Green Economy Journal Issue 57
You also want an ePaper? Increase the reach of your titles
YUMPU automatically turns print PDFs into web optimized ePapers that Google loves.
G R E E N<br />
<strong>Economy</strong><br />
journal<br />
ISSUE <strong>57</strong> | 2023<br />
Just Energy<br />
Transition for<br />
AFRICA<br />
22 SAPVIA<br />
INTERVIEW<br />
WITH<br />
CEO<br />
28<br />
WIND<br />
TURBINE<br />
SOURCING<br />
42<br />
INFRASTRUCTURE:<br />
ARRESTED<br />
DEVELOPMENT?
Strive for Net Zero<br />
while saving money at the same time!<br />
Rooftop, solar car-ports, ground mounted solar, and agri-voltaics represent the best value energy<br />
available to the energy customer in South Africa.<br />
Blue Sky Energy are experts in the design, procurement and construction of such plants.<br />
Battery energy storage installations provide access to solar energy daily during peak hours when the<br />
sun is not shining and enable users to bridge their primary energy needs through grid interruptions.<br />
While the levelised cost of hybrid solar + battery storage installations is significantly greater than solar<br />
PV only, appropriately sized solutions can be commercially feasible.<br />
Would you like to know if your property or business can achieve energy security at the same cost or<br />
less than what you are paying currently?<br />
Did you know that Section<br />
12B of the Tax Act allows for<br />
the accelerated depreciation<br />
of your power generation capex<br />
resulting in a 27.5% saving on<br />
your project installation?<br />
Agri-Voltaics and<br />
Solar Car Ports<br />
Blue Sky Energy works<br />
with leading light steel<br />
frame construction<br />
suppliers to offer a range<br />
of innovative solutions<br />
such as agrivoltaics and<br />
solar car-ports.<br />
Have you considered<br />
putting your spare space<br />
to work? Whether you<br />
have low value land or<br />
large parking spaces,<br />
bring them to life through<br />
solar PV installations that<br />
create energy and high<br />
value spaces such as<br />
shade for parking or<br />
tunnels for agriculture.<br />
123RF<br />
123RF<br />
Website: www.blue-sky.energy Email: enquiries@blue-sky.energy<br />
CONTACT THE EXPERTS AT BLUE SKY ENERGY RIGHT NOW!
NATURE RESERVE
PUBLISHER’S NOTE<br />
Recently a new ministerial portfolio was created, and the Honourable<br />
Minister of Electricity, Dr Kgosientso Ramokgopa, was appointed. But<br />
what do we know about him? According to Wikipedia, Kgosientso<br />
“Sputla” Ramokgopa is a South African politician who was the Mayor<br />
of Tshwane from 2010 to 2016. His academic background includes<br />
a Bachelor’s degree in civil engineering, Master’s degrees in public<br />
administration and business leadership and a PhD in public affairs.<br />
He was born in 1975.<br />
I read in media that Ramokgopa left the City of Tshwane bankrupt<br />
after the legal settlement with PEU Capital Partners over a deal to roll<br />
out smart electricity meters across the City ended in litigation.<br />
I would like to share a few first-hand details about Ramokgopa’s<br />
performance at City of Tshwane. It may give an idea as to how he will<br />
tackle his current monumental challenge.<br />
We ran the Sustainability Week conference in partnership with<br />
the City of Tshwane from 2011 to 2016, and Ramokgopa was the<br />
patron of the event. Among a great many other positive projects and<br />
happenings in the green economy that the event’s many sub-sector<br />
conferences focused on, we also showcased the work of Tshwane’s<br />
City Sustainability Unit under the leadership of Dorah Modise,<br />
subsequently influential CEO of <strong>Green</strong> Building Council SA.<br />
The team under Romokgopa were trailblazers. Aside from many<br />
other achievements, they developed the first <strong>Green</strong> Service Delivery<br />
Strategy in South Africa and were mandated to act into all City<br />
departments to guide the implementation of interventions aimed at<br />
achieving the stated objectives.<br />
Their projects ranged from the first wheeling deal which facilitated<br />
the Bio2Watt biogas project in Bronkhorstspruit, making electricity<br />
out of various waste streams including sorted municipal solid waste<br />
(MSW) and supplying power to the BMW Rosslyn plant and free WiFi to<br />
all Tshwane residents, to the first fully-mechanised materials recovery<br />
facility (MURF), and the roll-out of smart electricity meters that would<br />
enable net metering for small-scale embedded generation.<br />
Ultimately, Ramakgopa was unseated by an ANC opponent before<br />
they lost the City to the DA.<br />
Having worked with Ramokgopa, albeit at some distance, I feel<br />
optimistic that if anyone in the ANC can pull this mandate through,<br />
it is him.<br />
G R E E N<br />
<strong>Economy</strong><br />
journal<br />
EDITOR:<br />
CO-PUBLISHERS:<br />
LAYOUT AND DESIGN:<br />
OFFICE ADMINISTRATOR:<br />
WEB, DIGITAL AND SOCIAL MEDIA:<br />
SALES:<br />
PRINTERS:<br />
GENERAL ENQUIRIES:<br />
ADVERTISING ENQUIRIES:<br />
Alexis Knipe<br />
alexis@greeneconomy.media<br />
Gordon Brown<br />
gordon@greeneconomy.media<br />
Alexis Knipe<br />
alexis@greeneconomy.media<br />
Danielle Solomons<br />
danielle@greeneconomy.media<br />
CDC Design<br />
Melanie Taylor<br />
Steven Mokopane<br />
Gerard Jeffcote<br />
Glenda Kulp<br />
Nadia Maritz<br />
Tanya Duthie<br />
Vania Reyneke<br />
FA Print<br />
info@greeneconomy.media<br />
alexis@greeneconomy.media<br />
REG NUMBER: 2005/003854/07<br />
VAT NUMBER: 4750243448<br />
PUBLICATION DATE: April 2023<br />
www.greeneconomy.media<br />
G R E E N<br />
<strong>Economy</strong><br />
journal<br />
CONTENTS<br />
6 NEWS AND SNIPPETS<br />
ENERGY<br />
10 What the world is learning from SA’s energy transition<br />
16 The Just Energy Transition – what it should be ...<br />
22 It’s time for solar to shine: interview with SAPVIA CEO<br />
26 Business Partners urges companies to go solar<br />
28 The future of onshore wind turbine sourcing<br />
32 Wind energy’s leading role in SA’s Energy Action Plan<br />
36 REVOV says that we are morally bound to demand<br />
environmentally sound batteries<br />
38 Bringing power back to LiFe: we interview REVOV CEO<br />
WASTE<br />
20 NCPC-SA’s waste minimisation programme is improving lives<br />
DECARBONISATION<br />
34 Climate impact imperatives by SRK Consulting<br />
16<br />
28<br />
42<br />
Publisher<br />
EDITOR’S NOTE<br />
Africa is blessed with land and resources, enough to supply the whole<br />
world, and needs to capitalise on this in a sustainable way. We have<br />
sunshine for solar, water for hydro and wind for renewable capacity<br />
and an abundance of biomass and waste that can be converted<br />
to energy. Chris Whyte, ACEN, points out that the key focus here<br />
is energy, and the simple reality is that Africa will never be able to<br />
achieve the SDGs without energy. Everything is reliant on energy: we<br />
need to avoid the expensive mistakes of before and rather implement<br />
viable energy generation (page 16).<br />
The push for renewable energy is showing an increase in solar PV<br />
across the country, which in turn drives demand for components and<br />
services. Don’t miss our interview with the CEO of SAPVIA (page 22)<br />
or our article on wind turbine sourcing (page 28).<br />
Our thought leadership article indicates that despite the speed with<br />
which solar and wind power plants could be built, South Africa’s grid<br />
itself does not have the capacity to distribute that power (page 42).<br />
Alexis Knipe<br />
Editor<br />
All Rights Reserved. No part of this publication may be reproduced or transmitted in any way or<br />
in any form without the prior written permission of the Publisher. The opinions expressed herein<br />
are not necessarily those of the Publisher or the Editor. All editorial and advertising contributions<br />
are accepted on the understanding that the contributor either owns or has obtained all necessary<br />
copyrights and permissions. The Publisher does not endorse any claims made in the publication<br />
by or on behalf of any organisations or products. Please address any concerns in this regard to<br />
the Publisher.<br />
WOOD PULP AND PAPER<br />
8 PAMSA on the circular economy<br />
40 Forestry: a greener more sustainable future<br />
THOUGHT LEADERSHIP<br />
42 Quo vadis infrastructure development<br />
46 DQS Academy: simply leveraging quality<br />
READ REPORT<br />
THOUGHT [ECO]NOMY<br />
greeneconomy/report recycle<br />
To access the full report in our Thought [ECO]nomy report boxes:<br />
Click on the READ REPORT wording or image in the box and you will<br />
gain access to the original report. Turn to the page numbers (example<br />
below) for key takeouts of the report.<br />
01 02 03<br />
key takeouts<br />
of the report<br />
key takeouts<br />
of the report<br />
key takeouts<br />
of the report<br />
4<br />
5
NEWS & SNIPPETS<br />
NEWS & SNIPPETS<br />
SA WELCOMES CLIMATE CHANGE REPORT<br />
South Africa welcomes the release<br />
of the Intergovernmental Panel on<br />
Climate Change (IPCC)’s Summary for<br />
Policy Makers and a longer synthesis<br />
report of the Sixth Assessment Cycle.<br />
“The report brings together the work<br />
of leading global scientists over the<br />
past six years and clearly shows that<br />
more than a century of burning fossil<br />
fuels and unsustainable energy and<br />
land use worldwide, but in particular in<br />
developed countries, has led to global<br />
Minister Creecy.<br />
warming of 1.1°C since the start of the<br />
