The Pursuit of Renewables in South Africa

Author: NJ Ayuk, Executive Chairman of African Energy Chamber

Is a just energy transition really attainable for South Africa???

Amidst the country’s energy crisis and ongoing rolling blackouts, we’ve seen the South African government making strides in adopting policies to aid a just energy transition from coal to renewables. When you delve a bit deeper into how this is set to play out, South Africa has been setting a positive example for its approach to ensuring a just energy transition. Not only is South Africa embracing renewable energy projects, but it is also wisely pursuing several proactive measures to generate the necessary funding.?

One such approach is the Renewable Energy Independent Power Producer Procurement program (REIPPP), which focuses on incentivizing private-sector investment in biomass, wind, and small hydro.??

The government operated the program between 2011 and 2015 to address energy poverty and extend access to clean electricity. This effort gave South Africa over 6,000 MW of renewable generation capacity.?Due to its success, the program was re-launched as part of the country’s 2019 integrated resource plan. The REIPPP is fostering a just energy transition complete with job creation and economic transformation. By harnessing significant private sector expertise and channeling investment, the program is fostering grid-connected renewable energy at competitive prices.?

This is huge for the people of South Africa.?

We at the African Energy Chamber continue to be impressed with the success of the REIPPP. In the Eastern Cape province, for example, the program has created more than 18,000 jobs and has developed 16 wind farms and one solar energy farm. Perhaps more importantly, the province also experiences less loadshedding (scheduled power outages) as a result of these efforts.?

South Africa also introduced a carbon tax in June 2019. In January 2022, the government increased the tax rate from under $8 per ton of carbon dioxide equivalent (tCO?e) to $9/tCO?e and announced that the rate will continue to rise, to $30/tCO?e by 2030 and $120/tCO?e beyond 2050.?

More recently, in November 2022, South Africa announced its Just Energy Transition Investment Plan. The five-year plan outlines how South Africa will reduce emissions to 420 million tCO?e by 2030 and identifies the investment needed for the transition to clean energy.?

This is a critical juncture for South Africa and we encourage policymakers to continue to roll out concrete measures that incentivize investment in the arena.??

While the REIPPP has been largely successful to date, a lot more needs to be done from both an investment and regulatory perspective if South Africa is to end its energy crisis. At the Chamber, we believe in an integrated approach to energy developments, an approach that utilizes every resource available. From coal to oil to gas to renewables, South Africa must align its policies with market growth. This means driving exploration, developing discoveries and investing in downstream infrastructure. For South Africa’s energy and economic future, we need more investment across every segment of the energy value chain.

?

About the Author?

A leading authority in the African energy sector and a strong advocate for African entrepreneurship and the indigenous energy sector, NJ Ayuk is recognized as one of the foremost figures in African business today. A well-known dealmaker in the petroleum and power sectors and founder of a leading energy focused law firm, NJ is dedicating his career to helping African entrepreneurs.?

Read more renewable energy insights:?

South Africa Issues EOI for Renewable Energy Projects?

Enel Green Power Signs 2 PPAs to Supply Renewable Energy to South Africa?

Masdar to Develop 5 GW of Renewable Energy Projects Across Africa?

African Renewable Energy Projects by Resource?