidiary of German renewable group PNE.
New battery technologies make large-scale adoption of alternative energy possible, writes Probe – a power and energy solutions company.
The potential of supercapacitors is truly maximised when it comes to containerised solutions, where a customised, integrated energy solution is delivered in a container. Again, battery technologies make the difference, says Rovelli. “New generation graphene supercapacitors mean you can accommodate up to 8MWh in a 40-foot containerised solution, making these solutions economically viable. The construction of the supercapacitor module also allows for localised grid-scale production. Plans are underway for South African production facilities of 1GW monthly in collaboration with OEMS, preparing for worldwide distribution.”
Advanced energy storage solutions are good news for businesses globally, but even more critical in the South African energy environment. “The right energy storage solution with your solar PV installation will not only ensure businesses have consistent power, but also create utility savings over time,” says Rovelli. “Businesses with efficient energy storage can draw power from stored solar energy during peak times, avoiding higher peak demand charges.”
Businesses are looking at reducing their dependence on Eskom and capitalising on South Africa’s abundant solar energy. While the grid-tied solar systems favoured as a cost-effective solution can provide substantial energy cost savings when the sun shines, they don’t protect businesses from load shedding.
The real game changer is incorporating new affordable, efficient energy storage systems that enable hybrid solar solutions for business, says Frank Rovelli, Probe Group CEO. Rovelli says that energy density and usable capacity over a battery life cycle are the keys to real alternative energy return on investment.
“As batteries become more efficient, longer-lasting, faster charging, affordable, and take up less space, the business case for hybrid solar installations improves,” he explains. “We’re seeing massive improvements in energy storage capacity and round-trip efficiency while the investment and space required for battery banks reduces. This makes effective large-scale adoption of solar energy possible. Modular set-ups further enable businesses to scale up systems by adding additional battery storage as needed.”
An importer and distributor of batteries for over 60 years, Probe has a specialist team that keeps up to date with battery storage technologies. The Probenergy division focuses on alternative energy solutions from world-class suppliers, and now offers a Probenergy range as well as other Tier One products.
Rovelli believes graphene-based supercapacitors are the future of large grid-scale and solar energy. While lithium batteries store energy electrochemically, supercapacitor modules store it electrostatically –a safer, more energy-dense form of storage. Solid-state supercapacitors created with encapsulated hybrid graphene take this even further, more than doubling cell, module and volumetric energy density and eliminating degradation. “Graphene supercapacitors can now deliver four times the power of a lithium battery, and last seven times longer in terms of life cycles,” says Rovelli. They are also fully recyclable and far less hazardous than lithium batteries.
Lithium batteries lose efficiency and capacity over time. Graphene supercapacitors offer at least 43 000 cycles with a maximum degradation loss of 5% during their life span and no loss of efficiency. They can be charged and discharged three to five times faster than lithium batteries, with minimal heat generation. The supercapacitors can be joined in parallel and series with any type of battery, making them compatible with existing systems and flexible for future additions.
These factors make graphene supercapacitors the most efficient, fast-charging, longest-lasting, scaleable battery investment for commercial solar on the market, says Rovelli.
While these technologies pay off over time, the initial capital outlay can be challenging to finance. Probe has partnered with banks and funders to offer rent-to-own and leasing solutions.
“The right financial solution turns capital expenditure into manageable operating expenditure, enabling businesses to access the most appropriate, scalable technologies. Graphene supercapacitors allow for accurate pricing of the storage solution over the life of the system, with limited maintenance costs.”
Tax incentives further allow South African businesses to deduct 100 per cent of the costs of a solar installation of less than 1MW from their taxable income in the year of its commissioning.
Rovelli says that businesses must turn to reputable providers. “Providers should offer not only the best battery technologies and competitively priced Tier One products with a scalable, modular approach, but also detailed energy assessments, excellent ongoing maintenance and service, and rent-to-own financing options. At Probe, we are battery experts, and we’re committed to taking the best power solutions across Africa.”
For more information:
+27 86 111 3507
www.probegroup.co.za
With a 25 per cent share of all
Managing risk is particularly relevant to South Africa’s unstable grid, as it can help avoid unplanned downtime and expensive maintenance interventions, remedying faults before they can threaten energy provision.
An advanced distribution management system(ADMS)servesasthebridgebetween operational technology and information technology, and is a foundational strategy for a net-zero utility.
It appears clear that on a global scale, countries need to find ways to decarbonise their power sectors. This is a vital aspect in respect of meeting the emissions-reduction targets contained in their contributions to the Paris Agreement on climate change.
In fact, it has been stated that essentially complete decarbonisation of the power sector will be necessary by around 2050 if the world is going to meet the Paris Agreement’s target of capping global temperature rise at 1.5°C, and even to meet the less ambitious 2°C target.
As far as South Africa is concerned, we are currently in the midst of one of the greatest energy provision crises in recent years, making it difficult to contemplate that utilities have to start looking to the future in earnest, but it is critical that we keep in mind the global efforts towards decarbonisation.
South Africa certainly has its part to play, and beyond retiring carbon-polluting energy resources, Eskom must modernise to meet not only the country’s energy demands but also its decarbonisation efforts.
