The renewable energy space is becoming a very busy one for SA’s mining companies. It can only be good for their own green credentials and their energy security, as well as for SA’s.
Mining companies have long wanted to generate electricity for their own use, which would also take some pressure off the national grid. The government has at last enabled that by lifting the licence cap on what is called embedded generation. The Minerals Council estimates mining companies could build up to 6,000MW of new renewable energy capacity. Some of SA’s largest miners are entering into new partnerships with established players in the renewable energy industry to effect this. We are at last starting to see the shape of the new private electricity market that will emerge over the next few years.
Richards Bay Minerals has announced a deal with French renewable energy player Voltalia to build and operate a solar photovoltaic plant that could generate up to 300 GWh (gigawatt hours) a year to power RBM’s titanium smelters and processing plant. And Anglo American and French energy giant EDF took their partnership a big step forward with an agreement to form a new jointly owned company, Envusa Energy. The new company will launch 600MW of wind and solar projects in its first phase, with Anglo committed to lift its renewable energy generation to 3GW-5GW by 2030 in partnership with EDF.
The RBM and Anglo announcements come after coal and base metal miner Seriti recently bought control of Australian-owned renewable energy player Windlab Africa and said it would invest $730m (about R13bn) to build a 450MW wind farm in Mpumalanga to kick-start its foray into renewable energy.
Fairly priced
RBM operations will have a reduction of at least 10% in their carbon emissions, an issue that is becoming ever more essential for miners and other exporters to address as the EU and others look to impose carbon border taxes on their imports.
The new solar PV plant, Bolobedu, will be 51% black owned and located near Polokwane — which has available capacity on SA’s electricity grid to transport the electricity. The new Electricity Regulation Act provides for such power to be transported or “wheeled” across the national grid. Crucial now is that Eskom, which owns the grid, makes the process easy as well as speedy and prices it fairly. Regulator Nersa needs to co-operate too by streamlining the process to register these new private sector producers.
All of that is crucial because any new electron that goes into the national grid, wherever it is generated and whoever technically owns it, adds to the capacity of SA as a whole. And while Eskom’s ailing power stations are failing so badly to deliver, adding new electrons could hardly be more urgent. It will take time though. RBM’s Bolobedu plant starts construction only in 2023 with a view to completion in 2024. But that’s much faster than Eskom has brought any of its own plants on to the grid. And as miners and other companies put their own generation plans into effect, they could add enough capacity to the grid to start ending load-shedding by 2024 or 2025.
Big money
The renewable energy companies themselves already had pipelines of projects in the rest of Africa, and in some cases in SA itself. Their partnerships with the miners will expand their presence in SA and will bring foreign expertise and technology into SA’s renewable energy space. Nor are the miners the only companies to be investing in their own renewable energy generation: tech companies and manufacturers and a range of others are doing so too.
And there is big money involved, with all these private sector energy investments expected to be the big driver of a lift in SA’s capital spending over the next few years. That cannot be too soon. Absa’s corporate and investment bank pointed out recently that SA’s fixed investment as a ratio of GDP has fallen dramatically over the past 15 years, to just 14%. This is incredibly low by global standards and not even close to the level needed to support higher rates of economic growth and job creation.
With little impetus to investment coming from the public sector, it’s the private sector that will have to drive a pickup. And renewable energy is where it’s all happening.
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