South Africa Turns to Renewables as Load-shedding Intensifies

South Africa is home to substantial renewable energy potential. With power generation declines due to aging coal plants and growing demand across the region, an increase in renewable energy deployment and gas exploitation is vital for stabilizing the grid and driving socioeconomic development. South Africa’s renewable energy sector is ripe for investment not only owing to market-driven regulations such as its flagship Renewable Energy Independent Power Producer Procurement (REIPPP) program, but also to an ideal climate flush with opportunities across solar, wind and hydropower industries.

Earlier this year, a study conducted by the University of Oxford’s Environmental Change Institute found that the country’s wind capacity, combined with relatively high political stability and adequate techno-economic factors, make South Africa a strong candidate for commercial wind energy development, which could be a game changer for the domestic energy sector if fully leveraged.

However, large-scale investments, along with enhanced cooperation among government, the private sector and international partners, are vital to unlocking the capital required to develop renewable energy projects and related technologies, such as energy storage. According to André de Ruyter, CEO of Eskom, in addition to expanding power generation capacity through renewables, up to R131 billion in investment is required to build 8,000-10,000km of transmission lines and 101 new substations to make the network portable, with changes on both the generation and demand sides.

While regulation supports the rollout of renewables, more needs to be done from an execution standpoint.  Policy reforms and programs such as South Africa’s 2019 Integrated Resource Plan – which seeks to expand the share of renewables in the energy mix to 24.7% by 2030 – and the REIPPP program create opportunities for the increased rollout of utility-scale renewable projects that will have a significant impact on the country’s energy security.

Meanwhile, on the natural gas side, with recent discoveries made by TotalEnergies in the Brulpadda and Luiperd gas developments offshore South Africa, the country’s estimated 60 trillion cubic feet of offshore gas reserves, coupled with emerging gas markets in neighboring Mozambique, Namibia and Tanzania, present new opportunities for South Africa to improve regional energy security. The recent approval of the Liquefied Petroleum Gas (LPG) Rollout Strategy by South Africa’s Department of Mineral Resources and Energy in May 2022 is another indication of the critical role that gas will play in the country’s future energy matrix. However, more must be done from an investment and regulatory perspective to unlock the entire natural gas value chain, including LPG, liquefied natural gas and gas-to-power. By prioritizing the country’s gas and renewable sectors, South Africa will be able to address its worsening electricity crisis through the adoption of clean, readily available power.

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Nicolas

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