Renewable Energy World explains a few specific ways electric utilities can reach low-carbon emissions: “To meet carbon-neutrality goals, utilities will need to deploy multiple strategies such as carbon capture, cap-and-trade, and investing in lower-carbon energy sources and technologies.”
As we move towards feasible solutions to stabilise South Africa’s grid, utilities must ensure that they future-proof their infrastructure to bring about a cleaner future. Schneider Electric has identified three key areas that will benefit from digitisation and help to realise utilities’ goals.
A distributed energy resource (DER) is, in essence, a small-scale unit of power generation that is operated locally and connected to the larger power grid at the distribution level. DERs include solar panels, battery storage systems, natural gas-fuelled generators, and controllable loads.
As we continue to move towards low-carbon economies, DERs will undoubtedly enjoy increased uptake. However, DERs are a challenge for utility operations, planning and resource integration. Here, digitisation and automation of the grid will play invaluable roles in enabling utilities to:
• Monitorandestimateboththecurrentand future state
• Modelbothreal-timeandforecastedactivity
• Optimisemanagementandcontrol
Ultimately, utilities must have the ability to control distributed generation and delivery of electricity digitally, while improving power safety, reliability and quality.
Essentially,anADMSenablesutilitiesto manage the grid better, including monitoring, analysis, control, optimisation and planning, as well as training tools such as digital twins, which offer a virtual representation of the distribution network.
By merging distribution management, outage management, and supervisory control and data acquisition systems into one solution, utilities can maximise the benefits of an evolving smart grid.
Digital transformation allows for the improved management of existing assets, which aids significantly in improving energy distribution.
By digitising asset management, utilities can analyse operational, technical, financial and geospatial sources. For example, operations will be able to gain insight into maintenance in order to avoid outages, while also saving costs and maximising employee resources.
Managingriskisparticularlyrelevantto South Africa’s unstable grid, as it can help avoid unplanned downtime and expensive maintenance interventions, remedying faults before they can threaten energy provision.
Ultimately, in order to move towards a genuinely decarbonised world, one where various energy resources meet our demands, it is imperative that utilities begin to look deeply into the digitisation of their assets, in order to properly fortify the future.
carbon emissions globally, electric utilities play a crucial role in achieving a low-carbon future, so it is vital that they begin to decarbonise their grids, writes VLADIMIR MILOVANOVIC, vice president of power systems, Anglophone Africa cluster, Schneider Electric
Despite record load-shedding in 2022, the South African economy was able to deliver economic growth that exceeded pre-COVID-19 pandemic levels and just under 1 million South Africans found employment. This can largely be attributed to two factors: Record purchases of diesel for generators and an aggressive roll-out of renewable energy solutions.
While ongoing diesel purchases are not viable long-term solutions and come with multiple environmental issues, solar and renewable energy offerings are key elements of both sustainability strategies as well as access to markets for small businesses.
“If your key suppliers can continue to operate during loadshedding, you immediately enjoy a competitive advantage in the market,” says Ahmed Motara, Business Development lead at Solana Energy.
This is exactly the strategy being followed by Solana Energy and its partners - which include multinational mining group South32. Initially established as an Enterprise and Supplier Development (ESD) beneficiary to deliver solar energy installations via certified installers, Solana Energy is now using innovative funding models to allow businesses to empower their own key suppliers through solar installations.
Three of the key challenges for businesses considering solar installations are lack of access to funding, long lead times on solar installations due to supply chain constraints and a lack of certified installers to ensure high-quality projects are delivered.
“It makes complete business sense,” says Motara adding: “ESD funding is a key transformation requirement for businesses in terms of their B-BBEE strategy and the loss of key black-owned suppliers can have a material impact on your B-BBEE scorecard.”
competitive advantage in the market.”
Ahmed Motara, Business Developmentlead
at Solana EnergySolana Energy is already utilising innovative funding models to provide renewable energy solutions to 4 key suppliers of South32 in the first quarter of 2023. Where these businesses would have faced funding constraints, the deployment of ESD funding means that they can rapidly install solar energy that ensures business continuity.
Further, projects in Mbombela and the Northern Cape have also been identified to rapidly bring on clean energy solutions that will stimulate further growth in the South African economy and reduce reliance on the Eskom grid.
Launched in 2022 as part of an ESD initiative with leading mining and resources group South32, Solana’s mission is to be a leading reference in the renewable energy solutions sector, and make it a popular source when it comes to the microgeneration of clean and sustainable energy. As a renewable energy integrator and provider, Solana Energy offers the highest quality products and solutions, saving customers money with lower energy costs, while transforming the energy sector in South Africa.
Solana Energy is aiming to empower and power-up the communities they operate in. Solana has a social element built into the business model. Solana Energy partners with corporates by offering Enterprise and Supplier Development (ESD) solutions. Solana Energy is a business-backed, community-based solar installation solution which is backed up by a team of experienced industry professionals with proven track records. Whether you are looking for a household or industrial solar solution, Solana Energy
the expertise to deliver.
By supporting Solana Energy, you will support local solar businesses and invest in local development while switching to sustainable solutions.
“If your key suppliers can continue to operate during load-shedding, you immediately enjoy a
Solana Energy offers a variety of mechanisms for deploying B-BBEE funding to support a transition to green energy solutions. The team has extensive experience in delivering high-impact solutions across a variety of industries.
