A Model for Africa? South Africa’s Renewable Energy Policy

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Renewable energy policy.

Renewable energy policy.
Courtesy of greenenergyfront.

South Africa has the largest carbon footprint in Africa: It’s responsible for 40% of the total CO2  emissions in the continent. At the COP 15 climate confrence, the country pledged to reduce its carbon emissions 34% by 2020, and 42% by 2025. This commitment and other considerations, such as the currently inadequate supply of electricity, saw the country introduce an “Integrated Resource Plan” (IRP) in 2010. The plan aims to reduce coal consumption (the chief source of energy in the country) from 90% to 42%, and increase renewables to 15% of the country’s total generation mix by 2030. The practical implementation of the plan has been fraught with challenges. However, the introduction of the Renewable Energy Independent Power Project Procurement Program (REIPPPP) offers some light at the end of the tunnel. 

REIPPPP is an efficient and innovative approach to a country-specific renewables policy; it relies on private sector actors – as opposed to the South African government – to realise renewable energy projects. To this end, the policy uses a very clear and opaque international bidding process known as renewable energy auctions through its Independent Power Producer Program, which has been praised by the International Renewable Energy Agency (IRENA). Furthermore, the policy not only reduces borrowing and funding burdens that would have otherwise fallen on the South African government, but also promotes off-grid and small-scale renewable projects that the public utility company ESKOM has little incentive to pursue. The policy also aims to reduce corruption risks known to be prevalent in such projects.

And what are the results? The first phase, Bid Window 1, was initiated in 2011 and saw a total of 1190.34 MW auctioned. Of those projects, 99.4% (or 1182.62 MW) have been brought to a commercial stage. This outstanding success  in just a year  led to second, third and fourth bidding windows being announced in 2012, 2013 and 2014 respectively. In total, the government has awarded 3634.42 MW worth of projects. According to IRENA, the number of bidders at the renewable auctions has increased by 50%, while solar and wind costs have shrunk by 39% and 23% respectively. Furthermore, since 2011 – when the first bid was announced  the private sectors, comprising both domestic and international players, have invested a total of $13 billion dollars in South Africa’s renewable energy sector.

REIPPPP Projects in South Africa.

REIPPPP Projects in South Africa.
Courtesy of Newworld.

While boosting renewables is the program’s main goal, it also pays attention to the country’s rampant unemployment and economic inequality. (13% of the South African population does not have access to electricity.) REIPPPP has thus encouraged partial community ownership of the renewable projects, and a share of generated revenue is being diverted towards enterprise development, including hiring locals and transferring skills. In addition, the government has not lost sight of its vision for universal access to electricity, although stats on the improved access to electricity from these renewable projects are not yet available. Moreover, a domestic study has shown that solar and wind projects through the REIPPPP policy program have generated R 8 billion (the equivalent of $651 million) profit for the country.

Number of projects approved under REIPPPP's 4 bidding windows.

Number of projects approved under REIPPPP’s 4 bidding windows.
Courtesy of enregyramblings.

Though the policy has fostered a dramatic increase in renewable energy and local communities have benefited, IRP still falls short in some respects. It advocates for risky nuclear power, which is currently forecasted to provide 23% of the total generation capacity. Hydropower, in addition, is set to increase from 2.6% to 6% by 2030 in the country’s generation mix. In August 2012 the African Caucus and the Kinshasa II Declaration called for African states to tap more into renewable energy. This and many other such calls have been heeded, at different speeds, in various African countries, which has led to a surge of interest in renewables. However, country-level renewable policies have not necessarily enjoyed success in some countries, including Nigeria and Zambia. At the continental level, initiatives such as the Program for Infrastructure Development in Africa (Pida) continue to promote large, environmentally unsound and socially detrimental dams, blatantly overlooking comparably cheaper, more efficient and environmentally-sound renewable solutions.

South Africa’s Integrated Resource Plan, despite some shortcomings, can and should serve as a renewable energy policy model for the rest of the continent – a model that can be tailored to each country’s needs and opportunities.