The renewable-energy industry in South Africa is experiencing significant growth as a result of government initiatives, says consulting firm Frost & Sullivan energy and power analyst Joanita Roos.

“The South African Renew-able Energy Independent Power Producer Procurement Programme (REIPPPP) is creating an environment in which investors are secured in the price and the volume of megawatts allocated to each renewable-energy technology,” says Roos, adding that the costs of these technologies are declining, while State-owned entity Eskom’s tariff for its coal-based electricity is rising sharply. It is expected that grid parity for wind energy will be reached by 2015 and solar photovoltaic (PV) energy by 2018.

Further, Frost & Sullivan says South Africa is the twelfth-highest carbon-emitting nation in the world, with China being number one. Greenhouse-gas emissions from the electricity sector are estimated to comprise 45% of South Africa’s total emissions.

“Renewable energy can, in conjunction with gas and nuc-lear, become one of the preferred technologies for electricity generation in South Africa, in light of carbon taxation, as it will reduce the nation’s dependence on carbon,” says Roos.

Meanwhile, the firm notes that the commercial and industrial renewable-energy sector will grow rapidly in the medium to long term.

“International benchmarking reveals that market segmentation for renewable-energy trends will evolve gradually. For example, Germany is the world’s strongest solar PV market and rooftop systems currently represent the largest market segment for PV panels in Germany,” says Roos.

Initially, feed-in tariffs, or other such policy measures, stimulate investment and the deployment of large, utility-scale systems.

Once utility-scale and small-scale projects are established, there will be distributed generation for residential applications, partially enabled by government frameworks and sometimes without supporting frameworks.

Roos notes that the REIPPPP has been implemented successfully thus far. “The process has been fair and conducted with a lot of inte- grity. However, there has been some inconsistency in the volume of megawatts available and allocated to each technology in the different rounds,” says Roos, adding that consistent allocation is crucial to creating certainty in the market.

She notes that skills shortages are predominantly being experienced in high-skilled electrical engineering. The REIPPPP, however, is proving to be a platform for skills sharing between people, companies and industry.

Roos says there is a lot of interest from international suppliers in the South African renewable-energy industry. German engineering company Manz and Chinese supplier of modules, cells and wafers Jinko Solar have shown interest in establishing a new module manufacturing facility in South Africa.

“However, owing to price, most of equipment for the REIPPPP is sourced from international suppliers and the commercial feasibility of local manufacturing is questioned,” she says.

It is expected that a larger volume of megawatts, as outlined in the Integrated Resource Plan 2010, could be allocated to renewable energy in South Africa. The REIPPPP stimulates the investment in and deployment of large, utility-scale renewable-energy systems.

“Once large-scale renewable-energy developments are under way, the frameworks for small-scale projects could be set in place and, owing to market establishment, the commercial/ industrial segment could grow rapidly,” Roos concludes.