industrial revolution,” says the Minister of Forestry, Fisheries and<br />
the Environment, Barbara Creecy.<br />
The IPCC finds that with every increment of warming, the risks,<br />
impacts, related losses and damages escalate. When these risks<br />
combine with other adverse events, such as pollution and loss of<br />
biological diversity, they cascade across sectors and regions and<br />
become increasingly difficult to manage. Nothing less than an<br />
emergency response will suffice.<br />
“It is therefore important, particularly in this decade, to accelerate<br />
efforts to adapt to the reality of a rapidly changing climate and to<br />
close the existing adaptation gap,” says Minister Creecy.<br />
The scientists tell us that global emissions should already be<br />
decreasing and be cut by almost half by 2030. Ultimately, the only<br />
way to stabilise warming is to reach net zero CO2 emissions. To limit<br />
warming to 1.5°C would require net zero CO2 in the early 2050s,<br />
followed by net negative CO2 emissions in the decades thereafter.<br />
“Through the Just Energy Transition Investment Plan (JET-IP) we<br />
have identified measures in the electricity, transport and hydrogen<br />
sectors and value chains to contribute to decarbonisation of our<br />
economy. It is not just an energy transition plan, but a just one –<br />
and this puts workers and communities at the centre of defining<br />
their future in a low carbon economy. The JETP-IP will require over<br />
R1.5-trillion to be fully implemented. We have challenged our<br />
partners and multilateral development banks to increase finance<br />
for climate investments. This is important to achieve global<br />
climate goals and our view is that there is sufficient global capital<br />
to close the gaps.”<br />
The IPCC indicates that these finance gaps and opportunities<br />
are greatest in developing economies. A rapid scaling up of<br />
finance flows from global capital markets and supporting public<br />
funding from developed economies for enhanced mitigation and<br />
accelerated adaptation, can act as a catalyst for accelerating the<br />
global shift to sustainable development.<br />
More importantly, the IPCC indicates that grant-based public<br />
financing is crucial to accelerate adaptation activity, which is<br />
severely underfunded. The greatest gains in wellbeing can be<br />
achieved by prioritising finance to reduce climate risk for the most<br />
vulnerable regions (especially in Sub-Saharan Africa), and for the<br />
most vulnerable, low-income and marginalised communities.<br />
Mitigation faces a different challenge: leveraging private finance<br />
through public financing by reducing some of the risks inherent<br />
in upscaling mitigation, especially in newer sectors, and in developing<br />
regions, including those facing debt and public financing<br />
macroeconomic constraints. The JET-IP needs to support social<br />
justice, including in financial terms.<br />
JET MUST CONSIDER AFRICA’S NEEDS<br />
Africa must be given the space to transition from high carbon usage<br />
to low carbon at a pace and cost that it can afford, says Minister of<br />
Mineral Resources and Energy Gwede Mantashe.<br />
“Their voice [African people] on the energy transition must be heard.<br />
That is the voice that says, energy production in Africa must be aligned<br />
to Africa’s socio-economic development. This means that there must be<br />
a balance between energy demand for socio-economic development<br />
and energy supply that is premised on low carbon emissions,” he says.<br />
Africa’s mineral resources<br />
Mantashe says the continent’s rich endowment with minerals that<br />
are suitable for clean energy production could mean a boost for the<br />
continent’s economies. “We believe that it is in the interest of Africa<br />
that a rigorous mineral exploration programme is implemented to<br />
uncover these unknown deposits in many other countries of our<br />
continent. For its part, South Africa continues to mobilise investments<br />
in exploration informed by the understanding that it is the lifeblood of<br />
mining, which has been the backbone of our economic development<br />
for over 150 years.”<br />
NEW CEO FOR PRO ALLIANCE<br />
The Paper and Packaging PRO Alliance has announced the<br />
appointment of Dorah Modise as its new chief executive officer,<br />
effective from 1 April 2023. Modise’s personal philosophy,<br />
backed by considerable experience, is fully attuned to her new<br />
set of responsibilities.<br />
“I look forward to working with alliance partners in leading this<br />
great organisation that will demonstrate the power of collective<br />
action in a dynamic sector that is largely untapped. Waste is the<br />
new gold and with industry taking the lead on massifying recycling,<br />
recovery, beneficiation and market enhancement programmes, we<br />
will take several steps towards achieving sustainability,” she says.<br />
WOLF WIND BREEZES CLOSER TO NATIONAL GRID<br />
An 84MW Wolf Wind project in the Eastern Cape has reached<br />
financial close and is projected to start generating electricity for<br />
the national grid by the first quarter of 2024.<br />
Juwi Renewable Energies reports that exploding public and<br />
private demand for large-scale renewables because of South Africa’s<br />
energy crisis has led to the rapid expansion of its national footprint,<br />
with more than 1.5GW of wind, 2GW of solar and 500MW of hybrid<br />
projects incorporating storage in development for private and public<br />
energy users.<br />
The Wolf Wind project was successfully bid by Red Rocket in<br />
Round 5 of the government’s Renewable Energy Independent<br />
Power Producers Procurement Programme (REI4P). Wolf Wind is<br />
the second wind project developed by Juwi to reach financial close<br />
under the REI4P – the first being the 138MW Garob Wind Project,<br />
which reached commercial operation in 2021. The Wolf Wind Project<br />
is expected to generate more than 360GWh of clean electricity<br />
for the South African grid each year, offsetting 374 400 tons of<br />
CO2 each year.<br />
Positive economic contribution<br />
Wind has significantly demonstrated its positive economic contribution<br />
with a total procurement by wind IPPs during construction and<br />
operations to date exceeding R9-billion in value.<br />
SAWEA’s chief communications officer, Morongoa Ramaboa, says<br />
the Association welcomes the government’s approach to accelerate<br />
private investment in generation capacity, through the removal of<br />
the licensing requirement for generation projects of any size, the<br />
RECYCLABLE WIND TURBINE BLADES<br />
Nordex Group is participating as one of the 18 partners, in a<br />
sustainability project funded by the European Union, to drive<br />
the recycling of high-value rotor blade materials from wind<br />
turbine blades.<br />
Currently, 85% to 95% of a Nordex wind turbine is recyclable. For<br />
many of the materials used, there are established recycling processes<br />
for environmentally-friendly disposal – especially for steel and<br />
concrete, which make up the largest share of a wind turbine in the<br />
tower and foundation.<br />
Turbine rotor blades consist of a combination of different materials<br />
such as wood, various metals, adhesives, paints and composites.<br />
The composites are glass-fibre-reinforced plastics, as well as carbonfibre-reinforced<br />
plastics. At the end of their life, rotor blades are more<br />
challenging to recycle due to the heterogeneity of the material and<br />
the strong adhesion between the fibres and polymers. Recycling<br />
processes for these materials are not yet fully established, and reuse<br />
of recycled materials is not widespread.<br />
reduction of timeframes for regulatory approvals, as well as the<br />
establishment of a “one-stop shop” for energy projects through<br />
Invest SA.<br />
“The ideal is to create an environment that encourages and<br />
accelerates investment injection into the economy, removing the<br />
pressure from public fiscus, and to stimulate the private sector to<br />
invest in their own energy supply and create new industries,” she says.<br />
Niveshen Govender, SAWEA CEO, says a clearly defined queueing<br />
system needs to be urgently implemented with a balanced view<br />
between publicly and privately procured electricity.<br />
“Ministerial determination for over 18 000MW of new generation<br />
capacity from wind, solar and battery storage should be prioritised<br />
since it was published in August last year,” he says, noting that the<br />
intention to enable businesses and households to invest in rooftop<br />
solar is a good start towards addressing the country’s energy<br />
crisis. This requires the development of a net billing framework for<br />
municipalities to enable customers to feed electricity from rooftop<br />
solar installations into the grid.<br />
“To realise our vision of becoming a thriving commercial wind<br />
power industry that supports government in its mandate to secure<br />
energy for South Africa, we cannot afford a repeat of the latest failed<br />
public procurement bid window (BW6), which has resulted in the loss<br />
of investment and market confidence.<br />
“The current system for allocating grid access remains a pressure<br />
point as it marginalises capable and willing organisations that can<br />
contribute significantly to the supply of electricity,” Govender says.<br />
By Neesa Moodley. Courtesy Daily Maverick.<br />
“In line with our group’s Sustainability Strategy 2025, ambitious<br />
