Renewable energy gathers steam in South Africa

Abstract

South Africa’s Renewable Energy Independent Power Producers Procurement Programme (the REI4P) is an extensive initiative to install 17.8 GW of electricity generation capacity from renewables – wind, solar, biomass, biogas and hydropower – over the period 2012 to 2030. Although at the outset the REI4P seemed an expensive option, designed only to deflect criticism of South Africa’s high carbon footprint and excessive dependence on coal-based electricity generation, the escalating costs of the latter, the rapidly falling costs of photovoltaic and wind power, and the increasingly competitive bidding process of the REI4P have changed this prospect. At the conclusion of round three, the weighted cost of energy has reached a 23% discount to the cost of new coal-based generation and a 28% discount to global renewable energy prices. The bidders’ commitments to local employment creation have similarly increased from 11 to 18 jobs/MW. The programme is now well placed to deliver on a broad range of objectives, including regional development and black economic empowerment. However, maximum benefit from the REI4P will not be secured without some revision to aspects of the bidding and procurement process. More specifically, the local content provisions need to be tightened to drive higher levels of local manufacturing.