Enterprise Development: Investment in infrastructure for black-owned SMEs
Supplier Development: Keep your key suppliers online through solar energy installations
Skills Development Funding: Train the next generation of electricians through the Solana Training Academy
Solana Energy works with a number of B-BBEE advisors who are looking to integrate renewable energy into their ESD strategies and is always on the lookout for new partners.
Although the rapid roll-out of rooftop solar installations is going to play a meaningful role in keeping the South African economy online, there are a couple of challenges here.
The first is access to high-quality equipment including solar panels, batteries and inverters where demand far outstrips supply. The second factor is the lack of certified installers able to ensure safe, high-quality installations. Thirdly, the up-front implementation costs are prohibitive with a standard residential roof-top implementation likely to cost north of R200 000.
While “Rent-To-Own” solutions have proven popular, much of this is still dependent on the balance sheets of the installers.
Solana Energy has been able to drive its “Solar as a Service” offering due to a powerful balance sheet backed by corporate partners and one of South Africa’s largest banking groups. These partnerships plus relationships with high-quality suppliers and the development of its own training academy make Solana the partner of choice for your solar implementation.
“Being part of Solana has created a paradigm shift in my life holistically, on a personal and business front. For most of my life, I have been searching, learning, growing while trying to figure out just how to create tangible change that will catapult me to the next level of my entrepreneurial journey, and Solana has helped me to get there. The learning, the growing is still the game plan but now the difference is the fact that Solana has handed me the play book.”
Nkululeko Biyela, Sales Manager, Solana Energy
Solar, made simple.
For more information about Solana Energy in KZN, Northern Cape and Mbombela, you can reach out to us on:
Website: www.solanaenergy.co.za
E-mail: info@solanaenergy.co.za
“ESD funding is a key transformation requirement for businesses in terms of their B-BBEE strategy and the loss of key blackowned suppliers can have a material impact on your B-BBEE scorecard,”
Ahmed Motara, Business Development lead at Solana Energy
South Africa’s Just Energy Transition Investment Plan (JET IP), published late last year, estimates that our country’s energy transition will require R1.48-trillion, allocated as follows:
This requirement sees investment in the electricity sector over the following five years of R647.7-billion, based on:
homeowners to put their balance sheets on the line to support the drive to solar.
While solar energy is relatively accessible for individuals, its growth will be driven exponentially by businesses with available real estate, such as the solar panels installed at Makro stores on former shade ports.
Last year saw a record number of announcements by South African corporates of green financing to install solar energy. Here, local banks have really come into their own, funding companies to go green.
Although it is possible to install a small turbine for domestic purposes, South Africa’s wind-powered energy comes largely from utility-scale wind farms. The Cookhouse Wind Farm in the Eastern Cape, for example, with a capacity 135.8 megawatts (MW), was reported to have been developed at a cost of R2.4-billion. The number of balance sheets in South Africa that could support that kind of funding is exponentially smaller than the solar solutions referenced above.
It is clear that the sheer balance sheet capacity required to drive this kind of energy mix is material, and stretches to include individuals, corporate South Africa and the government.
As load shedding steadily increased over 2022 to near-crisis levels in 2023, individuals have turned to the most affordable renewable energy: solar. This growing home market has sparked innovative funding solutions, which could contribute distinctly to decreasing the strain on municipal infrastructure and balance sheets.
Companies like Gosolr offer a system for your home from only R1 580 per month, which they maintain but continue to own. Some offer lease-to-own systems, while others arrange financing from preferred financial partners for homeowners. These developments enable
Financial institutions are highly motivated to support the transition to green energy, and are becoming more innovative in enabling corporates to leverage their own balance sheets. It is relatively quick and simple to install solar systems, and banks are now willing to take the risk that, if that energy is not consumed by the original borrower after an initial funding period of three years, it will be able to find other customers.
This willingness to accept three-year corporate power purchase agreements (PPAs), as opposed to the far longer PPA requirements seen in the REIPPP programmes, for example, will unlock significant opportunity and liquidity.
Once the energy-intensive user group and municipalities come into the fray, however, the proposition really changes, and funding capacity becomes sufficiently material to drive other components of a future energy mix, including wind and transitional sources like gas.
In 2021, Sasol and Air Liquide jointly tendered out 900MW of renewable energy, expected to come from a mix of wind and solar projects each making at least a 70MW contribution. Late last year, Sasol confirmed that it was close to signing its first PPAs for 600MW of that programme.
It is of course also in the municipal sector – one of the biggest contributors to ensuring that energy is available on an equitable basis – that donor funding and concessional finance could potentially move the needle the most.
Major planning is going into what a future energy mix could look like, including considering costs and funding sources. It is critical that this funding load is spread in a commercially viable manner across an energy mix that is not only fit for purpose, but also fit for pocket.
This goes not only for generation, but also for transmission, where the R150-billion ask could potentially not be borne by government alone. The biggest constraint will remain supporting transmission infrastructure –ultimately, the governance between REIPPP and private generation will have to be clarified.
Last year saw a record number of announcements by South African corporates of green financing to install solar energy.
