Business intelligence provider Oxford Business Group (OBG) states that, although solar and wind energy are the main focus for South Africa’s renewable-energy thrust, Cabinet will discuss draft regulations on the biofuel industry later this year, paving the way for the potential development of a biofuels industry.

According to estimates by the Department of Energy, a biofuels industry that contributes 460-million litres a year would be able to reduce conventional energy imports by more than R2.5-billion a year.

While biogas projects currently face difficulties in attracting funding and do not yet have a feed-in tariff system in place, the Biofuels Regulatory Framework, which is due to be submitted to Cabinet this year, may put the segment on a more sound footing and boost investment opportunities.

“There are many opportunities surrounding the treatment of biowaste in South Africa, including the construction of waste treatment facilities in rural areas, which would have the added benefit of providing an alternative energy source in remote areas where there is no electricity infrastructure,” says South African Biogas Industry Association VP Eddie Cooke.

With much of the industrial base needed to produce equipment for waste processing already in place, the development of biogas technology would require only minimal regearing by manufacturers, according to South African National Energy Development Institute energy senior manager David Mahuma.

Meanwhile, OBG states that government aims to reduce the share of fossil fuels in the energy mix from 86.5% in 2010 to 57% by 2030, with renewables set to fill 21% of the generation gap and a $100-billion nuclear energy programme to make up the balance.

Currently, renewable-power sources account for 5% of South Africa’s installed capacity, from a baseline of zero in 2010. This has led to South Africa becoming the largest wind energy producer in Africa, and to be placed among the top ten countries globally for installed, utility-scale solar photovoltaic capacity, according to the OBG report.

Importantly, a greater contribution from renewable energy could help make up for lower output from State-owned power utility Eskom. The OBG report states that, in part, this has been a result of old production capacity being taken off line, and a reduction in the requirement to operate plants at full, or above-rated, capacity.

At the same time, other electricity producers have been ramping up output, with independent power producers (IPPs) producing 1 379 KWh in March 2016, representing a 29.7% increase from mid-July 2007. This is equivalent to around 7.2% of Eskom’s output.

While Eskom’s role as a producer is being scaled back, OBG states that its function as owner of the country’s distribution grid will be key to enhancing the benefits of the growth in renewable-energy generation.

Under the Renewable Energy Independent Power Producer Procurement Programme, launched in 2011, the electricity contribution of IPPs is expected to total about 7 GW by mid-2016 stated Energy Minister Tina Joemat-Pettersson during the Budget address in mid-May.

A further 1.8 GW of new renewable projects is currently being evaluated, with a decision on tenders to be announced later this year.

Pettersson added that private investment by IPPs in renewable capacity since 2011 totalled R194-billion, a figure set to increase this year. Considering the scope and scale of new projects coming on line, South Africa appears to be on course to achieve its renewables target of 17.8 GW by 2030.