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 on Wednesday.
Speaking at the Manufacturing Indaba, in Sandton, 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.
Matleng Energy Solutions chairperson Nelisiwe Magubane added that energy should be made as cost competitive as possible, and that there has 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 have dropped to 62c/kWh,” she said.
She added that for cost competitiveness to be achieved, proper planning was needed and that it was important for government to ensure that energy development planning focussed 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.
She added 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, there was still access to grid electricity.
She stressed that this meant that utilities needed to revisit their business models and ensure that they could look at 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.