goals have been set, including offering the market a fully recyclable<br />
blade within the next decade, with the target set for 2032,”<br />
explained Nordex MD, Compton Saunders.<br />
To reach this goal, Nordex have conducted and participated in<br />
several Research and Development projects, one of which is the<br />
European-funded “Wind turbine blades End of Life through Open<br />
HUBs for circular materials in sustainable business models”, or<br />
EoLO-HUBS for short.<br />
The objective of the EoLO-HUBS project is to demonstrate and<br />
validate a set of innovative composite material recycling technologies<br />
which will provide answers to the three main areas involved in endof-life<br />
wind farm recycling: de-commissioning and pre-treatment<br />
of wind turbine blades; sustainable fibre reclamation processes<br />
addressing two alternative routes: low-carbon pyrolysis and green<br />
chemistry solvolysis; upgrading processes for the recovered fibres<br />
addressing mainly glass fibres as well as carbon fibres.<br />
6<br />
7
ENERGY<br />
ENERGY<br />
What the world<br />
is learning<br />
from SA’s nascent<br />
JUST ENERGY TRANSITION<br />
INVESTMENT PLAN<br />
Ramaphosa has been praised by global leaders for South Africa’s efforts to prevent and avert the<br />
worst effects of human-induced climate change as part of its Just Energy Transition Investment Plan.<br />
BY ETHAN VAN DIEMEN<br />
South Africa’s Just Energy Transition Investment Plan (JET-IP) is<br />
designed to accelerate the move away from coal in a way that<br />
protects vulnerable workers and communities and develop<br />
new economic opportunities such as green hydrogen and electric<br />
vehicles (EVs). It is part of South Africa’s efforts to prevent and avert<br />
the worst effects of human-induced climate change.<br />
UK Prime Minister Rishi Sunak, US President Joe Biden, French<br />
President Emmanuel Macron and German Chancellor Olaf Scholz<br />
have commended South Africa for its commitment to clean energy<br />
but importantly the country’s emphasis on assisting workers and<br />
communities who will be affected by job losses as we become less<br />
reliant on the coal industry.<br />
Earthlife Africa director Makoma Lekalakala welcomed the five-year<br />
R1.5-trillion investment plan, summing up why our JET-IP is a gamechanger<br />
for South Africans. “We need clean, cheap renewable energy<br />
to end the loadshedding caused by our failing coal fleet, and to address<br />
the energy poverty that is hampering social justice and development<br />
for all.”<br />
South Africa is among the top 20 highest emitters of planet-warming<br />
greenhouse gases in the world and accounts for nearly a third of all<br />
of Africa’s emissions, due in large part to Eskom’s legacy dependence<br />
on coal for electricity generation. From the way we move people and<br />
goods around to how we light up our streets and homes, the plan seeks<br />
to clean up South Africa’s act without leaving anyone behind.<br />
Mandy Rambharos, former general manager of the Just Energy<br />
Transition office at Eskom said several banks, including the World Bank<br />
and African Development Bank, said South Africa’s plan is the best they<br />
had seen on the table out of 14 plans from around the world. “While I<br />
was at Eskom, we were approached by the Vietnamese, Indonesians,<br />
Philippines and Indians ... wanting to collaborate with us.”<br />
One of the reasons that South Africa is recognised as a leader in its<br />
moves towards JET is because of the multistakeholder consultative<br />
process that saw the drafting of a Just Transition Framework.<br />
The Presidential Climate Commission (PCC) in July last year released<br />
the framework that sets out a shared vision for JET, principles to guide<br />
the transition, and policies and governance arrangements to give<br />
effect to the transition from an economy that is predominantly reliant<br />
on fossil fuel-based energy, towards a low-emissions and climateresilient<br />
economy. Dr Crispian Olver, executive director of PCC, said<br />
that “a lot of the international partners … are looking to build a model<br />
[such as] in South Africa, and then expand it and replicate it elsewhere.<br />
“We’ve also heard the same from many of our sister developing<br />
countries and they’re not looking to exactly replicate what we’re doing<br />
… but we’re acutely aware that countries like Indonesia, Vietnam, India,<br />
Brazil and several African partners are all embarking on very similar<br />
energy transitions and they’re having to grapple with the economic<br />
and social consequences of those transitions”.<br />
Olver shared some of the lessons that South Africa offers to other<br />
countries. These include to:<br />
• Be consultative<br />
• Be inclusive<br />
• Make use of forums such as climate commissions<br />
At COP26, in what was hailed as a “watershed” moment for South Africa<br />
and international collaboration, a political declaration announced the<br />
mobilisation of $8.5-billion to accelerate our move away from its ageing,<br />
10 11
ENERGY<br />
ENERGY<br />
polluting and unreliable coal fleet towards renewable energy sources.<br />
The declaration heralded the first step in developing a pioneering<br />
model for climate-focused partnerships and collaborations between<br />
developed and developing countries.<br />
United Nations (UN) Secretary-General António Guterres, at the<br />
conclusion of the conference said, “To help lower emissions in many<br />
other emerging economies, we need to build coalitions of support<br />
including developed countries, financial institutions and those with<br />
the technical know-how. This is crucial to help each of those emerging<br />
countries speed the transition from coal and accelerate the greening<br />
of their economies.<br />
“The partnership with South Africa announced a few days ago is<br />
a model for doing just that,” the UN chief added.<br />
The model was formed after the governments of South Africa, France,<br />
Germany, UK, US and the European Union – collectively known as the<br />
International Partners Group (IPG) – signed the political declaration.<br />
The coalition of rich countries and South Africa came to be known as the<br />
Just Energy Transition Partnership (JETP) and spurred the development<br />
of both the investment plan as well as a framework for how best to<br />
move away from coal in a way that doesn’t leave workers along the coal<br />
value chain – particularly in Mpumalanga – stranded and destitute.<br />
Plans and pledges became reality when South Africa signed<br />
separate, highly concessional loan agreements with the French and<br />
German public development banks, AFD and KfW, worth €600-million<br />
(R10.7-billion). France and Germany are two of the partners in South<br />
Africa’s JETP, along with the US, the UK and the European Union. With<br />
associated interest rates for loans agreed at 3.6% and 3%, respectively,<br />
the loans are more palatable than the 8.9% the government would<br />
expect to raise an equivalent loan today in the open market.<br />
Amar Bhattacharya, a senior fellow in the Centre for Sustainable<br />
Development, housed in the Global <strong>Economy</strong> and Development<br />
programme at Brookings Institution, described our investment<br />
To help lower emissions in many<br />
other emerging economies, we<br />
need to build coalitions of support<br />
including developed countries,<br />
financial institutions and those with<br />
the technical know-how.<br />
PIPELINE OF PROJECTS<br />
Fumani Mthembi from Knowledge points out that what is needed<br />
is increased investment in improving capacity and competence<br />
amongst policymakers, investors and project developers. In addition,<br />
the development of specialised vehicles for project incubation<br />
and aggregation; working with existing project portfolios to effect<br />
change; reforming financial institution and financial sector incentive<br />
structures, reporting, benchmarks and project valuation frameworks<br />
and improving flexibility of public sector financing frameworks.<br />
Mthembi explains that the potential to upscale community projects<br />
was hampered by several factors including regulatory challenges.<br />
She explains that “just transition projects, by their nature, introduce<br />
technologies and ways of generating value that are novel, to the<br />
extent that decarbonisation has not historically been central to the<br />
impetus of job creation. Consequently, they often run into regulatory<br />
challenges, requiring changes to be made to enable project viability.”<br />
She says that “funding typically supports the operational aspects of<br />
project rollouts but the demand on developers to advance the more<br />
systemic changes required to enable scale is not incorporated into<br />
the funding package, placing added burden on project developers.<br />
Regulatory change is, therefore, often the product of the unpaid<br />
labour of developers who stretch and strain themselves to generate<br />
the public good that is an enabling regulatory environment.”<br />
Other issues include the need for public-private partnerships; the<br />
need to factor in the broader political context of implementing such<br />
projects especially at a community level and time is a key factor in<br />
developing community projects for scale. Finally, there is the issue<br />
of gender when it comes to small-scale projects and how so-called<br />
“women’s work” often is under-remunerated.<br />
