June 17, 2024


We Digest News to tell the Truth

The world is going green, while South Africa is still waving a brown camouflage flag

South Africa Energy Sector

Written by Bongani Siziba

South Africa’s economy has experienced stagnation which has put a strain on the effort to tackle the historical structural inequalities, unemployment and poverty. There is a consensus amongst the social partners that there should be substantial structural change in the economy that would unlock growth and allow for development. The outbreak of the Covid-19 pandemic in March, 2020, found a vulnerable South African economy that had experienced two consecutive quarters of a recession.

One of its notable setbacks is the renewable energy journey, which began a decade ago through the Renewable Energy Independent Power Producer Procurement programme. The programme is
experiencing some stumbling blocks along the way despite that South Africa has rich renewable energy resources compared with many other countries. Regardless of these favourable factors which makes the integration of these energy sources into the national electricity grid less complicated.                                              

South Africa’s energy transition shows very little to no signs of progress. This is evident in the amount of capital which has been invested this far yet no commitment or single government guarantee in place thus far. A biggest low for the country has been the delay in the procurement process of the emergency Risk Mitigation Procurement Programme due to allegations of corruption and fraud.

Although, South Africa has been discussing just transitions for over a decade. One of the critical points of contention has been when and how coal should be phased out.

With its power utility Eskom in crisis. In recent months, this has been brought home to South Africa’s 58 million citizens as major power cuts hit the country. The blackouts have renewed focus on the power utility’s economic and technical problems. But Eskom’s problems point to the much bigger issue of a country struggling to map out a new energy regime one that reduces its very high levels of dependency on coal in a way that doesn’t devastate people’s lives.

While, African policymakers continue to grapple with big questions about how to move their countries forward, with oil and coal producers under pressure from developed countries to compromise their resource advantage in fossil fuels in favour of a big push to renewable energy. 

South Africa is key among them. The biggest source of carbon emissions in Africa, the continent’s most industrialised economy has been targeted by activists for its large coal footprint, the source of about 80% of its grid energy. The country’s power utility, Eskom, is its biggest emitter of greenhouse gases even as it battles to keep the lights on, relying on power cuts and costly diesel generators to address system failures.

Despite its intention to keep exploiting coal, its Integrated Resource Plan envisages renewable energy contributing up to 42% of new generation by 2030. Indeed, the country has one of the most progressive renewable energy programmes on the continent – the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), which provides a template for other African countries.

However, South Africa is highly dependent on coal almost 90% of its energy comes from coal-fired power stations. The urgency of change is clear on both global and local levels. Mining and burning coal is one of the most destructive activities on the planet. It represents an immediate threat to all forms of life and to scarce supplies of water, the degradation of arable land and toxic pollution of the air and water with extremely negative health impacts.

But how Africa meets its growing energy needs is crucial for the continent’s economic and energy future and will have an impact on global trends. Rapidly growing urbanisation and high population growth 2.45% in 2021 means more than half a billion people will be added to Africa’s urban population by 2040.

In South Africa there is a lively debate raging about the extent to which renewable energy should replace coal, particularly given the threat of climate change. The country’s electricity supply is currently highly dependent on coal. While it’s clear that coal power won’t disappear anytime soon, a 100% renewable driven electricity generation scenario is feasible and desirable in a generation from now.

Speaking at the Africa Energy Indaba, South African president Cyril Ramaphosa said coal still has a an important role in South Africa’s just energy transition.

“In our onward march towards a low carbon future it’s critical that our efforts are both realistic and sustainable. We have resuscitated the successful Renewable Energy Independent Power Producers Procurement Programme, with plans to substantially upscale investment in wind and solar power” Ramaphosa said

“As we confront the reality of energy insecurity and the development of new sources, it’s critical that South Africa, like all developing economies, be given necessary developmental space”. he continued

Slow willingness in accelerating towards this new dawn

The reluctance of the country’s energy to drive a transition from coal has long been a handbrake on progress in decentralising energy, although recent changes to regulation will break Eskom’s virtual monopoly by allowing independent power producers to build plants of up to 100 MW without onerous licensing requirements. 

Looking at the average electricity to be generated South Africa’s energy mix would still be dominated by coal in 2030. The breakdown of electricity produced by source would be coal 64%, wind 13%, solar 8%, nuclear 4%, hydropower 3% and gas 1%.

