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South Africa gets helping hand as renewable buildout expands

02 November 2021 Keiron Greenhalgh

South Africa received a promise of an $8.5-billion helping hand from five G20 members 2 November as the globe's 12th-largest emitter seeks to cuts its GHG emissions and transition away from a coal-centric power generation sector.

The climate finance backing came as the South African government prepared to submit a roadmap for tackling climate change to the nation's parliament and an initiative to transform the country's energy sector was launched 2 November.

Change is needed because the same day all these developments took place, state-owned power generator Eskom was warning of load shedding because its power plant fleet's health was even creakier than usual, with almost 18 GW of capacity offline for maintenance. South Africa's installed power generation capacity is just over 58 GW.

Help from the G20 nations—France, Germany, the UK, the US, and the EU—will come in the form of the "Just Energy Transition Partnership." The partnership will mobilize an initial $8.5 billion in a first phase of financing involving grants, concessional loans and investments, and risk sharing instruments, its backers said. The premise of partnership is to prevent up to 1.5 gigatons of emissions over the next 20 years, and accelerate South Africa's transition to a low emissions, climate resilient economy, they said.

Support for implementing the path to South Africa's revised Nationally Determined Contribution (NDC) was welcome, said President Cyril Ramaphosa, adding that a long-term partnership such as this could serve as a model for support for developing countries from their developed nation counterparts. European Commission President Ursula von der Leyen added that the partnership was a global first and could become a template on how to support a just transition around the world.

"By closing South African coal plants ahead of schedule and investing in clean power alternatives for the people of South Africa and supporting an equitable and inclusive transition in South Africa's coal sector, we are following through on the pledge the G7 partners made in Cornwall to accelerate the transition away from coal in developing countries," noted US President Joe Biden.

South Africa's generation stack is dominated by coal, accounting for 85% in 2019, according to IHS Markit data. South Africa produced 258.9 million mt of coal in 2019, according to Minerals Council South Africa, good for seventh in the global rankings.

Revised NDC, climate change bill

In September, South Africa's government approved plans for a more ambitious GHG emissions target for the coming decade than previously expected.

South Africa's emissions target range is 398-510 million metric tons (mt) of CO2-equivalent in 2025 and 350-420 million mt of CO2-equivalent in 2030 under the plans approved by the Cabinet. The 2030 target range in March's draft NDC was 398-440 million mt CO2-equivalent. South Africa's first NDC, submitted in October 2015, committed to emissions in a range of 398-614 million mt CO2-equivalent for 2025 and 2030.

South Africa's cabinet approved a plan to reach net-zero emissions by 2050 in September 2020.

This September, the cabinet finalized the NDC and the Climate Change Bill that will lay out the roadmap to achieving the goals spelled out in the NDC. The bill is due to be presented to parliament any day now. Trade associations expected it to be put before the National Assembly 1 November, although local elections were taking place the same day. A spokesman for the Department of Forestry, Fisheries & the Environment did not respond to a Net-Zero Business Daily inquiry on its progress.

The bill will enhance adaptive capacity, strengthen resilience, and reduce vulnerability to climate change, as well as spell out that adaptation and mitigation should be based on the best available science, evidence, and information, the ministry said when announcing its approval by the Cabinet in September.

A segment of the decarbonization plans and shift away from coal-fired generation involves increased renewable power capacity. The South African government has an ongoing program known as the Renewable Energy Independent Power Producer Procurement Programme to encourage the diversification of the country's power stack.

Renewable RFP results

The Department of Mineral Resources & Energy on 28 October announced the preferred bidders under the fifth iteration of the program, which sought 2.6 GW of proposals—consisting of 1.6 GW of onshore wind and 1 GW of solar photovoltaic (PV) capacity. The request for proposals attracted 102 bids from potential project developers, equivalent to more than 9.6 GW of capacity.

The selected 25 bidders account for 2.583 GW of capacity, divided into 1.608 GW of onshore wind and 975 MW of solar PV, Minister of Mineral Resources and Energy Gwede Mantashe said. The projects are expected to start generating electricity as early as April 2024.

The energy ministry said the majority of bids were well prepared, resulting in a high level of competition. The weighted average price was R473.94/MWh ($30.78/MWh), the lowest price achieved by any of the government tenders since the program was launched in 2010, it said, adding that the average price would have been even lower if not for grid constraints that prevented some of the cheaper projects from being selected.

The South African government's next renewables tender will be launched by January 2022 at the latest, the ministry said. It too will seek 1.6 GW of onshore wind and 1 GW of solar PV project capacity.

Following the release of the latest tender's results, South African Wind Energy Association (SAWEA) Chair Mercia Grimbeek on 28 October said it was "a huge step towards rolling procurement, which is what the country and wind power sector needs, in order for renewables to be able to deliver adequate energy to the country and help shift the economy onto a positive trajectory."

"Consecutive bidding rounds will enable local manufacturing facilities to be re-established and the potential expansion of already operating manufacturers, which is crucial in creating long term sustainable jobs," she added.

However, SAWEA warned that to enable the required quantity and quality of components will require at least two to three years of investment and development, reinforcing the need for rolling procurements, without interruptions or delays.

Crispian Olver, executive director of South Africa's Presidential Climate Commission, told SAWEA's annual conference 7 October that transitioning South Africa's power system to net-zero will require the deployment of roughly 150 GW of wind and solar capacity by 2050, a rate of 4 GW each year, which he said would be roughly 10 times the current pace of newbuild.

Even so, South Africa is way out front compared with its neighbors when it comes to wind installations, so the Global Wind Energy Council on 30 September launched an initiative to accelerate deployment of the technology across the continent. GWEC estimates Africa is only tapping into 0.01% of its wind resource.

IHS Markit data show South Africa had 6.7 GW of renewable power capacity installed at the end of 2020, which 2.5 GW was wind and 3.7 GW solar PV, including distributed generation systems. It also has 500 MW of concentrated solar power. IHS Markit forecasts the total will reach about 8 GW by the end of 2021.

Pathway away from load shedding

The additional capacity is badly needed. Eskom's fleet is in shocking disrepair. On 2 November, the dominant power producer warned of load shedding a generation unit at the Kusile power station tripped, and a unit at the Matimba and Arnot power stations failed to return to service as anticipated. Eskom said the constraints could be expected to persist for the rest of the first week of COP26, which may require load shedding to be extended.

While nearly 18 GW of capacity is shuttered due to unexpected outages, planned maintenance is being carried out on a further 3.45 GW of capacity, Eskom said. The company asked South Africans to "continue using electricity sparingly" as a result.

The outages have been worsening, and South African companies, including the powerful mining industry, have had enough. They have banded together to work on pathways to improving the country's energy industry, launching the Energy Council of South Africa 2 November.

The initiative is led by CEOs from Anglo American, Central Energy Fund, Exxaro, Industrial Development Corporation of South Africa, Sasol, TotalEnergies South Africa, and Naamsa.

Such a collaborative effort was "long overdue," Department of Mineral Resources & Energy Deputy Minister Nobuhle Nkabane said in a 2 November speech. The energy sector must contribute more to South Africa's GDP and the approach must be systematic; there can't be any shortcuts, he said.

Energy is the "flywheel" for economic reconstruction, Nkabane said, but there is an obvious need for coordination. By 2030, coal's share of South Africa's generation portfolio will be under 60%, but the country won't be ditching it. "Our support on coal is not anti-climate change, but a pragmatic approach based on what we can afford," he said, adding that it would provide South Africa with a consistent supply of baseload power.

Posted 02 November 2021 by Keiron Greenhalgh, Senior Editor

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