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South African Business 2023

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The 2023 Guide to Business and Investment in South Africa.


OVERVIEW Energy Infrastructure for carrying newly-generated power is a priority. Showing two phases proposed for the development of Renewable Energy Development Zones (REDZs) and electricity grid infrastructure corridors where investment in transmission infrastructure is planned. Credit: CSIR The second phase of the Strategic Environmental Assessment (SEA) for wind and solar photovoltaic (PV) energy in South Africa proposes three additional Renewable Energy Development Zones (REDZs) for wind and solar photovoltaic energy projects, taking the total number to 11 (see map). The REDZs support the implementation of the Integrated Resource Plan (IRP 2019). Renewable energy projects that might be developed in these new REDZs have the potential to make significant contributions to mine rehabilitation and, by creating jobs, support a just energy transition in the specified areas including areas where coal power stations are planned to be decommissioned by 2030. A most important aspect for South Africa as it brings more and more renewable energy projects on line are the so-called “transmission corridors”. These have to be beefed up to be able to carry extra capacity if energy plants are built where transmission infrastructure is close to (or at) full capacity. This adds to the attractiveness of using existing power plant sites for new generation. SECTOR INSIGHT Komati power station is become a site for making mini-grid components. Part of the equation for agreeing to new power generation in the current context is whether or not there is sufficient carrying capacity to link the new solar or wind plant to the grid. Large investments are needed to beef up the Northern Cape’s capacity, but the problem is also leading planners to find different solutions, for example, to start SOUTH AFRICAN BUSINESS 2023 52

OVERVIEW exploring more carefully whether other provinces (with under-utilised infrastructure) might not be sensible locations for new renewable-energy plants. National utility Eskom has signalled that it wants to move into the new era, partly through a process whereby the entity will be broken into three more competitive units, but more immediately through the announcement in July 2022 of 18 winnings bids from independent power producers (IPPs) for renewable projects on Eskom land, 4 000ha of which the utility has made available for this first phase. Eskom owns 36 000ha in Mpumalanga alone. A total of 1 800MW will become available to the grid and it will be cheaper to transmit because the solar or wind plants will be right next to the existing Eskom transmission lines. Eskom is undertaking studies to assess the potential impact on local communities of power plant closures. Options to get these plants producing energy again include gas, biomass and hydrogen but it is possible they might be used for something quite different. The workshops of Komati power station are to be converted into a factory for the manufacture of components for containerised mini-grids. Eskom wants to be a net-zero company by 2050 Sasol has announced plans to start producing 1 200MW of renewable energy by 2030. Sasol is an integrated oil, gas and chemicals company with more than 30 000 employees and operations in 31 countries. Products manufactured by Sasol include synthetic fuel, petroleum, paraffin, jet fuel, creosote, bitumen, diesel and lubricants. The primary feedstock for synthetic-fuel production is coal. The National Cleaner Production Centre (NCPC) is expending considerable energy (renewable, mostly in the form of brain power) to help commercial operations use less energy. A programme of the Department of Trade, Industry and Competition (dtic) housed within the Council For Scientific and Industrial Research (CSIR), the NCPC also spent some money in rolling out an aspect of the Industrial Energy Efficiency Programme to large poultry company Daybreak Farms. Through improved energy management, the replacement of office lights with LED, the reduction of idling and heat loads in cold rooms and training, an overall energy consumption of 0.98% was achieved and energy savings of 916.85GJ were made. South Africa’s acclaimed Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) attracted about R200- billion in committed investments, mostly in solar and wind power, in just ONLINE RESOURCES National Cleaner Production Centre: National Energy Regulator of South Africa: South African Independent Power Producers Association: South African Wind Energy Association: five years. The first bidding window of the REIPPPP was announced in December 2011. By October 2021, the programme could boast of 5 423MW of renewable electricity capacity from 83 IPP projects, accounting for 7% of the country’s energy demand. The latest bidding rounds of South Africa’s independent power producers programme have revealed astonishing low costs: in round five the lowest solar generation bid came in at 37.5c/ kWh while one of the wind power offerings was priced at 34.4c/kWh. In June 2021 President Cyril Ramaphosa announced that private entities could go ahead and produce electricity without a licence, raising the threshold from 1MW to 100MW at a stroke. Intensive energy users such as mining houses had been arguing for this policy initiative for a long time, as had manufacturers in the sugar and timber milling industries, which produce vast amounts of biomass which can be turned into energy. The presidential announcement was almost universally welcomed by interested parties, including the CEO of national utility Eskom, which is struggling to keep South Africa supplied with sufficient power. Mining companies such as Sibanye- Stillwater and Gold Fields want to marshal renewable energy resources to power their own operations. Another big game-changer in the South African energy landscape will be the unbundling of Eskom, referenced above. An Independent Transmission System and Market Operator was set to be established. Companies such as Earth & Wire are preparing to become independent utilities in a more flexible energy environment. ■ 53 SOUTH AFRICAN BUSINESS 2023

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