SANDRA DU TOIT, EY Africa energy and natural resources leader, looks at how financing sources and structures could drive South Africa’s future energy mix
At COP27 in November 2022, South Africa launched its new Just Energy Transition Investment Plan (JET IP). It announced a five-year investment plan for the R146-billion financing package, which was announced as part of the country’s Just Energy Transition Partnership with France, Germany, the United Kingdom, the United States and the European Union at COP26.
The JET IP is aligned with the cabinet-approved national Just Transition Framework and outlines the investments required to achieve the country’s decarbonisation commitments, while promoting sustainable development and ensuring a just transition for affected workers and communities.
South Africa’s R1.5-trillion JET IP has since been endorsed by the International Partners Group (IPG), which includes the United Kingdom, United States, Germany, France and the European Union. These countries also plan to make an additional R10-billion available – on top of the already pledged R146-billion – to aid South Africa’s shift from coal, according to a joint statement.
The JET IP outlines the investments required to achieve the country’s decarbonisation commitments, while promoting sustainable development and ensuring a just transition for affected workers and communities – in other words, a whole-of-society approach.
The JET IP covers electricity, new energy vehicles and green hydrogen, and identifies
• Electricity: Decommissioning (re-powering and repurposing with clean technologies), transmitter grid strengthening and expansion, and renewable energy
• New energy vehicles: Decarbonising the automotive sector and supporting the supply chain transition towards sustainable green manufacturing
• Green hydrogen (GH2): Essential planning and feasibilities, including port investment, to enhance exports and boost employment and GDP
• Cross-cutting: Investment in skills development and municipalities
R1.5-trillion in financial requirements over the next five years, from the public and private sectors.
The goal of the JET IP is to decarbonise the South African economy to within the nationally determined contribution target range of 350-420Mt CO 2 by 2030 in a just manner. It is centred on decarbonisation, social justice, economic growth and inclusivity,
When asked about the shift to renewables and how we can ensure that existing miners are employed in the renewables space, Gravitas Minerals chief executive Tebogo Kale states: “Looking at our infrastructure and the switch to green technology, South Africa has to consider industrialisation to make finished renewable products, and to uplift and reskill new and existing workers within the industry. There is still too much focus on removing fossil fuels, and the industry focus is still centred on mining.
“In creating a new industry, we will be able to grow it by manufacturing renewable technologies, retain and increase employment rates, and uplift communities, as miners will now be able to become educated green technology specialists.”
and governance. The investment criteria for the plan include projects that deliver on greenhouse gas emissions reduction and just transition outcomes, and are catalytic and ready to implement.
According to Masopha Moshoeshoe, a green economy specialist in the Presidency’s Investment and Infrastructure Office, the industry could create around 1.4 million jobs and more than R515-billion in annual revenue by 2050. “Renewable power generation capacity between 140 000 megawatts (MW) and 300 000MW is needed to supply the green hydrogen sector,” he adds.
Speaking about the JET IP and the impact of foreign investment, Bernard Geldenhuys, the transactor for power and infrastructure finance at Investec, notes the following: “Foreign direct investment leads to economic growth, which in turn increases employment opportunities in South Africa (with a current unemployment rate of ±35 per cent). In addition, investments in the energy sector will facilitate South Africa’s energy and labour transition from fossil fuels to green or sustainable energy, and assist the country in meeting its COP26 responsibilities.”
The Just Energy Transition Investment Plan will cover electricity, new energy vehicles and green hydrogen, and will promote sustainable development.
VAN DER VEEN
“Investments in the energy sector will facilitate South Africa’s energy and labour transition from fossil fuels to green or sustainable energy, and assist the country in meeting its COP26 responsibilities.” – Bernard GeldenhuysTebogo Kale
The Sustainable Energy Fund for Africa is a multi-donor special fund managed by the African Development Bank. It provides catalytic finance to unlock private-sector investments in renewable energy and energy efficiency. The fund’s overarching goal is to contribute to universal access to affordable, reliable, sustainable and modern energy services for all Africans.
The challenge comes in where you don’t have a PPA, but rather merchant market-type of projects.
The private renewable energy market is arguably the biggest beneficiary of the current Eskom power crisis, particularly after the president announced the lifting of the private power generation cap in its entirety last year.
“Historically, there’s always been a lot of capital available and very few bankable projects, but we are now at the precipice of that equation shifting,” says Ziyaad Sarang, chief investment officer of Revego Fund Managers. “There are a plethora of bankable projects coming on the horizon, because the market understands how to develop these. At the same time, lenders in South Africa have an almost-infinite appetite for renewable energy projects.”
The bankability of a project depends on several factors. “The financing of large-scale renewable energy projects is typically non-recourse in nature,” explains Kwabena Malgas, head of infrastructure equity at Rand Merchant Bank.
“This primarily means that the project itself (once complete) must be cash generative and have the ability to repay its debt and other operational obligations, without relying on cash injections or balance sheet support from its shareholders.
“To assess whether or not a project meets this requirement, a lot of due diligence is undertaken on the project shareholders, construction contractors, operations and maintenance providers, and the power purchase agreement (PPA) that underpins the revenue line.”
In assessing the construction phase of the project, particular focus is placed on the contractor and its ability to deliver. “We apply due diligence to the company contracted to build the plant to ensure that it has the necessary experience and expertise to carry out the work within the agreed time frames, per budget and per the agreed plant performance specifications,” adds Malgas.