Article courtesy Daily Maverick<br />
plan as “precisely the kind of model that is needed to lay out<br />
an actionable plan. It has got justice running through it … I want to<br />
emphasise something … this is a sustained effort, five years to start<br />
with is good but it will require a generational shift.”<br />
Lebogang Mulaisi, head of policy at COSATU, was lukewarm about<br />
the JETP and the investment plan that came of it. “It’s a start for a<br />
broader conversation around how to finance the transition … I’m not<br />
convinced, as yet … that we go deep into how we’re going to address<br />
ownership structures in South Africa.”<br />
She said reskilling and upskilling is great, “but we have an ownership<br />
crisis in our country … and I just don’t feel we’ve addressed the issue<br />
of addressing inequality decisively”.<br />
Indonesia and India are two developing countries with similar coal<br />
dependencies and are at different stages of their transitions.<br />
Dr Sandeep Pai is a senior research lead with the Global Just<br />
Transition Network at the Centre for Strategic and International<br />
Studies (CSIS). His expertise spans the political economy of energy<br />
transitions, coal sector dynamics, energy access and just transitions.<br />
“Indonesia is very interested in multilateral financing to phase<br />
out coal in the long term. India, not so much. India considers coal<br />
as a key energy security source. Generally, India is not interested in<br />
any deals that focus on coal phase-out or phase-down. However,<br />
both countries are in JETP negotiations with G7 countries. G7 and<br />
Indonesian negotiations are at advanced stages but negotiations<br />
with India are going slow,” he said.<br />
Asked whether South Africa’s JETP can be considered a model, Pai<br />
said “Yes, JETP partnerships theoretically could be a model for<br />
catalysing a coal phase down in India and even Indonesia. However,<br />
not the way it has played out in South Africa. India and Indonesia<br />
need to learn many lessons from South Africa’s JETP model. India<br />
and Indonesia need to come up with investment plans … do<br />
their homework, identify projects they want to execute, and then<br />
negotiate JETPs with rich countries … I don’t think either of these<br />
countries has done their homework yet.<br />
“[The] South African JETP model – although very relevant for India<br />
and Indonesia – won’t be meaningful for workers and the climate in its<br />
current form.<br />
“India and Indonesia have a lot to learn from South Africa<br />
about how to run and engage a variety of stakeholders, including<br />
unions, regions and municipalities in Mpumalanga, to very concrete<br />
technical issues such as how to repurpose coal plants being<br />
undertaken by Eskom.”<br />
Dr Rahul Tongia, a senior fellow with the Centre for Social and<br />
Economic Progress in New Delhi, largely concurred with Pai. He<br />
is also a non-resident senior fellow in the Energy Security and<br />
Climate Initiative at the Brookings Institution. He explained that<br />
while lessons can be drawn from the South African experience, the<br />
country’s JETP is more accurately described as a “reference point”<br />
for India and other countries with heavy coal dependencies. “South<br />
Africa is heavily coal dependent, more so for its power sector, but<br />
there are critical differences with, say, India, that make South<br />
Africa’s JETP more useful as a reference point than as a template.<br />
Most South African coal power plants are multiple decades old,<br />
and thus close to end of life. “In contrast, the median age of India’s<br />
fleet is close to just over a decade old.”<br />
Sinthya Roesly is director of finance and risk management at<br />
Perusahaan Listrik Negara (PLN) – an Indonesian state-owned<br />
electricity distribution monopoly which supplies most of the coalfired<br />
power to the country. PLN, for all intents and purposes, can<br />
be considered the Indonesian Eskom. She acknowledged that while<br />
there were lessons to be learnt from South Africa’s experience,<br />
Indonesia needs to “look into every aspect of the transition” and<br />
that it is important to be “cautious in early retirement [of coal power<br />
plants]… balancing all energy sources to support the economy”.<br />
Roesly’s sentiments accorded with those of Gwede Mantashe,<br />
Minister of Mineral Resources and Energy, who in a parliamentary<br />
debate on JET said, “Our transition cannot only be about reaching<br />
climate change targets. It must also address energy poverty,<br />
which includes lack of access to energy, unaffordability of energy<br />
and electricity interruptions or loadshedding. A pendulum swing<br />
from coal-powered energy generation to renewable energy does<br />
not guarantee baseload stability. It will sink the country into a<br />
baseload crisis.”<br />
Amos Wemanya, the senior renewable energy and just transition<br />
JET-IP, SET, GO<br />
JET-IP identifies USD98-billion in financial requirements over the next five years to come from both public and private sectors. The JET-IP goal<br />
is to decarbonise our economy to within the NDC target range of 350-420MtCO 2 by 2030 in a just manner. JET-IP is centred on decarbonisation,<br />
social justice, economic growth and inclusivity as well as governance. The investment criteria for the Plan include projects that deliver on<br />
greenhouse gas emissions reduction and JET outcomes and are catalytic in nature and ready to implement. Key investments include:<br />
• Electricity. Decommissioning (repowering and repurposing with clean technologies), transmitter grid strengthening and expansion, and<br />
renewable energy.<br />
• New Energy Vehicles. Decarbonising the automotive sector and supporting supply chain transition towards green manufacturing.<br />
• Gaseous Hydrogen. Essential planning and feasibilities including port investment to enhance exports and boost employment and GDP.<br />
• Cross-cutting. Investment in skills development and municipalities.<br />
12<br />
13
ENERGY<br />
AfricaBusiness.com<br />
JET POLICY DEVELOPMENTS<br />
The National Development Plan (NDP), draft Integrated Energy Plan (IEP),<br />
Renewable Energy White Paper, Nationally Determined Contribution (NDC),<br />
Just Transition Framework and enabling policies under development and in<br />
implementation, outline the policy foundation for energy transition in South<br />
Africa and the move away from carbon-fuelled energy.<br />
The Integrated Resource Plan (IRP) 2019 covers the government’s plans for<br />
power until 2030 and outlines a decreased reliance on coal-powered energy<br />
and an increased focus on a diversified energy mix that includes renewable<br />
energy, distributed generation and battery storage.<br />
The Renewable Energy Independent Power Producer Procurement Programme<br />
(REIPPPP), introduced in 2011, outlined the procurement of renewable energy<br />
in the country. The sixth round of the REIPPP kicked off in 2022 and aims to<br />
procure 2.6GW of solar and wind power.<br />
To incentivise the self-generation of renewable energy, the government<br />
has indicated that it proposes to scrap the threshold for distributed energy<br />
generation of 100MW.<br />
Other developments include, inter alia, the South African Automotive<br />
Masterplan, Climate Change Bill, <strong>Green</strong> Taxonomy and carbon tax increases.<br />
Further policies such as the National Energy Efficiency Strategy and <strong>Green</strong><br />
Transport Strategy also have a role to play.<br />
Trading in carbon offsets in the carbon market, where companies can pay<br />
other entities to offset their emissions for them, is also growing in popularity in<br />
emerging markets. In August 2022, the JSE announced that it was investigating<br />
the possibility of introducing a carbon trading market in South Africa.<br />
In February 2022, the South African Hydrogen Society Roadmap was published<br />
by government. The roadmap is an important marker on its path towards<br />
implementing hydrogen development.<br />
Eskom identified 18 IPP bids in terms of an auction relating to the use of vacant<br />
land it owned in Mpumalanga situated in proximity to its coal-fired power stations<br />
with direct access to the national transmission network that will enable wheeling.<br />
The projects will add almost 1 800MW of renewable power to the grid.<br />
Recent amendments to the Electricity Regulation Act were proposed by<br />
DMRE and are likely to address the electricity supply deficit, vertical structure<br />
of the market and lack of competition, introduction of a multi-market including<br />
IPPs as well as the formation of a central purchasing agency. The amendments<br />
will address the introduction of a day-ahead market to accommodate hourly<br />
supply and demand, direct procurement of power by municipalities, increase in<br />
the threshold pertaining to self-generation, need to accommodate low carbonemitting<br />
generation technologies, timing of licensing applications, changes in<br />
transmission system operation including power trading and the creation of<br />
additional regulatory capability. The aim is to accelerate affordable, decentralised,<br />
diversely-owned renewable energy systems.<br />
adviser at Power Shift Africa, a Pan-African think-tank,<br />
called for caution. He said, “If done right, JETPs could offer<br />
an opportunity for piloting transformative approaches to<br />
addressing aspects of the energy transitions – like early coal<br />
