By 2030, renewable energy would contribute 42% to the energy mix in South Africa, said specialist fund manager Mergence Investment Managers impact investments head Mark van Wyk.
Speaking at a recent media briefing in Johannesburg, he noted that coal was used to meet 85% of South Africa’s current energy needs, but argued that renewable energy was becoming increasingly cost competitive with State-owned power utility Eskom’s tariffs.
He added that the concern was that coal produced a considerable amount of carbon dioxide (CO2) emissions.
Currently, for every 1 kWh of coal-based energy generation, 1 ℓ of water was used and 1 kg of CO2 was emitted, Van Wyk said.
He argued that it was a myth that renewable energy was expensive.
“We have had significant reductions in solar tariffs over three successive bidding rounds of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), from R3/kWh to about R1/kWh, and the wind energy price is 65c/kWh,” he stated.
He said, while the solar and wind energy tariffs compared favourably to Eskom’s current average electricity generation cost of 64c/kWh, Eskom’s tariffs were expected to increase to a level higher than the rate of inflation with the new-generation capacity from the Medupi and Kusile power plants, with an average expected generation cost of about 97c/kWh each.
He attributed the reduction in tariffs partly to efficient project installation costs and technology enhancements.
Van Wyk said that, without investments, a reduction in renewable-energy tariffs would not have occurred, noting that competition, owing to the REIPPPP, was driving the reduction in tariffs.
He added that Mergence Investment Managers’ role was to facilitate financing in this sector and that the company was focusing on rural economic development, the reindustrialisation of South Africa, a reduction in carbon emissions and energy security.
“We have invested R852-million in ten renewable-energy projects in South Africa. We are representing investments in more than 10% of the total megawatts allocated to date. This is equivalent to removing 360 000 cars from the roads or powering 60 000 homes,” he explained.
In terms of Mergence’s community impact, the average impact of projects includes local community trust ownership of 3% to 10%, socioeconomic development of local communities being allocated revenue of 1% to 1.5% and enterprise development, which targets education and skills development, enjoying 0.6% of turnover.