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Shifting Currents: South African Businesses Must Balance Equity And Innovation In The Renewable Energy Surge

Our energy industry is in a state of upheaval. In 2023 we’ve grappled with the worst load shedding ever on record, with over 250 days affected by bouts of load shedding, with resulting economic losses estimated to be in the trillions. The impacts have been especially gruelling for key economic sectors like mining, tourism, and manufacturing. But our local energy crisis is playing out against a global backdrop of an accelerated energy transition, driven at a global level by climate and ESG imperatives, trade and supply chain trends, as well as tax and other financial structures, says Jan Fourie, Executive Vice President for Scatec in Sub-Saharan Africa.

“These system-wide forces seemingly ensure that, the option to lean heavily into our fossil fuel reserves for rapid socio-economic development – something Energy Minister Gwede Mantashe has hinted at –  is increasingly untenable in the prevailing global landscape.”

Moreover, as SA grapples with the ongoing energy crisis and continual, highly disruptive loadshedding, businesses are pivoting to meet the urgently need for a reliable supply of cheap, clean energy to operate.

Over the last few quarters, it’s become increasingly clear that RE (Renewable Energy), especially PV (photovoltaics, or solar panels) and BESS (Battery Energy Storage Systems) solutions, represent a cheaper, faster alternative to coal-based options,” Fourie suggests.

“These technologies are now accepted as part of a viable trajectory towards a just transition, with some hailing 2023 as a massive year for Solar in SA,” he continues.

“Rapid developments in BESS technologies, including the rapidly scaled production of plant-ready lithium-ion batteries, have been a game-changer, effectively mitigating the ‘erratic’ nature of first-generation PV-based tech and rendering renewable energy a price-competitive viable alternative to fossil fuels.”

“In recent years we’ve seen a cohort of multinationals – Scatec included – and local companies looking to unlock the abundant solar potential in the region, to power at utility, commercial, industrial, and residential levels.

“With South Africa’s energy transition becoming a matter of high politics, polarising opinions on governance models have emerged, in which the debate is often over-simplified to a binary in which coal equated with socialist ideals, and renewable energy framed within the context of privatisation and capitalism. Renewables’ antagonists have overlooked the immense potential of the RE industry to ignite economic prosperity, job creation, and collective ownership schemes.”

However, given the realities of the current situation in SA, a viable route may lie in nuanced private investment, into key infrastructure, coupled with strategic community investment by public enterprises. This ensures not only energy sustainability but also the imperative collective ownership of the renewable energy transition in the country,” Fourie says.

One of the key takeaways from the 2023 Budget Speech was a rallying cry for investments in renewable energy, at all levels, as a fundamental commercial decision. This came after a massive investment from African Development Bank, which last year committed R2.3 billion in funding towards solar developments in the Northern Cape. However the 7th REIPPP bid window is still in limbo – one of the reasons for this, as we’ve seen clearly from the 6th round, is the need to align projects with geographic areas’ expected demand, supply, and regional grid capacity.

“This is a conundrum we urgently need to address in SA, for businesses to fully reap the rewards of sunlight-powered energy,” says Fourie.

“Our traditionally resilient grid accommodated fossil fuel-based electrification, especially via the historic, predominantly North-West to South-East running high voltage transmission pipelines. However, with massive commercial and utility-scale developments now commonplace – including the likes of Scatec’s Kenhardt trio of projects, which boasts a cumulative capacity of 540 MW in solar production and 1 140 MWh in battery storage. These burgeoning renewable projects necessitate an upgrade to our power transmissions infrastructure. We’re in the process of ‘reversing’ the grid’s historic architecture, as we now need to channel high-voltage energy from the sunshine- and wind-rich South and Western regions to the more populous Northeastern ones – historic hubs for the fossil fuel industries’ regional activities,” he notes.

“As we move forward with this transition, we should be mindful of societal implications, and work to bring about energy equity. Therefore, a balanced approach that prioritises both technical efficacy and social equity is crucial as we navigate these upgrades. “We want to see a RE-enabled grid that serves as a conduit for shared prosperity,” he elaborates.

Launched earlier this year, South Africa’s Renewable Energy Masterplan (SAREM), offers a promising tentative blueprint for diversifying the country’s energy mix, in which a sizeable chunk of the national electricity demand expected to be met via RE by 2030, with solar energy expected to be a cornerstone. Notably, the plan calls for community ownership, aiming for social upliftment alongside technological progress.

“Solar power in South Africa is not merely a passage to renewable energy; it’s a promising solution to the prevailing energy crisis, catalysing a clean energy transition with profound implications for businesses. Moreover, the embrace of solar energy dovetails with many businesses’ ESG and CSR objectives, heralding a vibrant landscape of developments in the solar sector, in turn catalysing economic rejuvenation, business sustainability, and job creation. But we need to overcome regulatory challenges, and grid capacity constraints, all while ensuring a socially just and equitable transition that works for everyone in SA.”