retirement – in a principled way. They can also potentially<br />
help aspiring oil and gas producers such as Senegal choose<br />
climate-friendly development pathways.<br />
“However,” Wemanya added, “JETPs could also perpetuate<br />
the continuation of a troubling donor-driven approach<br />
to climate finance that maintains unequal global power<br />
relations, picks winners and losers, and serves geopolitical<br />
interests. JETPs must be considered within the wider climate<br />
finance architecture and as a mechanism to put more and<br />
faster climate finance on the table, particularly from major<br />
historical polluters.<br />
“It is also important to recognise that ambitious goals<br />
such as achieving just energy transitions in Africa will require<br />
solutions that lie well outside the boundaries of JETPs.”<br />
JET-IP SETTER<br />
Discussing her research which focused on just transition<br />
project needs and finance response, Chantal Naidoo<br />
from Rabia Transitions says, “Projects are the primary<br />
channel where finance is exchanged in pursuit of the just<br />
transition vision.” She adds, “The distinguishing features<br />
of just transition projects are their focus on regenerative<br />
and transformative outcomes to people and planet due to<br />
deliberate shifts in systemic conditions and factors outside<br />
of the control of vulnerable stakeholders.<br />
“Just transition-related projects are interdependent,<br />
where one is the prerequisite for the next. This requires a<br />
portfolio approach to just transition-related investment,<br />
where projects are not viewed in isolation or cherry-picked<br />
by investors.”<br />
ESG | MINING<br />
WATER | ENERGY<br />
INFRASTRUCTURE<br />
READ REPORT<br />
THOUGHT [ECO]NOMY<br />
SOUTH AFRICA’S JUST ENERGY TRANSITION INVESTMENT PLAN (JET IP) FOR THE INITIAL<br />
PERIOD 2023-2027 | The Presidency Republic of South Africa | NDP 2030<br />
The JET-IP focus on electricity, new energy vehicles and green hydrogen (GH2) is a deliberate strategic<br />
decision, based on a clear understanding that as South Africa’s electricity sector decarbonises, there are<br />
significant gains to be made by unlocking growth in these sectors at the same time.<br />
greeneconomy/report recycle South Africa’s exports from “hard to abate” sectors and of ICE vehicles will be negatively affected by the<br />
proposed border tax adjustments of some of the country’s main trading partners, if accelerated mitigation<br />
measures in these sectors are not implemented. As the energy transition advances globally:<br />
- More complex linkages between sectors will develop, as zero-carbon electricity use replaces the use of fossil<br />
fuels in industry, transport and other sectors, and thus the benefits of an integrated energy policy approach,<br />
which incorporates energy policy closely with other key policy areas such as industrial policy are significant.<br />
- Technologies will become progressively cheaper through economies of scale and where policies mitigate investment risks and/or technological<br />
breakthroughs. When they pass below the cost levels at which such technologies become pervasive, the technologies are described as “disruptive”<br />
and are said to have passed “tipping points”. Sector coupling means that tipping points in different technologies reinforce each other.<br />
- Clean energy investments scale up most rapidly when they experience certainty about demand for their production. Security of demand mitigates<br />
investment risk.<br />
- Investments in existing storage technologies such as pumped storage; emerging technologies which include utility-scale batteries at all scales;<br />
thermal storage in concentrating solar power (CSP) plants and elsewhere; and other potential technologies such as GH2 will enable faster uptake of<br />
renewable electricity generation in electricity systems and will become more and more important as the electricity system is decarbonised.<br />
14
ENERGY<br />
ENERGY<br />
THE JUST ENERGY<br />
TRANSITION – what it should be…<br />
There has been a lot of press recently regarding the Just Energy Transition Partnership in South<br />
Africa with links to international funds to facilitate this transition – but what exactly is a “just” energy<br />
transition? First, we need to contextualise the problem and understand the solutions.<br />
BY CHRIS WHYTE, ACEN*<br />
Africa currently has a population of about 1.34-billion people,<br />
and this is expected to rise to almost 2.5-billion by 2050.<br />
Globally, there is a focus on understanding this dynamic<br />
regarding sustainability, and climate change is a key component<br />
of this focus. World leaders urge sustainability and achievement<br />
of the UN Sustainability Development Goals (SDGs). This vision<br />
and reality are somewhat different for Africa. Africa currently faces<br />
massive unemployment and poverty with its existing population.<br />
Some 650-million people on the continent currently have no access<br />
to electricity.<br />
The key focus here is energy, and the simple reality is that Africa<br />
will never be able to achieve the SDGs without energy. Everything<br />
is reliant on energy: access to reticulated water, agriculture, foodsecurity,<br />
agri-processing, manufacturing, transport, infrastructure,<br />
tourism, mining, education, health and just about any other sector<br />
you can name.<br />
To put into perspective, Africa relies on around 700 000GWh electrical<br />
16<br />
consumption capacity. South Africa, as one of 54 countries on the<br />
continent, supplies more than 30% of this. In 2018/19, South Africa<br />
sold 208 319GWH of electricity for consumption which made up<br />
close to 30% of the estimated 700 000GWh of electricity used in<br />
Africa in 2018. To put this into a global perspective, South Korea<br />
generated 530 000GWh at 0.33% the area of Africa and only 3.4%<br />
of Africa’s population. The size of Africa is often underestimated<br />
because of traditional Mercator projections on maps – the reality is<br />
that we can fit all of Europe, USA, China and India into Africa with<br />
space for many other countries. Africa is blessed with land and<br />
resources, enough to supply the whole world, and needs to capitalise<br />
on this but must follow a sustainable path. We have sunshine for solar,<br />
water for hydro and wind for renewable capacity and an abundance<br />
of biomass and waste that can be converted to energy.<br />
What we need to do as a continent, is avoid the expensive and<br />
unsustainable mistakes of the developed North and rather implement<br />
scaled, sustainable and viable energy generation. Transmission in<br />
traditional high-voltage lines is inefficient and the massive distances<br />
needed to transmit power across the vast mass of Africa simply does<br />
not make sense.<br />
The intense capital required for this also excludes normal people<br />
from benefitting from this abundance, so governments and global<br />
corporates control energy and drive the equality gap even further.<br />
The Gini index is a measure of the distribution of income across a<br />
population, and South Africa had the highest inequality in income<br />
distribution globally in 2021 with a Gini score of 63. This can be<br />
changed, and all the technology and applications are available to<br />
do this to ensure a just transition to energy access.<br />
The focus needs to be changed to small-scale systems tied into<br />
microgrids, where ordinary citizens can benefit from cheaper and<br />
more reliable electricity, but importantly also be direct beneficiaries<br />
of this (Power to the People!). Renewable and sustainable energy can<br />
be scaled from the household to the village to the city:<br />
• Scaled applications in solar energy can change the dynamic in<br />
Africa, reducing the reliance on poor service delivery from the<br />
public sector.<br />
• Hydropower can be delivered at microturbine level from as small<br />
as 1kW output without the need for billion-dollar hydroelectric<br />
schemes that displace communities, create cross-border conflict<br />
and destroy biodiversity and riverine ecology.<br />
• Vertical and horizontal wind turbines can work at the household<br />
or community level.<br />
• Waste organics can be scaled to provide gas or electricity.<br />
• Biomass can be grown or harvested to supply small-scale gasifiers,<br />
avoiding the need for deforestation and charcoal production.<br />
• The East African Rift Valley provides massive potential for clean<br />
geothermal energy, untapped to date.<br />
• Waste plastics (where there is no local circular market for<br />
recycling) can be converted to fuel for generators or gasified<br />
directly into electricity.<br />
• Water can be reticulated for household or irrigation use using<br />
ram-pumps that need no electricity.<br />
Africa is blessed with land<br />
and resources, enough to<br />
supply the whole world.<br />
17
ENERGY<br />
The focus needs to be changed<br />
to small-scale systems tied into<br />
microgrids, where ordinary<br />
citizens can benefit from cheaper<br />
and more reliable electricity.<br />
There literally is no need for massive hydro investments or fossil fuel<br />
extraction that impact the land and the air and destroy biodiversity<br />
and ecosystems. In South Africa, the biggest polluter by some margin<br />
is our own debt-ridden Eskom. The Mpumalanga Highveld region has<br />
12 coal-fired power stations, which have gained a reputation as being<br />
the most toxic and polluting group in the world.<br />
