What The Economist¹ says is happening in the world, GreenCape asserts is taking place in South Africa. Both the UK newspaper and the not-for-profit company concluded within a couple of months of one another in the middle of 2024 that solar is winning.
The Economist’s special section on the topic made the point that the progress of solar technology is so fast and so widespread that it almost doesn’t matter that there is some resistance to it: the battle is over. Some statistics put forward in the newspaper included:
- The levelised cost of solar since the 1960s has gone down by a factor of more than 1 000
- China’s solar panel capacity is 3.5TW
- Battery operators in Texas recorded revenues in 2023 of $523-million
- Whereas it took a year for the world to create 1GW of solar power in 2004, it now takes days (Source: Michael Liebreich)
Closer to home, GreenCape’s “Energy Services Market Intelligence Report 2024” noted a 52% increase in rooftop solar PV installations in South Africa, to 3.2GW from the beginning of 2022 to the first quarter of 2023. They assessed that market value at R41.6-billion and predicted that installed capacity will increase by 2030 to 10GW with a market value of R130-billion.
GreenCape also made observations about South Africa’s automotive industry. Given that the US is likely to want to pivot away trade with China, South Africa’s OEMs need to speed up the production of electric vehicles (EVs). The report noted that with many OEMs in the Eastern Cape, the creation of “large-scale renewable energy plants, such as wind and solar” would support this process. GreenCape market intelligence reports are published in partnership with UK PACT.
One of South Africa’s most successful investment projects, the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), suffered a setback in the period between 2015 and 2021 but investors are again queuing up to take a stake in greener energy.
According to the Presidential Climate Commission, the pipeline of REIPPPP projects stood at R377-billion in June 2024. Applications for the development of 4.5GW were received in 2023, sharply up from the two previous years, 135MW (2021) and 1.6GW (2022). The establishment of a one-stop shop to deal with registering projects is part of the reason for the expansion of potential new capacity.
The problem is that South Africa has now come up against the constraints of the national grid. In the most recent round of bidding for projects, the Northern Cape received fewer projects than it otherwise would have if the national grid was keeping up with increased generation potential of new projects. This gives Mpumalanga a comparative advantage. With most of South Africa’s power stations located in Mpumalanga, the issue of grid capacity does not arise.
Automotive manufacturers have not gone all in on switching to producing electric vehicles (EVs), not least because global and local consumers have been somewhat hesitant to commit fully to EV options. There have also been calls from the industry for national government to give guidance in terms of how much support can be expected for the rolling out of incentives to produce EVs and in terms of providing supporting infrastructure, such as charging points.
Ford Motor Company, in announcing a range of investments at their sites in Tshwane and Gqeberha, set aside an amount of R5.2-billion for the production of the hybrid-electric Ranger bakkie to be built in Gauteng. Mercedes-Benz South Africa now makes two plug-in hybrid-electric vehicles at its East London plant, although only one of those is sold in South Africa.
The Automotive Industry Development Centre (AIDC) Eastern Cape is taking steps to prepare the province for EVs through its eMobility and Climate Change Support Business Unit. A high-profile aspect of the unit’s work has been the creation of EV charging stations in different parts of the Eastern Cape, including Gqeberha, East London and the Tsitsikamma. Education, research and the promotion of the idea of EV travel, including through the conversion of bus fleets, form important parts of the work of the unit.
Wheeling
Another big change that has come to South Africa’s energy landscape is the concept of “wheeling”. This entails power being generated specifically for a customer and “wheeled” along the grid to that customer from a supplier of energy. For this to work the grid has to be neutral and for that to be a reality, Eskom had to be unbundled, a process that has begun.
The model might entail a high-energy-use company entering a contract with a renewables company to supply it, as is the case with the Impofu Wind Farm complex comprising three 110MW facilities in the Eastern Cape, which will supply energy to Sasol and Air Liquide in Mpumalanga. Enel Green Power and Red Cap are building the R9-billion project. Another example is the joint venture called Envusa Energy, which is the new partnership between EDF Renewables and Anglo American.
Envusa Energy is putting up 50 Nordex turbines on Umsobomvu and Hartebeesthoek wind farms which form part of the Koruson 2 cluster, a blended wind and solar project which is partly in the Eastern Cape and partly in the Northern Cape.
An alternate model is emerging with the creation of energy aggregators, companies that can buy and sell at scale. National regulations on how much electricity private generators could sell fell away in 2023 and that has liberalised and turbo-charged the market. Some of the new aggregator companies include Discovery Green, NOA, Etana Energy and Lyra Energy.
Battery storage is increasingly becoming an important part of hybrid projects and a move in November 2023 by the JSE, Africa’s biggest stock market, signalled another landmark on the renewable energy landscape.
JSE Ventures has initiated a Voluntary Carbon Market together with US company Xpansiv, with the aim of creating a market for carbon credits.
Wind power is not being left behind, though. In Mpumalanga, Seriti Green has broken ground on a project that will deliver 750MW of wind from 130m towers when it is complete. In addition, the hybrid model will include 100MW of solar and 800MW of battery.
The greater Humansdorp Jeffreys Bay area hosts no fewer than 13 wind farms so the announcement in March 2024 that Nordex Energy South Africa is to start making concrete tower sections at a manufacturing facility in Humansdorp makes economic sense.
Up to 300 jobs will be created and work at the tower factory is expected to start in Q1 2024 with the first set of turbines due to be installed in the second half of the year. Having invested in the Eastern Cape since 2013, Nordex Energy South Africa boasts a significant footprint in the province, including a warehouse in Gqeberha and 573MW of installed capacity across five wind-power plants.
The latest large resources company to announce a 20-year power-purchase agreement is Richards Bay Minerals. Khangela Emoyeni Wind Farm will supply the miner with 140MW from the huge renewable-energy generator that rolls over a series of mountains on the edge of the Western and Northern Cape provinces.
Certain manufacturing companies that have access to biomass that results from the manufacturing process, such as woodchips for Sappi and bagasse in the case of sugar producers such as Tongaat Hulett and Illovo, are in a position to produce their own energy.
However, there are industries where signing offtake agreements with renewable energy producers is the more logical route to take. In fact, even PGM miner Ivanhoe Mines, despite having its own plans to produce solar power, has signed an offtake agreement with Renergen.
¹ Visit The Economist at https://www.economist.com/topics/the-world-ahead-2025
