The number of power projects across Africa and South Africa has grown in the last few years and has given rise to many opportunities, but also challenges, Trade and Industrial Policy Strategies executive director Saul Levin said at the recent Manufacturing Indaba.
He noted that these challenges included the cost of production of electricity generation, the implications of new plants on the country’s electricity grid and increasing electricity tariffs.
Former Department of Engery director-general andMatleng Energy Solutions chairperson Nelisiwe Magubane added that energy should be made as cost competitive as possible, and that there had been a decrease in the prices of renewables, owing to greater competition, especially in the independent power producer space.
“In the first bid window [of the Renewable Energy Independent Power Producer Procurement Programme], companies signed up at a bid price of R2.50/kWh; however, by the last round, prices had dropped to 62c/kWh,” she said.
For cost competitiveness to be achieved, she added, proper planning was needed and it was important for government to ensure that energy development planning focused on the long term.
“Manufacturers need to know what the long-term plan is regarding energy supply and security, especially when it comes to how much energy costs over a long period of time,” she noted
, adding that energy security also encouraged infrastructure development in various areas, which helped businesses work more efficiently.
“We are beginning to see the rising costs of energy, which is leading manufacturers to look for alternatives. The Fourth Industrial Revolution is going to demand large quantities of energy,” she said.
She further noted that grid electricity would still be needed in future, despite the large deployment of renewable energy.
Magubane said it was important to ensure that, in the future, access was still available to grid electricity.
She stressed that this meant that utilities needed to revisit their business models and consider other ways of transporting electricity.
“Most utilities are facing a 'utility death spiral', whereby costs are rising, but what they are selling is contracting, which means they increase tariffs,” she said.