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Mar 29, 2011

Stable policy implementation needed to encourage renewable energy investment

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Base-load renewable energy supply could be viable in South Africa in the next decade or two, depending on a mindset change, decentralised supply and the amount of risk government and the private sector is willing to take, a panel of power and energy experts said on Tuesday.

Global thought leaders attending the Power and Electricity World Africa conference in Johannesburg said renewable energy has in the past for years increasingly competed with coal-fired generation, setting the stage for the development of renewable power generation.

However, the state of planning and implementation was not what it should be and the South African government’s response was too slow, leading to slow uptake from investors.

A Department of Energy (DoE) representative, delivering a speech on behalf of Energy Minister Dipuo Peters, said government aimed to tackle the slow uptake of renewable energy development by intensifying public-private partnerships, as collaboration and capacity building was key to the implementation of renewable energy in South Africa.

“Africa faces serious socioeconomic challenges with high poverty and low power supply. Investment must come into all energy resources available to us and policies must be carefully crafted to attract investment,” the DoE representative noted.

Panel members identified access to finance, supporting policies and frameworks, access to information, as well as training and capacity shortages as key barriers to the development of renewable energy.

Israeli Ministry of Industry and Trade director-general Sharon Kedmi said South Africa needed a stable, firm policy for foreign investment in renewable energy.

Global wind energy council secretary-general Stephen Sawyer agreed, pointing out that power generation was the largest contributor to climate change, necessitating changes to the sector, such as switching from fuel to gas and applying renewables at scale.

“Stable long-term policy implementation and clarity about the future would significantly encourage businesses to jump onto renewable energy development,” he noted.

The implementation of renewable energies could further offer solutions to almost every need and situation in rural and developed Africa, according to the Belgium Alliance for Rural Electrification secretary-general Simon Roland.

Roland and World Future Council Africa liaison office director Ansgar Kiene agreed that sustainable change in society could most easily be brought about through changed policies and political will.

Another challenge identified by Renewable Energy and Energy Efficiency Partnership (REEEP) South Africa representative Jason Schäffler was that renewable energy posed vast possibilities, but government struggled to implement it.

While government cited high capital costs as one of the most significant challenges to renewable energy development, other panel members believed this was a myth.

Mainstream Renewable Energy South Africa MD and GM Davin Chown said renewable energy implementation could cost less than coal-fired stations.

“The common perception is that renewable energy increases the cost of electricity generation. This is untrue. Wind and free fuel renewables actually reduce the portfolio risk of our national generation assets,” he asserted.

He added that each unit of wind-generated electricity saves R0,11, proving its efficiency. A study done in Ireland showed that wind power generation in 2011 was expected to reduce the country’s wholesale market cost of electricity by about €74-million.

“It is possible to generate affordable renewable energy with the correct regulatory system,” he said.

Roland agreed, adding that the challenge is not the price, but rather the technology.

Chown believed that there should not be any further changes to the renewable energy feed-in tariff (Refit) programme and that its benefits, such as rural development, skills development and industry development, which would all be funded by Refit,should rather be highlighted.

“Refit will even lead to job creation in the long run, resulting from agricultural development and broad-based black economic empowerment. A stable Refit programme without any regulatory uncertainty is of utmost importance,” he stressed.

Wind power, which was said to be the cheapest solution to local energy-generation challenges and also the quickest plant to deploy, would provide 40 000 jobs in South Africa by 2025. Chown pointed out that this could go a long way towards derisking the economy, driving rural and agricultural development and alleviating poverty.

The National Energy Regulator of South Africa published a consultation paper earlier this month, in which it proposes substantial decreases to the Refit rates when compared with those approved and promulgated in 2009. The paper proposes tariffs that are 7,3% lower on some technologies and more than 41% lower on others.

The proposed changes come ahead of the release of a request for proposals for the first 1 025 MW of the Refit project.

Meanwhile, the panel highlighted a number of points that it was hoped would flow from the United Nation's 17th Conference of the Parties, to be held in Durban in December, such as the encouragement of more small-scale electricity generation, the implementation of the second Kyoto protocol, without the US, and leapfrogging fossil fuel development.
 

Edited by: Mariaan Webb
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