Load-shedding and global pressure to cut carbon emissions are prompting commerce and industry in SA to dump Eskom for self-generated renewable energy, or electricity bought from IPPs/
Energy regulator says it has received more than 10 inquiries from companies seeking to produce their own power and end or reduce their dependence on Eskom
The National Energy Regulator of SA (Nersa) says companies have expressed much interest in power generation following the government’s announcement in June last year of a 100MW threshold for companies to generate power for their own use.
With an unpredictable electricity supply from Eskom, companies are increasingly looking at alternatives to save costs, ensure uninterrupted productivity, decarbonise their operations and decrease reliance on the national grid. This will unleash a wave of private investment in new generation projects that should help to keep SA’s lights on — and speed up the country’s transition to greener energy.
“There is a lot of interest expressed with the increase of the registration threshold to 100MW — we have received more than 10 inquiries from the industry but very few actual applications for registration,” said Nersa’s head of communications Charles Hlebela.
He said six plants capable of producing more than 1MW are supposed to go online this year. Of those set to be launched, the biggest will have a capacity of 10MW.
Companies wanting to generate their own power are likely to invest mainly in renewable energy, particularly wind and solar.
According to Sun Exchange CEO and founder Abraham Cambridge, solar is the most popular of the alternative energy sources, because it is affordable, flexible, scalable and faster to deploy. It also has more applications and can be embedded into the grid.
According to the International Energy Agency, solar photovoltaic (PV) systems made up about 60% of all renewable (solar, wind, hydro) power installed globally last year.
“With South Africa being one of the sunniest places on earth, we are particularly well-suited for solar power,” said Cambridge.
He said wind also has an important role to play in transitioning to clean energy, particularly in colder climates where conditions are not ideal for solar.
“Although the energy output from solar is more predictable and reliable than wind, it has a lower capacity factor than wind, which is why wind and solar work well when combined.” Capacity factor measures how often a plant is running at maximum power.
Cambridge said there is already demand for alternative energy sources due to load-shedding, and there has been a spike in interest since the government announced the 100MW embedded power generation threshold.
“The new government measures … are now contributing to an increase in very large solar projects. However, irrespective of the change in regulations, we are seeing an increase in demand for solar-plus-storage systems from businesses and industries with very high energy requirements that are seeking to protect their operations from load-shedding, while accessing the cost- and carbon-reducing benefits of solar.”
Wind farms are springing up like mushrooms, particularly in the Western Cape, to take advantage of a free natural resource. Picture: GROUNDUP/JOHN YELD
Sun Exchange’s “crowdsale” business model connects investors around the world with new renewable energy installations, usually at schools, businesses and other organisations. Cambridge said the focus was on installations of 25kW and higher, with battery storage up to 10MW. “We’re seeing interest from all sectors, including education, agriculture, retail and manufacturing.”
Companies in sectors such as mining, manufacturing, retail, telecoms and financial services have been aggressive in switching to alternative energy.
According to Cambridge, building a 100MW solar plant will cost about R1bn in capital expenditure. However, he said a solar plant of that scale can produce power at a rate as low as R433/MWH, compared with R1,000/MWH for coal and R2,000/MWH for nuclear.
MTN SA’s executive for corporate affairs, Jacqui O’Sullivan, said the cellphone operator was looking at potential partnerships with independent power producers (IPPs) to take advantage of the new, higher self-generation threshold. “The focus will be on an IPP with clean and renewable generation capabilities, [which] will be paramount to support the MTN ambition to be carbon neutral by 2040.”
MTN, which has an IPP licence, generates 4.75MW of its own power at three of its switching centres, reducing its dependence on the Eskom grid.
“We also have 30 off-grid renewable energy facilities which generate an additional 57kW in remote areas where there are no space constraints,” said O’Sullivan. She said MTN was exploring all forms of renewable energy, ranging from large to small, to support its net-zero ambition.
Hethen Hira, head of investor resources at gold producer Pan African Resources, said the company is building a 10MW solar PV plant to help power its Evander operation, with full commissioning expected next month. The plant will supply up to 30% of the operation’s daytime power requirements, ensuring stability of power supply while reducing greenhouse gas emissions and materially reducing electricity costs over the medium to long term.
Hira said feasibility studies were being conducted into increasing the capacity of this PV plant to 26MW and installing a new 10MW PV plant at the company’s Barberton Mines operations.
Shoprite has doubled its solar capacity as it aims to power 25% of operations with renewable energy over the next five years. It added 22 new solar PV sites at operations across the country between February and September 2021, more than doubling its solar capacity. This is in line with its strategy to mitigate climate change. Shoprite’s renewable energy initiatives will help the group manage its electricity costs, which amount to R3bn a year.
Pick n Pay has installed solar power at its two largest distribution centres, Longmeadow in Gauteng and Philippi in the Western Cape, and at four standalone stores — Plattekloof, On Nicol, Rosmead and Faerie Glen Hyper, for a total of 5.6MW capacity.
Vodacom has 1,088 solar-power sites across its markets, helping it to produce 5GWh of renewable electricity. This has contributed to a R16m savings in energy costs and reduced greenhouse gas emissions. Vodacom aims to halve its carbon footprint by 2025 by increasing energy efficiencies at its mobile base stations, using self-generated renewables for office buildings and data centres, and entering accelerating the pace of renewables adoption through more power purchase agreements with IPPs. credible and accredited independent power producers.
Last year, black women-owned fund manager Mahlako Financial Services built a 10MW solar plant for Amazon Web Services in Khathu, Northern Cape, which will supply the US company’s regional data centres.
The Khathu project will generate up to 28,000MWh a year, equivalent to the annual consumption of more than 8,000 average South African homes. Mahlako is also involved in a green hydrogen project in Prieska in the Northern Cape.
In December, Enel Green Power RSA announced the commercial launch of its Garob wind farm in Copperton, Northern Cape, which will generate 573GWh every year, potentially preventing the emission of 600,000 tons of CO2 annually.