JOHANNESBURG (Thomson Reuters Foundation) - South Africans have traditionally relied upon their plentiful coal reserves to supply over 90 percent of their electricity needs. Only in the past decade has national energy policy taken note of abundant wind and solar resources. Economic growth in the past two decades has outstripped electricity capacity, and now the country needs to catch up.
As a result, Eskom, South Africa’s national electricity provider, is investing for the first time in utility-scale renewable energy, even as it also goes ahead with new coal-fired plants. The Renewables Support Programme, worth $1.3 billion, will see Eskom develop the first commercial-scale wind farm in the country and one of the world’s largest concentrating solar power (CSP) plants. Each of these two projects will add 100MW to the grid.
Financing for the programme has been obtained from the Clean Technology Fund (part of the Climate Investment Funds), the International Bank for Reconstruction and Development, and the African Development Bank.
“The programme is strongly linked to the government’s development agenda,” explained Mafalda Duarte, the African Development Bank's chief climate change specialist. The projects were approved as an important element toward meeting South Africa’s goal of shifting the balance of its energy mix to 42 percent clean energy while reducing its carbon emissions.
“Renewable energy will contribute to improved generation capacity and make electricity generally more reliable and resistant to fossil-price fluctuations,” she said. Because components can be sourced locally, the projects would also contribute to domestic industrial development and employment – both national priorities in a country with an official unemployment rate of 25 percent and widespread poverty.
According to the Clean Technology Fund (CTF) investment plan for South Africa, prepared in 2009, concentrating solar power plants have vast potential to be scaled up around the region. “In South Africa alone, Eskom estimates 40 gigawatts of commercially viable CSP in the Northern and Western Cape provinces. Replication in Namibia and Botswana could double or treble this potential,” the authors say.
In addition, solar plants could help to stabilise emissions, in line with President Jacob Zuma’s pledge to reduce growth in greenhouse gas emissions by 34 percent by 2020 and 42 percent by 2025. South Africa, despite its status as a developing country, is the 11th largest carbon emitter in the world.
“Eskom aspires to reduce its relative emissions of carbon dioxide by diversifying its energy mix in the years leading up to 2025. After this, it plans to reduce absolute emissions of carbon dioxide,” Eskom’s media desk said in response to questions.
Construction has already started on the 100 megawatt Sere wind farm, in the Western Cape, which will be fully commissioned by December 2014. It is expected to save approximately 230 000 tons of carbon emissions per year.
Eskom did not say when work would begin on the 100 MW concentrating thermal power plant, in the Northern Cape. However, the plant is due to be commissioned in 2017, and would save 450 000 tons of carbon emissions per year.
In addition, the utility will buy over 4,700 MW of renewable energy from independent power producers.
Thanks to the soft loan financing structure, Eskom has been able to lower the capital cost of renewables, said Saliem Fakir, head of WWF South Africa’s Living Planet Unit. The money allowed Eskom to develop renewable energy at a cheaper rate than commercial producers, something that should ultimately result in benefits to consumers.
Now, “the question is whether Eskom is willing to take on a larger bulk of the renewables and bring the benefits to South African consumers. If they can find ways to lower their cost of generating electricity from renewables, it can result in a lower impact on electricity tariffs,” Fakir said.
In the long term, renewable power could help South Africa save on transmission losses, lowering the cost of transmitting electricity, and create more flexibility in the national grid. “Those costs are often not taken account of because they are future costs to the economy,” he said.
Jocelyn Newmarch is a reporter specialising in environmental economics, based in Johannesburg. This article is part of a series funded by the Climate Investment Funds.
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