The plan’s recommendations only cover the period 2019-2030. But it also provides draft models for the energy mix as far ahead as 2050. It predicts that in 2050, under the optimal scenario, 42% of electricity will come from wind, 20% from solar, 17% from coal, 11% from gas and no nuclear.

Meanwhile, the minister of Minerals and energy, Gwede Mantashe said rich nations, should not force South Africa to ban new coal power projects and impose other conditions to reduce its carbon footprint, pointing to the power issues developing countries have faced in the recent past.

“We are a developing economy. We must have a clear programme. We must navigate the transition carefully.”

He echoes what some other countries, also richly endowed with fossil fuels, are thinking. There are still many countries that rely on fossil fuels for their base load energy even while they court renewable.He also said that rushing to shut down coal power plants is not the solution, and will lead to costlier electricity, fewer jobs and damage the economy

His argument is that South Africa must get the most out of the coal power stations the country already has. 

Mantashe said that South Africa has 16 coal fired power stations providing about 75% of the country’s electricity generation, and by 2030 is it estimated to be 60%. 

“You don’t destroy what you have on the basis of hope that something better is coming. You build for the future on what you know and what you have. So that approach to me is scientific, is systematic, it protects the present ability of the state to supply energy.” said Mantashe

He said that rushing to shut down coal power plants is not the solution, and will lead to costlier electricity, fewer jobs and damage the economy. 

“Coal has made a huge contribution to the economy. It is growing, it is generating revenue it is doing well.  

While, African Development Bank is at the forefront of efforts to effect an energy transition, investing in helping countries end their coal dependence and driving its new deal on energy for Africa, which includes mobilising domestic and international capital for innovative financing for energy; helping African governments to strengthen energy policy, regulation and sector governance and increasing its own investments in energy and climate financing.

Economists and policy experts are raising economically sound arguments regarding the energy matter

Energy expects have raised concerns in the strides in which South Africa is taking to a just transition.

Tsepho Kgaduma, an energy expect told Top Africa News that the challenges do not arise from policy or legislative impediments but are rather technical and economic in that renewable energy sources have a poor energy efficiency factor of approximately 19% and a measly energy availability factor of 24-25% hence requiring 100% backup from base load power stations as there is still no commercial scale storage system and therefore renewable energy remains prohibitively expensive on a cost per kilowatt hour basis.

Furthermore, he said the intellectual property on renewable energy is owned by European, Northern American and Chinese companies while the engineering and fabrication of renewable energy equipment and components is also done in foreign countries thus carrying an element of foreign exchange rates risk as the Rand is continually weak and highly volatile.

South Africa has a lot going for it when it comes to renewable energy good sunshine and coastlines that lend themselves to wind power generation. But a number of factors stand in the way of its ability to move entirely away from coal. The biggest is that wind and solar power are intermittent, and new technologies haven’t yet been developed that allow for cheap and effective storage. A major global energy transition is redefining the way electricity is generated and supplied. In the past, electricity production was dominated by large and often polluting power mega plants distributed through big power lines. But the trend is now towards small-scale units primarily feeding localized electricity networks.

Leleti Maluleke a researcher for human security and climate change programme at Good Governance Africa sighted corruption and poverty as the negative impacts on the quick transition.

“The major challenge is the issue of corruption. Due to the cumulative investment needed for a decarbonized economy, there is a high risk of corruption. South Africa witnessed huge scandals of corruption during the pandemic. At least 36 cases were at various stages of investigation and prosecution. Financing meant for decarbonizing projects can easily be siphoned by corrupt officials” she said.

“The concern around unemployment, also poses a significant challenge to a quick transition. Over 500 000 people are employed under the mining sector and are at risk. While the green industry will create additional jobs, it is important that people employed in the mining sector are trained with skills that will be transferable to a green economy. The country’s unemployment rate is already at its highest and a transition that is not inclusive of low and semi-skilled workers will further contribute to unemployment and poverty” Maluleke added

Reliable energy is a luxury in Africa and a survey by Energy for Growth Hub, a global solutions connector, shows that more than 53% of firms in sub-Saharan Africa rely on self-generation as a back-up to grid power. 

How Africa meets its growing energy needs is crucial for the continent’s economic and energy future and will have an impact on global trends. Rapidly growing urbanisation and high population growth 2.45% in 2021 means more than half a billion people will be added to Africa’s urban population by 2040.

