A cost-effective fix for SA’s energy woes

In his Budget Speech on February 24, Finance Minister Pravin Gordhan announced that the Department of Energy’s (DoE) Independent Power Producers Procurement (IPPP) programme will be extended to include coal and gas power projects.

According to Paschal Phelan, chairman of Solar Capital, the IPPP Programme will be rolled out in order to replicate the successes achieved in the South African renewable energy sector. “Although the replication in other sectors will allow for further energy to be produced, a focus on solar power would allow for the supply of energy at a massively reduced rate,” he notes.

The programme was designed to contribute towards the 2010 Integrated Resource Plan (IRP) target of providing 17 800 MW of renewable power-generation capacity to the electricity grid by 2030. More than 2 292 MW of solar-powered energy projects have been awarded preferred bidder status to date.

Phelan explains that the cost of solar technology (internationally and locally) has dropped substantially in recent years. Solar power in South Africa can now be produced at a cost of under R0,70 per kWh.

According to growth consultancy Frost & Sullivan, the running costs of the Medupi and Kusile power stations, when factors such as the cost of water usage and CO₂ emissions are taken into account, are approximately R2,35 and R1,94 per kWh.

Says Phelan: “South Africa should rather invest in the expansion of renewable energy, in particular solar, which provides energy at a substantially lower cost to coal. This solar price is also fixed for a period of 20 years, making the cost saving consistent and predictable. This cost saving would in turn assist in preventing the increase of Eskom tariffs in the future.”

Minister of Energy Tina Joemat-Pettersson is set to inaugurate the Solar Capital De Aar solar farm during the first quarter of 2016 – the largest solar farm ever completed in the southern Hemisphere, Africa and the Middle East Region. The power generated from this 175 MW facility will produce enough electricity to power approximately 75 000 South African homes every year.