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Energy industry calls for more local content in energy supply chain to secure SA’s energy security

14th April 2020

By: Simone Liedtke

Creamer Media Social Media Editor & Senior Writer


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Wind tower producer GRI Towers South Africa has called on government to insist on more local content in the energy supply chain to ensure energy security for South Africa in line with anticipations of a changed global economic reality post Covid-19.

According to GRI, government has achieved positive momentum in the past few months by taking decisive steps towards implementing a new independent energy procurement round. It says this is a good sign for foreign companies that have invested in South Africa’s renewable energy sector.

GRI plant manager Daniel Erasun laments, however, that until the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) Round 5 procurement gets under way, wind projects cannot move forward.

"It is becoming increasingly difficult to motivate our international shareholders to wait it out," he adds. 

GRI Renewable Industries, which is based in Spain, has 16 wind energy industrial component manufacturing facilities in eight countries.

The company’s operation in Atlantis in the Western Cape, opened its wind tower manufacturing plant in 2014, creating over 300 jobs and developing key skills in the process. The plant has the capacity to manufacture over 150 wind towers a year, which is the equivalent of supplying 400 MW in new-build wind farms a year.

Meanwhile, JSE-listed energy investment company Hulisani CEO Marubini Raphulu says the global economic fallout of Covid-19 exposes the need for South Africa to diversify its supply chain by procuring a greater percentage of inputs locally.

“It would be a travesty if local wind farms import components and towers from other countries when they are available here. Local content requirements should be increased and must be consistently applied in the rush to add energy to the grid. Industry is ready to partner with government to speed things up and ramp up local production,” he states.

South Africa’s blueprint of government plans for energy, the Integrated Resource Plan (IRP), requires the country to build between 25 000 MW and 30 000MW of power capacity by 2030, of which wind is set to contribute 18%.

After a nearly three-year hiatus in the programme, in April 2018, State-owned power utility Eskom entered into power purchase agreements for 27 large-scale renewable energy projects procured in round 4 of REIPPPP.

The IRP was released in 2019 and is awaiting processing by the National Energy Regular of South Africa (Nersa), before generation capacity can be procured. Nersa has since released consultation papers for both the supply of emergency power and short to medium term energy supply, which should see the process finalised by the end of the year. 

Meanwhile, a Section 34 determination which allows for energy generation was made, and now all that remains is to set in motion the procurement for REIPPPP Round 5.

“Buying in local currency also brings greater price stability, whereas dollar- and euro-based procurement is now subject to extreme currency fluctuations.

"In addition, the ability to deliver components has been severely constrained due to interrupted supply chains. It makes sense to use existing resources in the country and it will have the added benefit of boosting job creation and skills development,” explains Raphulu.

Hulisani’s investments include solar farms, peaking plants, hybrid captive power plants, wind farms, wind tower production and property lease cash flow management.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online




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