South Africa is the 12 th biggest emitter of sulphur, Nitrogen and<br />
carbon dioxide in the world. Most of this comes from our 80% energy<br />
dependence on coal and the US$8.94-billion concessional funding<br />
pledged to us at CoP26 in Glasgow is intended to wean us off this<br />
dependence. Not because we are a good investment destination,<br />
but rather because we are globally recognised for literally killing<br />
thousands of our own citizens every year from respiratory illnesses<br />
considering the above rankings.<br />
A just transition is not just about equitable economic distribution.<br />
It is also about environmental and social justice to achieve a healthy<br />
and safe South Africa for all our citizens. The remainder of Africa still<br />
needs to attain energy independence, and it is essential that we<br />
follow a just transition approach across the continent.<br />
*African Circular <strong>Economy</strong> Network (ACEN)<br />
18
WASTE<br />
Waste minimisation programme<br />
IMPROVING LIVELIHOODS in Limpopo<br />
Waste management, inadequate diversion and the depletion of landfill space remains a challenge<br />
in South Africa. However, there are opportunities to not only alleviate the waste but also create<br />
jobs and positively impact livelihoods.<br />
Invest in<br />
Industrial Efficiency<br />
• Long term sustainability through resource savings<br />
• Economic growth<br />
• Environmental compliance<br />
• Contributes to social development<br />
Services include:<br />
<strong>Green</strong> skills development<br />
National Cleaner<br />
Production Centre<br />
South Africa<br />
A national industrial<br />
support programme that<br />
partners with industry to<br />
drive the transition towards<br />
a green economy and<br />
save money.<br />
BY NCPC-SA<br />
A<br />
recent event hosted by the Limpopo Department of Economic<br />
Development, Environment and Tourism in collaboration<br />
with the National Cleaner Production Centre of South<br />
Africa (NCPC-SA) highlighted the impact made through a waste<br />
minimisation programme in the province over the past three years.<br />
Since taking off in 2019, the Industrial Symbiosis Programme or ISP<br />
as it is more commonly known has successfully diverted 49 518 tons of<br />
waste from landfills, saving 181 370 tons in CO 2 emissions and unlocked<br />
economic opportunities in the province.<br />
National programme manager, Victor Manavhela, says, “This event is<br />
evidence that we can transition to a waste-free society and use waste<br />
as a resource to change lives. We are looking to replicate this work in all<br />
the provinces in the next few years.”<br />
The ISP, facilitated by the NCPC-SA, has been a successful partnership<br />
project in many provinces that aims to reduce waste to landfills and<br />
encourage waste circularity or resource exchanges.<br />
NATIONAL PROGRAMME, LOCAL IMPACT<br />
A year after establishing the industrial symbiosis partnership,<br />
Dziphathutshedzo <strong>Green</strong> Surfacing and PWK Waste Management<br />
Recycling has already diverted 11 tons of waste from the landfill.<br />
Dziphathutshedzo <strong>Green</strong> Surfacing recycled HDPE plastic that<br />
was collected and stockpiled by PWK Waste Management and<br />
manufactured it into eco-friendly and durable paving bricks and<br />
stepping stones.<br />
This is just one of the 40 IS success stories that were celebrated at<br />
the Limpopo ISP impact and information-sharing workshop. The<br />
The NCPC-SA team: Victor Manavhela, Annah Mothapo and Matimba Makhani.<br />
We can transition to a waste-free<br />
society and use waste as a resource<br />
to change lives.<br />
Industry and sector knowledge sharing<br />
Company technical support<br />
Contact us for a free assessment<br />
www.ncpc.co.za<br />
ncpc@csir.co.za<br />
workshops demonstrated how Limpopo ISP assisted industry in the<br />
surrounding area to recover and redirect residual resources for reuse by<br />
employing IS principles.<br />
The ISP is a free facilitation service that promotes the exchange of<br />
one company’s residual resources (material, energy, water, waste,<br />
assets, logistics and expertise, etc) with another that can benefit from<br />
them.<br />
Including Limpopo, the NCPC-SA implements the ISP in Gauteng,<br />
KwaZulu-Natal, Mpumalanga and the Free State. The NCPC-SA is a<br />
national industry support programme managed by the Council for<br />
Scientific and Industrial Research on behalf of the Department of Trade,<br />
Industry and Competition.<br />
To find out more about the ISP and/or the work of the NCPC-SA,<br />
please visit www.ncpc.co.za or email ncpc@csir.co.za.<br />
THA 05-2023<br />
Funded by the dtic, hosted by the CSIR<br />
Victor Manavhela, NCPC-SA national programme manager at Limpopo ISP.<br />
21
ENERGY<br />
ENERGY<br />
It’s time for<br />
SOLAR<br />
TO SHINE<br />
<strong>Green</strong> <strong>Economy</strong> <strong>Journal</strong><br />
interviews the CEO of SAPVIA<br />
SAPVIA CEO, Dr Rethabile Melamu, believes that the wide deployment of solar PV and broader<br />
renewable energy technologies can support a resilient energy system in South Africa. Will the tax<br />
relief programme anchor our green economy transition? The <strong>Journal</strong> caught up with Dr Melamu,<br />
the illustrious leader at the coalface of it all.<br />
Please tell us about your first year as CEO of SAPVIA.<br />
It has been an incredible year. A year of immense growth, stretching<br />
and learning. I inherited a good and a growing brand, with a lean but<br />
supportive team and the Board. Leading a member-led organisation is<br />
unique and it is like nothing I’ve done before. It is rewarding to be of<br />
service, but is it not without its unique demands of attending to the<br />
vastly different needs of 500+ members.<br />
I hope to continue to meet and to add value to all members. This<br />
year has been challenging for all South Africans, but together with our<br />
members, we are providing an alternative and immensely sustainable<br />
solution to the loadshedding and energy security challenges. Overall,<br />
it is a privilege to work with and alongside those that are providing<br />
solutions to the most pressing challenges.<br />
Does government consult with SAPVIA for matters relating to the<br />
development, regulation and promotion of solar PV in South Africa?<br />
Most definitely, we have had good engagements with different spheres<br />
of government, from national, provincial and to the local level. For<br />
instance, we have supported the Department of Mineral Resources<br />
and Energy (DMRE) as well as the Department of Trade, Industry<br />
and Competition (the dtic) in the development of the South African<br />
Renewable Energy Masterplan (SAREM).<br />
22<br />
We have contributed to Eskom’s grid planning and access processes<br />
in partnership with our sister association, South African Wind Energy<br />
Association (SAWEA) and we enjoy a great relationship with the<br />
Independent Power Producers Office (IPPO).<br />
That said, we have called on the powers that be for more involvement<br />
in the decision-making that involves our sector and members. For<br />
instance, we would have valued engagement in the design of tax<br />
incentives for the solar PV sector. We have views on areas that needed<br />
to be prioritised.<br />
Please talk to us about policy certainty in this space.<br />
There is generally a commitment to the transition towards a lowcarbon<br />
energy mix. This is evident in government’s recent regulatory<br />
reforms that removed the need for independent power producers<br />
who develop private projects to hold a generation licence, which has<br />
been touted a good move. This aims to speed up the addition of new<br />
generation capacity to the grid. The results are beginning to show,<br />
with 0.5 GW of utility scale projects registered with the National Energy<br />
Regulator of South Africa (NERSA) in the first months of 2023.<br />
The Integrated Resource Plan is being updated to comprehensively<br />
address the current change and long-term planning. However, there<br />
is more to be done to effectively enable the roll-out of embedded<br />
generation projects and the development of grid infrastructure to<br />
enable uptake of new generation capacity, in particular renewable<br />
energy projects. That requires for Eskom and municipalities to<br />
create rules, regulations and tariffs. A clearer articulation of Just Energy<br />
Transition action as well as the envisaged role of the industry is needed.<br />
A nationwide wheeling framework for private projects will further<br />
enable ease of project developments.<br />
How will a rapid growth in solar installations affect the market?<br />
SAPVIA estimates that the installed solar PV capacity exceeded 1 GW<br />
for the first time in 2022. We have seen substantial growth in private<br />
projects registered with NERSA and not signed up. We are expecting<br />
sustained growth, especially in the private sector where investment in<br />
utility scale renewable energy projects both for direct consumption,<br />
i.e. behind the meter or embedded generation, and for wheeling,<br />
where generation and consumption are at two different sites.<br />
Dr Melamu, do you have any reservations about the rooftop solar<br />
PV tax incentives? If so, what are your concerns?<br />
The individual tax incentive has prioritised middle to high-income<br />
households who already have access to capital to invest in solar PV<br />
systems. This completely leaves out low-income households, who are<br />
