South Africa has made huge strides towards creating a more renewable energy sector in a very short time, with an emphasis on wind power. Prior to 2015, South Africa was predominantly powered by thermal energy, in particular relying on coal plants. “Thermal power accounted for 87% of the total power installed capacity in South Africa in 2015,” explains GlobalData analyst Pavan Vyakaranam. “In terms of electricity generation, thermal power contributed 93.8% of the total power generation in the country.”
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By GlobalDataBut with rolling power cuts caused by failures in outdated coal infrastructure and an overburdened and poorly maintained grid, alongside the need to move towards a more environmental and sustainable approach to energy, it is no surprise that South Africa is taking the first steps towards a more diversified approach.
Already, a range of new renewable technologies including solar, PV and biomass are being employed as low-cost environmental alternatives, but none are seeing a success rate quite like that of wind power. Johan van den Berg, CEO of SAWEA, recently pointed out that global wind power has grown by around 25% annually over the last 20 years, meaning that “the wind industry has matured and reached a stage where its business case speaks for itself”.
Wind brings change for South Africa
Despite being the second-largest economy in Africa, until 2012 South Africa possessed only 10MW of cumulative installed wind energy capacity. According to Vyakaranam: “[A] lack of right policy framework, delays in confirmation of grid connection and power purchase agreement for planned projects are the key reasons for delay in market uptake for wind in South Africa.”
As these factors are being overcome, the country’s renewables market is exploding into action. In 2015 alone 196 turbines were installed in South Africa as the first major move towards renewable energy began. This brings the total installed wind power to 1.13GW, already an increase of 113% since 2012, and it is expected to rise again to reach 5.6GW by 2020, as plans to continue growth are being pushed by the governments Renewable Energy Independent Power Producer Procurement Programme (REIPPPP). The programme is auctioning off capacity allocations of varied amounts to a variety of energy companies such as Siemens, Vestas and Nordex.
With the fourth of five rounds of REIPPPP auctions complete, there are renewable projects at all stages of development. Significantly, many of these are set to come to fruition between this year and 2017, when South Africa will see its largest capacity additions of over 1.1GW wind energy. This growth looks set to continue between 2019 and 2025, as over 900MW is added per year.
“The integrated resource plan (IRP) has a goal to develop 9GW of wind power by 2030 and the South African Wind Energy Association (SAWEA) expects it to exceed and opines that 15GW will be installed by 2030,” says Vyakaranam, adding that this move is already creating employment opportunities.
“Building a green economy is definitely identified to create sustainable employment opportunities by the South African Government” Vyakaranam says, and that “around 31,000 direct employment opportunities were created by wind sector in construction and operation of wind power plants in the last four rounds of auctions under REIPPPP”.
This is an area in which the benefits are already being seen, with 2,000 jobs sustained by the wind power industry in 2015 alone. Employment is paired with economic sense, according to SAWEA, which claims that “wind power is now about 40% cheaper than new coal power produced by the national utility”, as well as taking six times less to build and begin production.
Beyond this there are the clear environmental benefits involved in a shift towards a renewable source of energy. Currently the energy sector is the largest contributor to greenhouse gas emissions in South Africa, creating 250 million tonnes (Mt) of CO2 a year. In 2015 the use of wind power saved 1.2Mt of CO2 from being created, and this is expected to rise to 12.7Mt by 2025, supporting efforts to counter global warming.
Is the country ready for an energy shake-up?
Increasing the countries energy sector in such a short period of time is full of challenges. The greatest of which is South Africa’s infrastructure, as the grid has been poorly maintained and its power supply is unreliable.
While grid integration is a problem, it is one that South Africa has already started to prepare for. “Significant lengths of new transmission lines are being developed and large-scale renewable power generation is the prime driver for new investment in grid infrastructure” Vyakaranam says.
Upscaling and adapting of the electricity grid is already underway. From March 2013 to March 2015, over 1,900km of new transmission lines were added. While the transmission development plan (TDP) is intended to add more than 9,900km of new lines over in the next nine years. This should help offset the more varied grid intake, which is already powering 386,000 homes on wind energy – a huge escalation when compared with just 1,000 in the 2010-2012 period.
A variety of projects are helping make renewable energy a possibility for South Africa. One such project is the US Trade and Development Agency’s (USTDA) partnership with South Africa’s eThekwini Electricity Company. USTDA helps provide strategies and funding to build a more efficient and reliable grid system, which should benefit 630,000 residential and commercial customers.
Meanwhile ABB has constructed a combined PowerStore and Microgrid Plus System at Longmeadow in Johannesburg to regulate reliable solar and diesel power. The key component of this plant is the use of the PowerStore, a battery that helps bypass the unreliability of solar power and instead enable constant flow of electricity through power storage. This work will help increase energy predictability, something that will benefit all renewables as well as the grid.
However, state regulator Eskom’s financial health may hamper the pace. “Eskom, [which] had previously subsidised the associated costs of grid integration, is now transferring them to project developers resulting in higher project costs” Vyakaranam warns.
In addition to Eskom’s financial health is that of the country at large. Following the Finance Minister Nhlanhla Nene being unexpectedly fired in 2015, South Africa’s currency, the rand, fell dramatically and is yet to fully recover. There is concern as to how this will affect investments in renewable energy, and the prices of renewable electricity.
There are also skills issues. Due to high wind speeds South Africa has been able to almost universally build large-scale wind turbines. More than 70% of turbines built in 2014 and 2015 were larger than 2MW in capacity, the bigger size allowing projects to create more energy, faster. However, higher turbines present logistical challenges as it requires specialist skills and planning to transport the larger components.
More to come
South Africa’s plans don’t stop with just building wind farms; the country says it is committed to building investment opportunities, employment and creating sustainable power. Market size for the wind power industry has already grown exponentially, from $61m in 2013 to over $1bn in 2014 and is predicted to continue to grow. GlobalData estimates that the wind industry will reach its peak market value of more than $2bn in 2017. This is bolstered by South Africa’s attractiveness to power producers due to their high wind-speeds and the efficient system in place for mapping potential windfarm sites.
Mapping comes from the Wind Atlas for South Africa (WASA) project, which was started in 2009 and has since come a long way. WASA has been mapping wind speeds across South Africa, in order to best determine successful plots. This is along with providing guidelines and tools to encourage wind farm development. In doing such they have become aware that South Africa has good potential not just for coastal but also inland wind farms, leaving the country with many avenues to pursue.
But as South Africa’s energy industry struggles, the country needs continued growth. South Africa is currently the only nation in Africa to have a nuclear plant, Koeberg, which began construction in 1976 and produces 5% of the country’s power. Plans had been underway for a fleet of six to eight new power stations, which could produce an extra 9.6GW at a cost of between $ 50bn and $ 93bn, up until March this year, when the projects were delayed following a high court judgment that the government hadn’t adhered to transparency and public participation legislation.
Furthermore, the country’s formerly prosperous coal industry is flagging. Construction began in 2007 for two new coal plants, Kusile and Medupi – built and run by Eskom – which were scheduled for completion in 2011 to provide 9.6GW to the grid. However, they are still incomplete and have cost more than double the original budget, leaving the thermal power industry with only dated plants.
It is clear the South Africa’s power industry is struggling through a difficult time, so the growth in renewable, and in particular, wind energy is impressive but also necessary in order for the country to truly have a reliable and efficient energy network, as well as a greener one.
