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South African green energy transition can create 250 000 more jobs over 25 years – GWEC

The Cookhouse wind farm

The Cookhouse wind farm

17th February 2022

By: Schalk Burger

Creamer Media Senior Deputy Editor


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The shift from coal-fired to clean energy in South Africa could deliver an additional 250 000 jobs and more than $10-billion, or R150-billion, in gross value-add to the economy over 25 years, if an ambitious green recovery is pursued, the Global Wind Energy Council (GWEC) states in its 'Capturing Green Recovery Opportunities from Wind Power in Developing Economies' report.

The energy transition, kickstarted with the commitment of $8.5-billion in financing agreed at COP26, would also deliver enormous decreases in carbon emissions equivalent, as well as save more than 50 Mℓ/y of water from 2026, the global body says.

The report quantifies a series of impacts that would result from pursuing a green recovery strategy, in which public policy shifts towards the clean energy transition to accelerate deployment of wind projects over the next five years.

This approach would not only support countries in their progress to meet energy and climate goals, but would enable them to realise a range of socioeconomic benefits from long-term job creation to cleaner air and water conservation, the GWEC says.

"Contributing about 5% to global greenhouse-gas emissions, South Africa has an energy system heavily dependent on coal. The country also struggles to maintain a stable energy supply and experiences power cuts and frequent load-shedding.

"Wind energy can address these energy supply issues, as well as cut emissions and add significant stimulus to the economy," the GWEC says.

Wind is now a highly affordable source of energy in South Africa, according to Department of Mineral Resources and Energy statistics. In the Renewable Energy Independent Power Producer Procurement Programme Bid Window 5, one of the wind projects was priced at just 34c/kWh, which is well below Eskom's coal input costs alone. The average cost of wind projects was 49c/kWh.

The country has also flagged an aspiration to become net-zero by 2050, and for 22.5% of the energy mix to come from wind energy by 2030, up from 5% in 2021. To reach these targets, a rapid expansion of renewable energy capacity will be required, the council says.

In a business-as-usual scenario, South Africa will create 130 000 direct and indirect full-time equivalent (FTE) job years through wind energy between 2022 and 2026 in the development, construction and installation phase.

In addition, 14 000 annual direct and indirect FTE job years are created in operations and maintenance, which continues for the lifetime of the wind farms.

"However, in a green recovery scenario in which South Africa boosts renewable energy investments, 180 000 direct and indirect FTE job years are created from wind energy in South Africa between 2022 and 2026 in the development, construction and installation phase.

In addition, 22 000 long-term annual direct and indirect FTE job years are created in operations and maintenance. There is a potential upside of 250 000 new FTE jobs created in a green recovery scenario," the report shows.

In a green recovery scenario, 27 900 GWh/y of wind-generated electricity will be produced from 2026, while 676-million tonnes of carbon emissions will be saved during the lifetime of the wind farms. This approach will also save 52 Mℓ/y of water that would otherwise have been used for thermal power generation.

"One of the primary hindrances to faster wind energy development in South Africa is a lack of development of the power transmission network," the GWEC says.

For example, the Northern Cape region, which currently has the best wind resources in the country, has some of the least developed transmission networks. The development of wind projects in these areas is held up by a lack of transmission capability, and State-owned power utility Eskom has been slow to improve the infrastructure in these areas.

However, Eskom has created a roadmap to improve the speed of its internal workings, as well as the development of the network. This will primarily be achieved by separating generation, transmission, and distribution into different working groups, and separating transmission as a separate entity within Eskom.

Further, the National Energy Regulator of South Africa (Nersa) is viewed as a reactive rather than proactive body and lacks a forward-looking strategy and technical expertise states the GWEC.

"More technical knowledge, especially of the country’s transmission system, is required to help solve the transmission system issues outlined previously. Improving the resources and capabilities of Nersa will also help share the work burden with Eskom, which has been struggling under its large remit," the GWEC recommends.

The South African government has been mostly supportive of diversifying the country’s energy grid and increasing the use of wind energy. To improve further, the government could be more interventionist, such as by implementing targeted subsidies for the wind sector. South Africa has the potential to be a world-leading wind energy producer, it says.

However, the government has also introduced local content requirements. The requirements are complex and not aligned with current manufacturing capabilities, which leads to exemptions being granted on a case-by-case basis.

In addition, a lack of tender predictability and continuity makes supply chain investment more uncertain. South Africa has recently announced preferred bidders for its most recent renewable energy bidding round, which was run after almost six years of no new renewable energy procurement.

"There have been multiple instances of long delays in signing power purchase agreements for winning projects, and the resulting lack of predictability has led to a slowing of investment in the wind industry. Removing uncertainty around procurement by introducing binding off-taker contracts will help to attract investment," the GWEC highlights.

Additionally, there are numerous regulatory and administrative barriers for independent power producers to enter the energy market.

South Africa can accelerate its green recovery and expand the use of wind energy. To do so, it must increase the power, capabilities and technical knowledge of Nersa to help develop the transmission network to further enable the development of the wind industry, the GWEC suggests.

"South Africa must also improve government backing and commitment to renewable energy, as one of the main de-risking factors in the country. If the government strengthens its renewable energy and wind energy commitments, announces ambitious targets in the coming months and shores up the local supply chain, the wind industry in South Africa would have an even stronger footing," the GWEC highlights.

Further, the country must maintain a systematic and reliable schedule of auctions which can create a stable pipeline of capacity procurement and installation, and encourage long-term investment in a local wind value chain.

Additionally, it should amend the current local content requirements to ensure clarity, simplicity and practicality. Simpler lists of the components subject to local content requirements will support cost and resource efficiency of project development and procurement.

"South Africa must provide visibility of the long-term tender pipeline to encourage and de-risk supply chain investment, and remove uncertainty around capacity procurement to attract investment by introducing binding off-taker contracts," the GWEC advises.

The government can further bolster the wind industry by being more proactive in its support, at least while the industry is still young. Subsidizing struggling local content suppliers in the wind industry would provide security to the local supply chain and boost investor confidence. Industrial visions and policies, including business incubation programmes and industrial clusters, can help to increase competitiveness of local suppliers and support small and medium-sized enterprises.

Meanwhile, South Africa should also simplify procedures for approvals and shorten permitting timeframes, with one consideration being to remove Ministerial approval required for the signing of direct power purchase agreements with independent power producers.

Further, the private sector should be enabled to continue to enter into power supply agreements with independent power producers, which have a better track record of delivering projects. The rules for electricity procurement for corporate buyers and municipalities, including wheeling charges applied by Eskom to private procurement could be clarified to enable direct transactions with independent power producers, the GWEC says.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online



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