SA going green fastest

SOUTH AFRICA’S flourishing renewable energy market has seen the highest year-on-year growth globally, a Moody’s Investors Service report says.

GOOD NEWS: SA is going green very fast.

Christopher Bredholt, a Moody’s vice-president, senior analyst and the report’s author, said: “The South African renewable energy market has grown rapidly over the last five years or so, and there is rising demand for renewables debt.

“South Africa was the continent’s largest renewables market in 2015 in terms of asset finance for utility-scale projects and it saw the highest year-on-year growth globally.”

The report says SA’s debt market for renewable energy projects was supported by credit-positive developments, including a significant fall in renewable electricity costs, growth of independent producers and the likely increased role of institutional investors.

While local banks and development finance institutions have played a dominant role in financing South Africa’s renewable energy projects, Moody’s expects increasing participation of institutional investors in the sector.

“South Africa’s renewable energy projects are becoming less dependent on high levels of subsidy, helped by reductions in the price of equipment and installation costs and the country’s abundant natural resources, particularly solar power,” reads the report published this month.

Although coal still provides around three-quarters of SA’s energy, the government aims to increase the country’s renewable capacity to about 17.8GW by 2030, compared to 1.9GW in June 2015.

Bredholt, however, said: “Eskom has raised questions about the broader electricity generation mix and cost-reflective tariffs are yet to be implemented in the face of Eskom’s rising costs from power purchase agreements, considerations which may influence the government’s programme.”

Ahead of SA’s largest wind energy conference, Windaba, to be held in November by the SA Wind Energy Association (Sawea) and the Global Wind Energy Council, Sawea chief executive Johan van den Berg said renewable energy had become cheaper than anticipated. “Additionally, the cost of wind power has steadily lowered to approximately 
40 percent below the cost of new coal power at Medupi.

“As Moody’s shows, we have the fastest-growing green economy in the world. We’ve built a R7 billion infrastructure sector in four years, all with private money, creating many jobs and significant new manufacturing capability while quickly increasing local content beyond 45 percent. The industry is responsible for approximately 30 percent of all foreign direct investment into the country.”

The theme of this year’s Windaba is “Towards 100 percent renewables”.

The Department of Energy’s Independent Power Producers Procurement Programme, to contribute towards socio-economic and environmentally sustainable growth, has also seen remarkable success.

The latest quarterly departmental reviews says Independent Power Producers (IPPs) have contributed 8 273GWh to the national grid, while total payment to the IPPs was R18bn.

Energy generated in the Western Cape accounts for 
15 percent of the contribution to the national grid. At the end of March, 2 505 jobs had been created in the province through local IPPs. In the Free State, Limpopo, North West, KwaZulu-Natal, Mpumalanga and Gauteng combined, 2 661 jobs have been created.

The province’s biggest wind farm, the Gouda wind farm in Drakenstein already powers nearly 68 000 homes.

Karen Surridge-Talbot, of the renewable energy centre of research and development division within the South African National Energy Development Institute, said the next five to 
10 years would see solar photovoltaic (PV) and wind energy take centre stage.

“Solar PV and wind technology are the renewable technologies we know work and can produce energy fed into the grid.

“We are still going to see more wind and more solar PV in the IPP space, but we will also see more (PV) on the roofs of buildings. Shopping malls put PV on their roofs, we’ll see them on office blocks – a trend that will pick up where the country will start seeing small installations servicing a need,” Surridge-Talbot said.

She said with renewables playing a larger role in the energy mix, they also provided security to the power grid, offsetting load shedding.

This story was sourced from IOL