All about the offtaker
Similarly, financiers look at who is going to run the operations to make sure they have the necessary track record and expertise to run these optimally and profitably. The revenue line of the project is assessed on the strength of long-term offtake or PPAs. “In the past, you had a single offtaker: Eskom,” says Sarang. “Because Eskom is backed by the government, you always knew the offtaker was solid from a credit perspective. What you see in this phase of the private power space is that there are large mining companies signing these long-term offtake agreements with independent power producers. While this is not government credit, it is still decent credit and they are in a financial position to sign long-term agreements.”
“This is where South Africa is heading: a liberalised energy market where you can buy power from any of the power producers through a wheeling agreement,” notes Sarang. “Vital to these types of agreements is access to the electricity grid, which is an issue in some of the provinces, specifically the Northern Cape, which is ironically perfectly placed for both wind and solar projects. Eskom needs to build the necessary infrastructure to create more access to the grid, to enable more independent power producers to build wind and solar plants in these areas.”
Part of assessing a project is ensuring that the shareholders are complementary. “Ideally, there should be a technical sponsor in the project – typically the independent power producer, who also has the ability to negotiate with all the various project contractors, a financial shareholder and a local partner,” says Malgas. Renewable energy projects are usually financed in a 70:30 or 80:20 debt-to-equity ratio. “The ratio depends on the strength of the offtake agreement,” says Sarang. “The funding covers the capital costs and construction of the project. In wind projects, more than 80 per cent of the cost of the installation would be the turbines themselves, which are all imported.”
Malgas says that in South Africa, from a renewable perspective, wind, solar and combinations of the two are the primary sources of alternative energy. “We also see the inclusion of battery and storage facilities. South Africa has a good mix of the different types of renewable sources to tap into and ultimately make a sustainable impact on the country’s future power generation.”
“Lenders in South Africa have an almost-infinite appetite for renewable energy projects.” – Ziyaad SarangZiyaad Sarang Kwabena Malgas
To help mitigate the growing climate crisis, we urgently need smart solutions. Every organisation, government and individual has a role to play. For companies, their brand, reputation, and financial position all depend on having tangible climate action plans.
The first priority in any company’s net-zero journey must be to reduce emissions. Each organisation should set a reduction goal aligned with science-based targets, while focusing on properly reducing scope 1, 2 and 3 emissions.
However, reaching these targets is dependent on long-term systemic changes that will take time to perfect. Companies therefore need solutions today that can have a more immediate impact while they work towards their long-term emission reduction goals.
Investing in high-quality carbon credits – and complementing this with efforts such as forest conservation, tree planting, wind farms, solar cooking stoves or better farming methods – can play a critical role in an organisation’s comprehensive climate strategy.
The path to purchasing carbon credits can be complex. Buyers want to trust that the carbon credit projects have a positive impact. In addition, providers of carbon credits don’t always have the traditional sales and marketing
mechanisms they need to successfully bring credits to the market.
This is why Salesforce recently launched Net Zero Marketplace, a trusted platform that makes carbon credit purchases simple and transparent, allowing organisations to accelerate climate positive impact at scale.
To reach a net-zero future, all roles should be sustainability roles. We’re going to need an army of qualified individuals working together, from carbon accountants to scientists, but businesses continue to face a severe shortage of sustainability talent available to help meet their commitments.
Leveraging a company’s existing workforce can be a powerful solution to solving the sustainability talent gap. By upskilling existing workers who want to make the jump into sustainability careers, companies can source talent for hard-to-fill roles, while helping employees work towards something they’re passionate about.
Through a re-evaluation of how to create sustainability roles, and the hiring and retention of sustainability talent through the provision of the right tools and training, businesses can ensure everyone can become part of the movement towards a net-zero future.
There are myriad reasons to change the way we think about waste, writes KATE
STUBBS, marketing director at InterwasteWith the worst bouts of load shedding since 2008, 2022 was a challenging year for South Africa. Clearly, the country’s energy supply needs are critical, and with the Just Energy Transition’s focus on achieving net-zero carbon emissions by 2050, exploring alternative sustainable options and reducing carbon emissions is essential. In this respect, waste-to-energy presents a huge opportunity.
In South Africa we generate an estimated 122 million tonnes of waste per annum, with 90 per cent of this being disposed of in landfills. Much of this waste, if managed effectively, could be reused as alternative resources in the form of waste-to-energy solutions. These offer a wide range of scalable options for processing waste,
which could make a significant contribution to our energy crisis, as well as alleviate pressure on our natural resources and ecosystems.
Converting waste to energy occurs through three key processes: thermal; biological and physical. For each process, there are a number of technologies available to convert different types of waste to energy such as electricity, steam or gas.
Examples of thermal destruction solutions include direct combustion for energy recovery, pyrolysis and gasification. A large variety of waste types from municipal solids to highly
hazardous waste can be processed through direct combustion.
Biological technologies focus on processing putrescent, organic waste such as food, sewage sludge, animal carcasses and agricultural waste, and include anaerobic digestion, fermentation for production of bioethanol, and landfill gas extraction and utilisation.
Certain types of non-recyclable solid or liquid wastes that have a calorific value can be physically processed to create a refuse-derived fuel that can be used as a replacement for fossil fuels.