But, coal no longer make sense. It pollutes rivers, fills our lungs with poison and when it rains or too hot. Corruption, state capture and patronage networks seems to be a stumbling block in this country, Coal is also unaffordable, and the president also noted this.

South Africa aims to cut coal’s share of the energy mix to less than 60% by 2030 from around 75% now while increasing the share of wind and solar power to around 25%. The minister pointed to China’s own energy needs as an example of what could go wrong if a transition is attempted too quickly.

At the COP26 finance negotiations, the European Union, Germany, France, the UK and the US pledged R131-billion to support South Africa’s climate action goals, in the form of grants, concessional loans and investment and risk-sharing instruments, the question is why is the government reluctant on moving to renewable energy.

“They will not give us that money,” said the minister of minerals and energy Gwede  Mantashe. “They will give it to us if we take it as a loan bearing interest rates. That is how it works, that is what the world is like.” 

He added that in our context R131-billion is R50-billion short for financing the upgrade of the national grid infrastructure.

Mantashe emphasised that what came out of COP26 was to phase down unabated coal power and inefficient fossil fuel subsidies not phase out coal.  

“They say you must phase down, meaning that we must be systematic in dealing with the exit from coal. To tell the truth, the whole of Glasgow said these commitments made by some are based on technologies that are yet to be developed. And this is at best reckless and, at worst, dangerous.” 

If these echoes by the minister of minerals and energy persist, South Africa must forget about energy stability. To achieve energy stability, South Africa needs coherence and suppression of the voice of non-engineers in the engineering space.

At Africa Climate Week, held in late September 2021, the idea of an “African just transition” was floated for the first time, with calls for attention to the continent’s grave social and economic challenges, including its vulnerability to climate change and its huge informal economy.

Meanwhile, as Africa is looking at China’s presence in energy on the continent with hope for a just transition. Speaking at the UN General Assembly, China’s president, Xi Jinping, announced China would provide strong support for green transitions in developing nations and stop building coal power overseas.

During the 8th Forum on China–Africa Cooperation issued a declaration reiterating those points on climate change. At the annual meeting of the Africa Coal Network, the hundred-plus organisations attending from over 20 African nations welcomed the move and called for China to be a responsible partner in supporting renewables in Africa.

Several countries already draw almost all of their electricity from renewable power sources. These include Costa Rica, Iceland, Norway and Paraguay. They all much less populours than South Africa, enjoy large hydropower resources. South Africa, for its part is a water scarce country

Kenya is one of the African countries well ahead, with 70% of its energy already coming from renewable sources in the form of geothermal and hydro power. North African countries are using their huge solar capability to best effect. 

However, South Africa’s  economy is one of the most coal-intensive in the world, wants to steer investment into renewables and start shutting down its aging fleet of 15 coal-fired, carbon-spewing power plants, which supply 84 percent of the nation’s electricity.

On 18 May 2021 the the International Energy Agency (IEA) released a vital report showing the steps the world needs to take to transform its energy in line with the United Nations Paris Climate Agreement’s goal of keeping warming rom rising above 1.5°C.

Running counter to South Africa’s gas strategy, the IEA report showed that for emerging economies heavily dependent on coal power generation, the bulk of their transition will be straight from coal to clean energy not coal to gas. The reality is that gas, once considered a bridge fuel is a bridge to nowhere. Gas is very expensive, unlike the minister of minerals and energy remarks on gas much of the international communities realises that gas projects are likely to become stranded assets n the face of climate action and more affordable renewable energy and storage.

Although, the role of gas in the clean energy debate is still unclear. It was considered to be a bridging fuel source between dirty fossils and renewables, but many critics are sceptical as climate targets get tougher. However, it is becoming an increasingly important source for Africa as well as a major export product from gas reserves in offshore areas, including South Africa, Mozambique and Tanzania. Nigeria, the continent’s biggest oil producer, also has significant gas reserves, which it is prioritising in its energy mix going forward.

Africa possesses natural and mineral wealth capable of turning around country economies and the prospects of the continent. The inability to translate this potential resource into actualisation is hampered by lack of financial, technological and human capabilities that are compounded by difficult global dynamics.

A transition away from fossil fuels in South Africa is required to meet the obligations of the Paris
Agreement, Urgent work is needed to identify and assess the policy barriers which are holding the country back.

This reporting was supported by Earth Journalism Network (EJN)

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