Environmental economics

SA renewables drive draws investors

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South Africa's renewable energy programme has the potential to power growth in the country as its innovative approach continues to catch the attention of investors at home and abroad.

The Department of Energy's plans to develop the renewable energy industry have seen investment leap from "a few hundred million dollars" to US$5.7-billion last year, according to the Renewables 2013 Global Status Report published in July by REN21, the global renewable energy policy multi-stakeholder network.

While renewable energy accounted for less than 1% of the energy mix in South Africa in 2012, this is expected to reach 12% by 2020. This would place South Africa in the "global top 15 countries" with regard to the implementation of renewable energy projects, according to research released earlier this month by energy analysts Frost & Sullivan.

"In the light of electricity and water scarcity, as well as rising coal prices, renewable energy is becoming a preferred choice of energy-generation technology in South Africa," Frost & Sullivan's Joanita Roos said in a statement.

"Additionally, South Africa is the 12th highest carbon-emitting nation, and the need to diversify industries and incorporate lower carbon-emitting technologies will spur renewable energy development."

Under the government's Integrated Resource Plan, a 20-year projection on electricity supply and demand, about 42% of electricity generated in South Africa will have to come from renewable resources.

The Department of Energy's renewable energy programme for independent power producers (REIPPP), introduced in August 2011, will help meet this target.

The project comprises five rounds, or windows, the first two of which have been accepted. The third window of bidders was due to be announced on Tuesday, 29 October, but was postponed due to Energy Minister Ben Martins' participation in a state visit to the Democratic Republic of Congo.

International companies have been showing increasing interest. They are required to form partnerships with local companies in terms of the programme.

First-round projects are in the construction phase, and those that generate electricity from solar photovoltaic (PV) cells could be up and running early next year.

This includes two projects in the Northern Cape, where China's Suntech Power Holdings is partnering with Mainstream Renewable Power. The projects, which will be online next year, will generate 180 gigawatt-hours of electricity, enough to power approximately 15 000 households and displace approximately 180 000 tons of carbon emissions per year.

Frost & Sullivan put the expected value of local content for the first and second phase of the REIPPP at R23.2-billion, with 21 214 jobs expected to be created.

In total, the programme is expected to create investment of about R100-billion between 2012 and 2016.

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