Waste is a universal issue as it presents much broader challenges that not only affect human health and livelihood, but also the environment and ultimately the economy. It is therefore critical that we shift our thinking and approach to managing waste from a linear process – take, make, dispose – toward a more circular model whereby waste is designed out of the value chain from the onset and any waste produced is repurposed, recycled or reused, with disposal being the last option.
To reach a net-zero future, all roles should be sustainability roles.
Why waste-to-energy is an important part of a just transition
In South Africa we generate an estimated 122 million tonnes of waste per annum, with 90 per cent of this being disposed of in landfills.Kate Stubbs Zuko Mdwaba
While there is a distinct move away from using lead-acid batteries as the world slowly shifts towards renewable forms of energy, it is crucial for users of this equipment to ensure the correct disposal of these items, which are heavily polluting and dangerous.
By MURRAY LONG , managing director of First National BatteryIndustries that embrace circular economies can positively impact the environment through recycling initiatives. This is especially important for manufacturers of vehicle, standby and renewable energy (solar and wind) batteries. These contain between 60 and 80 per cent lead and plastic that can be reclaimed and reused, while the harmful chemicals can be neutralised so they don’t end up in landfills.
Most South African cars, taxis, trucks, and motorcycles have lead-acid batteries to power up their engines and other electrical systems. These batteries are truly the unsung heroes of the economy, as they keep wheels turning and industries productive, get families to work and school, and (the best part) are almost fully recyclable.
More than 90 per cent of the materials used to manufacture lead-acid batteries can be recycled, with valuable materials recovered and reused to manufacture new battery casings.
When we recycle lead-acid batteries, we reduce the cost of manufacturing new batteries, along with pollution and the need for destructive mining operations.
It is thus important to work closely with entities involved in battery recycling, as these have access to world-class recycling facilities. This in turn allows them to reduce the number of batteries in landfills, something that can be devastating and dangerous to the environment.
Even when defunct and discarded, some batteries can be flammable and difficult to extinguish. Moreover, there are numerous other toxic materials used in their manufacture that cannot be allowed to end up in landfills and find their way into the water system.
As battery solutions providers, it is our responsibility to ensure that this does not happen, a responsibility we take extremely seriously.
Smart technologies offer homeowners the opportunity to automate household devices in ways that enable them to save on electricity costs. By DR
ANDREW DICKSON, engineering executive
South Africans are struggling with ongoing load shedding coupled with a rapidly rising electricity price. Smart home technologies can help to reduce electricity use around your home, even when you are not there, as they enable you to monitor and control appliances from anywhere via an app on your smartphone.
Here are some of the ways homeowners can use smart home technologies to reduce their electricity costs.
Saving power and water
A home’s irrigation system can be automated to switch on and off at select times. Since smart home apps are able to integrate with weather apps, if a rainy day is detected, the system will not switch on, saving both electricity and water, and reducing your total municipal bill.
Avoid power surges
Prevent damage to home appliances from
at
CBI-electric: low voltagepower surges as a result of load shedding by setting a minimum and maximum “safe operating voltage range” for appliances via the app. It will then only allow power to the appliance once within a safe operating range.
A typical pool pump uses about one kilowatt per hour, or the same as running a 100-watt light bulb continuously for 10 hours. Smart technology enables users to schedule when their pumps run, preferably during off-peak periods when electricity costs less.
Don’t just stand by When in standby mode, gadgets like microwaves, computers, televisions, coffee machines, gaming consoles and
even garage door openers can consume even more electricity than when they are in use. Smart technology lets users switch off any items that are drawing power unnecessarily.
Smart technology can be used to schedule both indoor and outdoor lighting to turn on and off in ways that mimic real behaviour, even when you are not at home.
Smart home technologies can help to reduce electricity use around your home, even when you are not there.
More than 90 per cent of the materials used to manufacture lead-acid batteries can be recycled.
Decreased reliance on fossil fuel electricity is one of the key measurements lying at the heart of ESG, essentially making renewable energy independent power producers enablers for the rest of the market – if they share the right credentials. By NICOLAS MARSAY, ESG and circular economy specialist at NSDV
Genuine concern about social injustice or “wokeness” aside, the objective purpose of environmental, social and governance (ESG) measurements is to enable a company to track, transform, and improve their commitment to doing sustainable business transparently. This open accountability in business operations enables investors and customers in the market to make comprehensive and data-informed decisions about which companies to invest in and procure from.
Essentially, ESG credentials are a combination of verified metrics relating to the non-financial impact that a company has on people and the planet – a scorecard, if you will.
Is purchasing goods and services from net-zero suppliers key to your procurement policy? Is investing in companies with low water intensity key to your fund’s mandate? ESG credentials will assist in filtering the possible suppliers and/or target companies.
While stock exchanges have taken steps to set disclosure requirements for sustainability, incorporating GRI and/or SASB standards on how to measure the various indicators doesn’t necessarily allow companies to effectively score themselves. It makes sense to have hard
targets like we have for B-BBEE scoring to score ESG impact accurately.
Looking at metric E4.1c of the JSE disclosure requirements as published in June 2022, companies are required to disclose their waste intensity, in the form of tonnes/ZAR of revenue. It doesn’t (yet) have a hard target that says fewer than x tonnes per rand of revenue generated will give you a preferable score.
