By Reginald Demana
There is no better moment to remind us of our country’s precarious energy security than the current streak of load shedding, which at some point escalated from stage 2 to 6 and came perilously close to breaching stage 8.
The cost to the economy varies between R2 billion and R4 billion a day, depending on which industry expert you speak to.
One thing is certain, though, businesses and households are counting their losses daily, suffice it to add it is near impossible to quantify the actual cost of load shedding to the economy.
Flashback: many intensive energy users, including small businesses, have not forgotten the infamous load shedding in 2008. And one can forgive them for nursing a heightened sense of déjà vu.
Such was the devastation of load shedding it nearly paralysed mining, effectively wiping out the 2008 first quarter GDP.
This crisis placed a huge cost burden on intensive energy users, including households. Solar panels mounted on rooftops of houses of disillusioned consumers suddenly became a common feature, understandably so, as this crisis stretched both the resilience and temperament of consumers.
Yet, for us at the IDC, in the face of adversity, we saw an opportunity and began to explore how best we could contribute to shoring up the country’s energy reserves.
At best, this experience – the urgency to help stabilise the country’s energy reserves including a commitment to contribute to decarbonising the country’s economy – largely informed our foray into the renewable energy space.
It is the IDC, among the early pace setters, that helped de-risk SA’s renewable sector. Since we ventured into this space in 2012, our exposure to this sector has grown to R15.6bn.
To date, our investments in renewable energy, notably in Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) Round 1 and 2, has helped add 900MW of power to the national grid.
In the process, this created about 7 095 jobs spread across the Northern Cape, Western Cape, North West and Eastern Cape. The Northern Cape, with excellent renewable energy resources, is the biggest beneficiary of IDC’s investment with a combined capacity of 486MW and R2.5bn in the combined purchase price for community shareholding in 15 projects.
Funding support for the Scatec deal demonstrates our commitment to transformation.
To this end, the IDC is pleased to announce that we have contributed to creating what is set to be one of the world’s largest hybrid solar PV (photovoltaic) and battery storage facilities.
Accordingly, the IDC will provide funding to H1, a black economic empowerment outfit that will own a 49% stake in these new hybrid solar PV and energy storage projects. This transaction affirms the IDC’s commitment to broadening the pool of black industrialists looking to break into key sectors of the economy.
Construction of this facility is set to start following the conclusion of financial closure. Renewable energy developer Scatec, which is headquartered in Norway, recently reached financial close for its three projects, Kenhardt 1, 2 and 3.
Among salient features of this project, it has an installed solar PV capacity of 540MW and battery storage capacity of 225MW/1 140MWh. The most significant aspect of this transaction is that this project has already secured a 20-year power purchase agreement with the power utility, Eskom.
By all means, it is a game changer.
The project will supply 150MW dispatchable power to the grid from 5am to 9.30pm once it is operational. It is 10km wide, from side to side. It will include about two million solar PV modules and construction is expected to take just over a year, after which power will be fed to the grid. About 2 000 jobs are expected to be created during the construction period.
These projects are unique in that battery storage addresses the intermittency challenges of renewables – when there is no wind or no sunshine, then no power is produced.
The projects are part of South Africa’s Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP), which was launched in August 2020. The programme aimed to procure about 2 000MW of generation capacity to help address the country’s energy supply constraints.
Already there have been development benefits even before the business comes to fruition.
Telecoms group Vodacom has set up a tower to enable communications at the facility and in the greater Kenhardt region – an area which previously had almost no signal.
Local communities and enterprises in and near Kenhardt will benefit through R444 million committed to the supplier, enterprise, and socio-economic development initiatives over 20 years.
In addition, a significant portion of construction material for the projects is locally sourced, such as transformers and cables. Solar PV modules, trackers, and inverters are targeted for partial local sourcing, while some of these will be imported.
Companies such as ARTsolar, which is South African owned and one of two local manufacturers specialising in high volume manufacturing of solar panels, has embarked on a massive upgrade of its production facility.
This has resulted in significant employment opportunities created by the Durban- based company and within the value chain. As we embark on this journey, the spin-offs to job creation are massive.
Demana is divisional executive for mining, metals, energy and infrastructure at the Industrial Development Corporation.
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