not able to access instruments availed by financial institutions and<br />
other industry players. The fact that incentives cover modules alone<br />
while most households install hybrid systems (PV, inverter and battery<br />
system) is a surprise. The administrative requirements for accessing<br />
the tax incentive are confusing – mainly that only a certificate of<br />
compliance is required for accessing the incentive, which covers the<br />
part of the system that is not incentivised.<br />
SAPVIA has indicated that the waiting period for the installation<br />
of solar PV is increasing. Why is this?<br />
There is a shortage of skilled installers with adequate experience and<br />
training. Those reputable installers tend to be inundated. As such,<br />
SAPVIA is working with various partners such as the Energy and Water<br />
Sector Education Training Authority (EWSETA), the Small Enterprise<br />
Finance Agency (SEFA) and the Small Enterprise Development Agency<br />
(SEDA) to increase the pool of installers.<br />
Please talk to us about the importance of economies of scales<br />
and predictable demand for facilitating investments needed for<br />
the manufacture of solar PV installation components.<br />
This is mainly driven by increased demand for PV components,<br />
exacerbated by the frequent episodes of loadshedding. First, there<br />
needs to be an understanding of localisation potential, that’s why<br />
SAPVIA developed a study to assess opportunities along the solar PV<br />
THE RENEWABLE ENERGY TAX INCENTIVE<br />
The tax incentive available for businesses to promote renewable<br />
energy will have no thresholds on the size of the projects that<br />
qualify and the incentive will be available for two years to<br />
stimulate investment in the short term.<br />
Businesses can deduct 50% of the costs in the first year, 30%<br />
in the second and 20% in the third for qualifying investments in<br />
wind, concentrated solar, hydropower below 30 MW, biomass and<br />
PV projects above 1 MW. Investors in PV projects below 1 MW can<br />
deduct 100% of the cost in the first year. Under the expanded<br />
incentive, businesses will be able to claim a 125% deduction in<br />
the first year for all renewable energy projects with no thresholds<br />
on generation capacity.<br />
The incentive will only be available for investments brought into<br />
use for the first time between 1 March 2023 and 28 February 2025.<br />
SOLAR TAX BREAKS<br />
In the 2023 Budget Speech, a R9-billion tax relief programme<br />
was introduced to support the clean energy transition. While<br />
R4-billion is for households that install solar panels, R5-billion<br />
will go to companies through an expansion of the renewable<br />
energy incentive. The tax incentive available for businesses will be<br />
temporarily expanded to encourage rapid private investment to<br />
alleviate the energy crisis. The current incentive allows businesses<br />
to deduct the costs of qualifying investments over a one- or threeyear<br />
period.<br />
Government’s proposed rooftop solar incentive for households<br />
means that individuals will be able to receive a tax rebate to the<br />
value of 25% of the cost of any new and unused solar PV panels.<br />
To qualify, the solar panels must be purchased and installed at a<br />
private residence and a certificate of compliance for the installation<br />
must be issued from 1 March 2023 to 29 February 2024.<br />
Solar-related loans for small and medium enterprises on a 20%<br />
first-loss basis were confirmed by government.<br />
There is a shortage of skilled<br />
installers with adequate<br />
experience and training.<br />
23
ENERGY<br />
value chain. With this better understood and with recommendation<br />
from the advanced SAREM, there will be clarity on which aspect of the<br />
value chain localisation should be pursued in the immediate, medium<br />
and long term.<br />
What stands in the way of the domestic market penetration of key<br />
solar PV components?<br />
There are a list of designated materials and components that should<br />
be procured in South Africa, the extent to which that is implemented,<br />
especially for private projects, is unclear.<br />
Why does SAPVIA advocate for the incentivisation of domestic<br />
systems to contribute to demand-side management efforts?<br />
It reduces the national electricity demand during peak times, but it also<br />
shields end users against the impact of loadshedding. Lastly, energy<br />
efficiency and adoption of roof-top solar PV is the quickest and the<br />
most cost-effective way to address current energy shortages.<br />
What is your personal wish for the future of the solar industry?<br />
My personal wish is properly aligned with SAPVIA’s: for solar PV to be<br />
a significant and reliable contributor to the South African electricity<br />
mix towards an energy secure country. Also, my wish is for the sector to<br />
achieve policy and market alignment. Lastly, for solar PV to significantly<br />
contribute to decarbonising the energy mix environmental and for the<br />
sector to contribute towards economic development imperatives in<br />
the country.<br />
It is a privilege<br />
to work with and<br />
alongside those<br />
that are providing<br />
solutions to the most<br />
pressing challenges.<br />
BRIEF BIO<br />
A chemical and environmental engineer by training, Dr Melamu<br />
is renowned for her global expertise in the green economy and<br />
energy sectors. She has leveraged both the theoretical and<br />
practical to harness innovative smart technologies to mitigate<br />
the impact of climate change in society with a dedicated focus<br />
on African sustainable development.<br />
Get 10% Off Energy Meter Purchases<br />
Use Code: Acu<strong>Green</strong>3<br />
Valid From 1 April 2023 - 31 May 2023<br />
Terms and Conditions Apply<br />
READ REPORT<br />
THOUGHT [ECO]NOMY<br />
greeneconomy/report recycle<br />
INSIGHTS INTO THE SOLAR PHOTOVOLTAIC MANUFACTURING VALUE CHAIN IN SOUTH<br />
AFRICA | Trade & Industrial Policies (TIPS) | WWF South Africa | Kate Rivett-Carnac | [August 2022]<br />
The push for more electricity generation, particularly renewable energy generation, is showing a<br />
significant increase in Solar PV projects across the country. This in turn drives demand for the components<br />
and services.<br />
While South African renewable energy stakeholders focus on building local capabilities, there are a range<br />
of geopolitical and macroeconomic challenges beyond domestic borders that are likely to impact the work<br />
and potential. This presents challenges and opportunities. For manufacturers supplying private Solar PV<br />
projects that are outside of REI4P, there appears to be considerable opportunity for expansion, not just in<br />
South Africa but also into the rest of the continent (and, indeed, South African firms are already doing so).<br />
Plans for future solar PV manufacturing in South Africa will need to consider global shifts and future<br />
volatility in renewable energy markets in addition to local conditions and industry potential.<br />
24
Go green with<br />
Business Partners Ltd<br />
finance.<br />
It’s time to harness renewable<br />
energy, go off grid, harvest<br />
rainwater, and ultimately reduce<br />
your business’ running costs.<br />
Business Finance<br />
Our <strong>Green</strong> Buildings Finance Programme provides<br />
up to 100% property finance ranging from R500 000 to<br />
R50 million to established entrepreneurs with a viable<br />
business who want to invest in green buildings and<br />
achieve green building certification. We finance the<br />
purchase, construction, and/or retrofit of buildings if<br />
their designs are certified under an eligible green<br />
building certification.<br />
www.businesspartners.co.za<br />
Property Finance<br />
Property Joint<br />
Venture Fund<br />
Extra benefits:<br />
Mentorship and<br />
Technical Assistance<br />
<strong>Green</strong> Buildings<br />
Finance<br />
The cost of green certification is covered by a nonrefundable<br />
grant of up to R150 000. We offer a rebate<br />
of up to 40 percent of the capital expenditure needed<br />
to green your building and achieve green buildings<br />
certified status.<br />
Small businesses<br />
urged to<br />
ECONOMY<br />
GO SOLAR<br />
If anything, the 2023 Budget Speech revealed that devising a targeted plan to solve South Africa’s<br />
ongoing energy crisis remains the government’s top priority. The immediate future will see a<br />
concerted and collective focus on bringing together the public and private sectors in a bid to fuel<br />
the clean-energy transition and end loadshedding.<br />
BY BUSINESS PARTNERS LIMITED<br />
For small businesses looking to ride this wave on the path to<br />
post-pandemic recovery, the key is to go solar. This is the<br />
opinion of Jeremy Lang, chief investment officer at independent<br />
small- and medium-sized enterprise (SME) financier, Business<br />
Partners Limited. Prior to the Budget Speech, Lang aired hopes<br />
that “large-scale interventions” would be on the cards for the small<br />
business sector in the form of much-needed relief measures.<br />
In light of the almost single-minded focus on boosting embedded<br />
generation efforts through various fiscal measures and policy reforms,<br />
this year’s speech delivered little in the way of SME-specific relief. It did,<br />
however, propose several measures that speak to the urgent need for<br />
government to address the resounding impact that rolling blackouts<br />