Furthermore, none of the metrics are weighted within the ESG categories. This is key in enabling investors and/or buyers to make an objective, like-for-like comparison. A good ESG scorecard, created with the legal and operational aspects of your business in mind, becomes that “all-important” credential when looking to do good business.
To give the market confidence in any company’s ESG credentials two things are needed:
1. Regulators need to set metric-specific targets (for example, solid waste intensity must be less than x tonnes per unit of revenue) and weighting of each metric within the greater ESG scorecard. We believe this is imminent.
2. Enforcement must be done through an incentive and/or penalty regime.
A good example of the effective enforcement of policy is the South African government’s broadbased black economic empowerment (B-BBEE) policy. Policy. The policy lists specific targets relating to each of the sub-elements, enabling a company to score points that are then assured by licenced verification agents.
Whilst opinion varies on the impact that B-BBEE has had on business in South Africa, ranging from positive (the creation of a tax-paying middle class of previously disadvantaged people) to negative (enabling of corruption in state-owned entities), it is agreed that the mechanism of its enforcement, through the supply chain by clients, has been extremely effective. All businesses in South Africa (and those investing in local businesses) are aware of it.
It is not difficult then to imagine that in order to enforce ESG, the supply-chain method used by B-BBEE could be the next evolution for sustainable business practice. With regulators defining targets for each of the metrics and the licensing framework for verification agents, the market will have independent third-party assurance that a company’s ESG credentials are correct, limiting risk exposure to any greenwashing gimmicks.
This brings us back to independent power producers (IPPs). We believe that specifically defined and weighted metrics for the IPP sector are needed. While renewable energy IPPs enable other companies to achieve their scores by selling clean power, these do not exempt them from underperforming on other ESG credentials such as water intensity (contributing to the E), skills training (contributing to the S) and/or board diversity (contributing to the G). ESG is scored as an ecosystem, and you pass the up- or downstream onto those with whom you do business.
IPPs stand to lead economies in leveraging better scores for their clients, based on decreased reliance on fossil fuel electricity. Conversely, IPPs pass on their positive ESG score to procurers of energy, creating an upstream effect.
As a law firm, we always think contracts and agreements are a good idea, but there is a bigger net effect beyond compliance. We believe starting a tailored scorecard and sharing the results with other businesses in your supply chain (which will naturally refine overtime) will create a culture and demand for better insights into how businesses operate (or should be operating) with specific targets in mind.
Sound ESG credentials, or a scorecard, provide IPPs with the ultimate opportunity to differentiate in a rapidly growing market, appealing to the next generation who are already leveraging ESG credentials for economic decision-making.
It is not difficult to imagine that in order to enforce ESG, the supply-chain method used by B-BBEE could be the next evolution for sustainable business practice.
Adding to the above expenses, ongoing load shedding is losing businesses millions in revenue, as they are simply unable to operate during outages, not to mention the additional consequential damage to equipment and machinery. All told, this is estimated to be costing the country’s economy some R4-billion per day. It is therefore unsurprising that a great number of companies are actively seeking alternative power supplies, in order to avoid reliance on the unstable grid. In fact, the commercial and industrial sectors account for about 70 per cent of all new rooftop solar photovoltaic (PV) installations at a national scale.
Currently, many solar PV systems have batteries that can typically only provide a few hours of backup (if sparingly used) because they have limited capacity. Large batteries are very expensive. While solar PV provides a measure of energy cost reduction, it is battery storage that provides the critical energy security to make sure machines and computers are still running.
However, it is essential to have load management to prevent the battery from draining unnecessarily, considering that something as simple as an employee heating their leftover pizza in the company kitchen at lunchtime could flatten the reserve, crippling the business.
While South African businesses were spared from Eskom’s proposed 32 per cent tariff hike, energy regulator Nersa nonetheless allowed the utility to increase tariffs by 18.65 per cent. Although not as crippling as it could have been, this remains another heavy expense for local companies to foot, especially as they use between 15 000 and 50 000 kilowatt hours of electricity annually, depending on the size of the company.
Businesses are already paying very large amounts for their electricity consumption, and you can add to this the further costs they are hit with each month should they exceed their notified maximum demand (NMD) limit. Businesses can no longer afford for their energy use to remain unmanaged, particularly in light of continued turbulent economic conditions.
As the old cliché goes, “You can’t manage what you can’t measure.” So if businesses don’t know what is contributing to their electricity bills, it becomes very difficult for them to control these and to understand how to reduce costs.
To illustrate this, we had a client that was spending upwards of R120 000 every month on electricity, but did not know what was contributing to this cost. While they were aware that approximately R30 000 was going to NMD penalties, which is money straight down the drain, of the R90 000 for consumption, the organisation could only guess. At the same time, they were spending hours trying to compare consumption data against their utility bill manually.
The best way for business owners to start tackling spiralling electricity costs is to implement managed smart metering at several key points in their electrical network. This enables them to gather and analyse real-time electricity consumption data. Once they can identify exactly where energy is being consumed, they can ensure that measures are put in place to reduce wastage of both money and energy.
It is also worth noting that while everyone has their part to play when it comes to reducing energy consumption, relying on the company’s employees to change their behaviour often doesn’t yield optimal results. Unless electrical load management is automated, a business’s ability to reduce its consumption costs is fairly limited.
