International renewable-energy advisory firm K2 Management remains convinced that, despite recent setbacks, the role of wind and solar will continue to rise in the South African electricity mix. Therefore, the company is preparing to expand its presence in the country, as well as the rest of Africa.

Headquartered in Denmark, K2 Management has 15 global offices, from where its 170 employees have been directly involved in more than 1 400 wind and solar photovoltaic (PV) projects in over 40 countries.

The firm opened an office in Johannesburg in 2013 and, in 2016, acquired Prevailing Analysis, which played an advisory role in 25 utility-scale projects procured under South Africa’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP).

K2 Management South Africa head Hebren James says the Johannesburg office is also being used as a base for pursuing opportunities in the reset of Africa, where the pipeline of wind and solar PV projects is maturing.

James believes the recent stalling of the REIPPPP – owing initially to Eskom’s refusal to sign further power purchase agreements with renewable-energy independent power producers as it returned to a generation surplus, and, more recently, as a result of a union-led legal challenge to the conclusion of the 27 delayed contracts – is a temporary phenomenon.

Even under South Africa’s current outdated Integrated Resource Plan (IRP) the role of solar and wind is projected to expand materially. However, there is an expectation that the penetration of renewables could expand even further once the IRP is updated, using up-to-date technology costs derived not only from the latest REIPPPP bid windows, but also from competitive auctions in other countries, such as the United Arab Emirates and India.

In a number of instances, solar PV projects are being bid at tariffs below the 50c/kWh level, which is superior to the average tariffs of between 56c/kWh and 87c/kWh achieved for the 27 projects procured during the fourth REIPPPP bid window.

Nevertheless, scepticism about the suitability of variable generation in South Africa’s electricity mix remains, while labour unions such as the National Union of Metalworkers of South Africa (Numsa) and the National Union of Mineworkers, are concerned about the prospect of jobs losses, as coal-fired generation makes way for renewables plants.

Numsa has stressed that it is not opposed to renewable energy in itself, but has called for the transition from coal to be managed justly, which implies not only a protection of coal workers during the transition, but also what it describes as a “socially owned renewable sector”, where the plants are under public, community or collective ownership.

James says K2 Management has witnessed similar resistance in many other countries and expects that, as has been the case elsewhere, South African will also eventually come to terms with the economic and social benefits of embracing the transition.

In the meantime the firm intends supporting its private, public and utility clients in improving the competitive position of their renewable-energy projects so that stakeholders, including electricity consumers, can share in the cost-saving benefits.

“Our role is to help optimise and de-risk projects by supporting clients throughout the entire value chain of an energy project so that the projects are not only bankable, but also achieve the best possible return for investors and consumers.”

James believes that, as the industry matures, and the benefits of wind and solar are better understood, there will also be less opposition to the role of private generators in the electricity mix.

“As with any change, there will be resistance. However, there is little question that the private sector has a key role to play in improving electricity access across Africa and in delivering affordable and reliable electricity to consumers.”