SA has a pipeline of 184 renewable energy projects that would add 10.3GW of power generation capacity, more than enough to plug the country’s power supply gap, according to a study by auditing firm EY.
The finding is part of a study conducted by EY-Parthenon — a brand under which several EY member firms provide consulting services — and funded by the EU Climate Commission.
The report, “A Clean Covid-19 Recovery”, found that of the 184 projects, 94 are power-generation projects dominated by solar and wind technologies. Another 79 are in the transmission and distribution segment, while 11 are storage projects. Most of the projects are still obtaining permits and most are expected to be ready for construction in the next 24 months.
SA’s power supply gap is estimated at 4,000MW to 6,000MW over the next five years as a result of Eskom’s ageing and unreliable plants, with devastating economic consequences if unresolved.
However, “deploying the available pipeline of renewable energy projects will enable SA to increase its total generation capacity by around 18%, substantially increasing the availability of reliable electricity and improving energy security,” EY-Parthenon said in the report.
“Increasing electricity production with renewables will also contribute to reducing energy costs, tariffs for end-consumers and production costs for Eskom.”
While the pipeline requires investment of more than $37bn (R526bn), the firm said the vast majority of the funding can be sourced from the private sector — which in any case is the primary driver of the size of the pipeline.
In addition to the substantial investments into the economy, the report found SA’s renewable project pipeline could create 102,000 local jobs, compared with 92,000 jobs in the domestic coal sector.
Of the 94 generation projects, 53 are smaller than 100MW, making the new licensing exemption threshold of 100MW critical in assisting these projects to get off the ground quickly.
President Cyril Ramaphosa announced in June that schedule 2 of the Electricity Regulation Act would be amended to exempt projects of 100MW and less from obtaining a licence from the regulator.
About 10GW of renewable power would also assist decarbonisation efforts in SA, the world’s 12th-largest emitter of greenhouse gases due to its reliance on coal-fired power.
The project pipeline could allow SA to reduce its emissions by 40 megatonnes of carbon dioxide equivalent per year, a 9% reduction in the country’s total emissions, the report said.
This could go some way towards realising the recommendations of SA’s Presidential Climate Change Co-ordinating Commission, which last week recommended that the country embark on a more rapid reduction of emissions than planned so as to attract climate finance and for the country to remain competitive in global trade.
While there is abundant capital available for the project pipeline, additional policy measures would unlock the full potential of private investment, EY-Parthenon said. For example, the government could increase the allocations in future renewable energy procurement rounds and ensure consistency in the timing of bidding rounds.
SA could also strengthen local supply chains, such as the manufacturing capability for wind generation, and invest in expanding grid infrastructure to the Northern Cape and upgrade existing grid infrastructure.
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