In today’s business climate, companies are primarily concerned about reducing their upfront capital. However, they need to consider all the costs associated with unmanaged consumption, including their environmental, social and governance and carbon footprint reduction objectives, as well as the most basic and necessary capability: that of being able to keep trading and servicing their customers.
In the period from 1988 up to the 2008 electricity crisis, electricity tariffs increased by 223 per cent, while inflation over this period was 335 per cent.
From the start of the 2008 electricity crisis onwards, there is a clear and sharp inflection point for electricity tariffs in South Africa. From 2007 to 2022, electricity tariffs increased by 653 per cent, while inflation was 129 per cent. Thus, electricity tariffs increased four-fold (or quadrupled) in real money terms in 14 years.
Source: PowerOptimal
Unless electrical load management is automated, a business’s ability to reduce its consumption costs is fairly limited.
On 4 November 2022, the Presidential Climate Commission published South Africa’s first Just Energy Transition Investment Plan (JET IP) for 2023–2027. The JET IP sets out the scope of investment required to support the ambitious decarbonisation commitments made by government in its nationally determined contribution and Low Emission Development Strategy submitted to the United Nations Framework Convention on Climate Change.
The JET IP articulates investment priorities to enable the uptake of renewable energy that will be generated largely by the private sector over the next five years. These include decommissioning the retiring coal generation fleet, expanding and geographically diversifying the transmission grid to accommodate the shift to renewable energy, and modernising the electricity distribution system.
For the JET IP and South Africa’s supporting climate change policies to succeed, they must be underpinned by an appropriate enabling environment. In this article, we explore a key challenge to the implementation of South Africa’s ambitious reforms, namely fragmentation, at both the level of existing legislation and policy.
Several positive legislative developments have supported decarbonisation efforts, such as recent amendments to the Electricity Regulation Act to remove the 100 megawatt licensing threshold for embedded generation. This will further incentivise private investment in electricity generation and reduce the lead times to commence construction of projects. However, these amendments need to be accompanied by other interventions to address concerns, such as the lack
of transmission infrastructure, the state of Eskom and pricing.
The JET IP states that “a pragmatic approach will be taken to local content requirements for near-term renewable energy investments” –specifically for bid window 5. This pragmatism was made possible by an exemption to the local content requirements granted by the Department of Trade, Industry and Competition as a once-off, temporary measure. The ad hoc nature of these exemptions does not provide the legal certainty essential to enable investment.
A more lasting solution to this challenge is required and may need to be achieved through legislative amendment. Meaningful local content requirements must be supported by a programme implemented at pace and scale, with sufficient predictability to encourage investment in the value chain, which will support local content.
The JET IP provides that “special legislation is being developed and expedited to address legal and regulatory obstacles to new generation capacity, and regulations are being streamlined or waived where possible, including for solar projects in areas of low and medium environmental sensitivity”.
Some of the legal obstacles to new generation capacity referred to by the plan were crafted to ensure that the development of new capacity is undertaken in a manner that is socially and environmentally responsible. Apart from the environmental approvals, clearances are required to ensure that developments do not adversely affect aviation activity, harm heritage resources, adversely impact mining rights, or affect road traffic and spatial planning.
Any amendment to do away with those regulations could be open to abuse or cause unintended environmental, economic, social or other consequences. Structural mechanisms need to be put in place, for example to determine what constitutes a project of low or medium environmental sensitivity, and to limit a
enabling
developer’s ability to bypass environmental permitting requirements.
This will be important for the sustainability of projects, as local and international financial institutions and funds (the primary lenders to such projects in our market) will have their own environmental, social and governance requirements that have to be met to ensure that projects are bankable.
Several notable developments in local environmental sustainability policies have taken place over the last decade, but often in a fragmented fashion, resulting in a highly complex policy environment that stifles investment.
These have included the policies regarding the introduction of the Carbon Tax Act, the Climate Change Bill, the draft national guideline for consideration of climate change implications in applications for environmental authorisations/ licences, and the proposed carbon budget system.
JET policies often suffer from vagueness. For instance, the JET IP is drafted in very aspirational and idealistic terms, giving little attention to systemic challenges such as corruption, political apathy, the shortage of some of the skills required to sustain an electricity market driven by private power generation, and the need for policy and regulatory certainty.
The plan does not deal with the need to manage other environmental impacts, such as the destruction of biodiversity to make room for renewable energy projects. Policies must adopt a holistic rather than a siloed approach to climate change risks, and guard against the potential unintended environmental impacts of renewable energy projects.
In recent years, South Africa’s climate change policies and legislation have mushroomed. Without a consolidated, streamlined and consistent approach, implementation of our ambitious decarbonisation targets by sectors and levels of government will remain a challenge, and our energy deficit will remain difficult to plug.
For the JET IP and South Africa’s supporting climate change policies to succeed, they must be underpinned by an appropriate
environment.Mzukisi Kota Mlungisi Mahlangu
Do South Africa’s current policies and regulatory framework support its Just Energy Transition plans? MZUKISI KOTA (partner), MLUNGISI MAHLANGU (partner) and LUBUMBA KAMUKWAMBA (senior associate) of Webber Wentzel investigateLubumba Kamukwamba