have had on small businesses.<br />
On this, Lang suggests that South African small businesses review the<br />
viability of installing solar energy systems to power their operations.<br />
“Not only will this help to alleviate pressure on the national grid,<br />
but it will also ensure business continuity – a vital factor given that<br />
loadshedding will likely persist for a long while longer. This could also<br />
bring good news for small businesses in the formal sector, who will<br />
realise gains in the form of a 125% deduction in tax in the first year for<br />
all renewable energy projects,” says Lang.<br />
Further state-led interventions aimed at benefiting the SME sector<br />
include the government’s proposal to provide solar-related loans for<br />
SMEs on a 20% first-loss basis. “What this means essentially is that<br />
going forward, small businesses will be able to secure loans from<br />
finance providers where the National Treasury will assume 20% of the<br />
initial loss. This will help to mitigate the total risk on behalf of lenders<br />
and hopefully make these loans more accessible to a wider base,”<br />
explains Lang.<br />
For small businesses looking to<br />
ride this wave on the path to post-pandemic<br />
recovery, the key is to go solar.<br />
This development will likely form part of the proposed Energy<br />
Bounce Back Scheme, set to launch in April 2023 – an extension of<br />
the Bounce Back scheme initiated during the pandemic years to assist<br />
SMEs in recovering Covid-19-related losses. On the effectiveness of this<br />
particular measure, Lang remains hopeful that the new solar-directed<br />
slant of the scheme will attract more uptake than its predecessor<br />
which saw only R140-million in loans being approved and R77-million<br />
disbursed of the proposed R15-billion.<br />
“This is where the cooperation of state entities, governmental<br />
departments, private sector players and financiers will play a crucial role<br />
Jeremy Lang, Chief<br />
Investment Officer,<br />
Business Partners.<br />
in reaching out to the thousands of small businesses in need of relief,<br />
facilitating a streamlined loan application process and deploying<br />
funds efficiently,” says Lang.<br />
Overall, government’s R5-billion investment into the expansion of<br />
the renewable energy tax incentive is a welcomed development, in<br />
tandem with the decision not to increase fuel levies.<br />
Additionally, this year’s extended Budget Review revealed that<br />
the Department of Small Business Development has been allocated<br />
R2.8-billion as part of a fund to support 12 000 townships and rural<br />
enterprises. The measures on which these funds will be spent remain<br />
unclear, but as Lang asserts, “a meaningful impact on informal<br />
SMEs and the economy can be made by funding a concerted effort<br />
to formalise the many township and rural businesses that exist in<br />
South Africa.<br />
“In pushing the agenda to formalise these businesses, government<br />
will achieve the dual purpose of ‘providing more support and<br />
regulatory protection to small businesses, while expanding the<br />
tax base.”<br />
On this Lang believes the temporary diversion of focus to a more<br />
consolidated effort to solve the energy crisis is well-warranted and<br />
that a “solution that includes and benefits small businesses is a<br />
solution that benefits all South Africans”.<br />
As he concludes: “In light of the changes that are afoot in South<br />
Africa’s tax regime, small business owners would do well to seek the<br />
advice and guidance of tax professionals and remain informed, via<br />
the available knowledge bases, to understand how they can make the<br />
most of the tax-related benefits on offer for the foreseeable future,<br />
this is where further relief will stem from.”<br />
011 713 6600<br />
enquiries@businesspartners.co.za<br />
www.businesspartners.co.za<br />
27
ENERGY<br />
ENERGY<br />
The future of<br />
ONSHORE WIND<br />
TURBINE SOURCING<br />
Kearney Analysis<br />
Figure 1. Turbine manufacturers are reporting sharp drops in their margins.<br />
Three factors are triggering OEMs’ troubled performance. First,<br />
the historically strong negotiating power of large utilities has been<br />
upholding strong pressure to reduce the levelised cost of energy<br />
(LCOE). Here, their relentless focus on capex reduction and a limited<br />
view on the full potential of project optimisation decreased the<br />
margin of turbine sales to a bare minimum. Second, OEMs are facing<br />
protracted costs of quality issues caused by the high pressure on fast<br />
innovation cycles. Third, the current supply chain issues and sharp<br />
In times of uncertain supply,<br />
setting up an even closer supplier<br />
relationship – a strategic partnership – can<br />
be very attractive for both parties.<br />
rises in raw material costs cause severe troubles. Contracts with<br />
long lead times and often limited contractual inflation clauses make<br />
it difficult for OEMs to fully pass rising costs on to their customers,<br />
pushing the companies into the red.<br />
CHANGES LIE AHEAD<br />
In an oligopolistic market structure, these losses are unsustainable<br />
and limit investments in additional capacity. In a market with<br />
fast-growing demand, this puts the sufficiency of wind turbine<br />
supply in the short- to medium-term future at a heavy risk. Market<br />
fundamentals will shift the negotiating power from the demand<br />
side to turbines suppliers – a process that has already started.<br />
This will impact costs and ultimately capacity access for utilities and<br />
project developers:<br />
• Suppliers will gain more pricing power, driving turbine prices up<br />
beyond the already elevated level of more than 30% year-on-year.<br />
• Suppliers will select their preferred customers, and ill-prepared<br />
customers will find it difficult to place orders at all.<br />
This new paradigm will require a strategic shift in wind turbine sourcing.<br />
CLOSER COLLABORATION<br />
In traditional sourcing approaches, turbines are procured project by<br />
project in individual tenders, sometimes enhanced with bundling of<br />
multiple projects to make use of the economy of scale. This approach<br />
is best used in cases of very large, complex projects where the sheer<br />
size of the projects is enough to entice the OEM to collaborate closer.<br />
However, it fails to unleash the full potential to create value over the<br />
complete pipeline.<br />
Framework agreements create value by standardising procurement<br />
processes across projects and by capturing scale advantages for<br />
large pipelines. Best-in-class framework agreements contractually<br />
stipulate a higher degree of collaboration by the OEM – and in exchange<br />
offer the commitment of projects to be built with the participating<br />
OEM’s turbines.<br />
With bold decarbonisation targets, the demand for renewable energy will skyrocket with an<br />
estimated 2 400GW of new capacity installed by 2030. The strong pressure to deliver against<br />
these targets will escalate demand-side competition.<br />
BY KEARNEY CONSULTING*<br />
At the same time, original equipment manufacturers (OEMs)<br />
for turbines are in financial trouble despite having full order<br />
books and receiving record-level order intakes (see figure 1).<br />
GE Renewables reported a sharp drop in their EBIT margin, from<br />
-5% in the past few years to a devastating -26% in 2022 Q3. Siemens<br />
Gamesa recently announced a layoff of roughly 2 900 employees,<br />
and Nordex and Enercon have been facing financial troubles over<br />
the past few years. Even Vestas, the only profitable large western<br />
OEM up to now, has reported a -11.9% EBIT margin year-to-date.<br />
28<br />
29
ENERGY<br />
ENERGY<br />
In times of uncertain supply, setting up an even closer supplier<br />
relationship – a strategic partnership – can be very attractive for both<br />
parties (see figure 2). The utility company commits to equipping a large<br />
share of its pipeline with wind turbines from one OEM. In return, the<br />
utility receives preferential access to turbines, extended transparency<br />
on costs and technical specifications, and most importantly, the OEM’s<br />
support in the development phase to optimise the project.<br />
Although there is no silver bullet and the contracting method<br />
will need to fit the unique needs of the business, leading industry<br />
players with broad pipelines have been turning to more collaborative<br />
approaches. The goal is to establish successful long-term partnerships<br />
to shift the dynamic to a more balanced and mutually-beneficial relation.<br />
HOW TO WIN<br />
Setting up a successful strategic partnership is not straightforward and<br />
requires sound preparation. In our experience, there are three main<br />
elements to sustainable win-win outcomes:<br />
Securing a reliable and resilient project delivery. Enhancing the<br />
reliability and resiliency of project delivery requires trust and extensive<br />
two-way transparency between the utility and the OEM. Greater<br />
visibility on the utility’s pipeline lengthens the planning horizon for<br />
the OEM, which can consequently profit from enhanced operational<br />
and strategic optimisation leeway. The utility, on the other hand,<br />
can count on timely turbine deliveries and execute projects better<br />
on time and on budget. In addition, extended transparency on<br />
OEM-proprietary technical data, especially for upcoming turbine<br />
types, can benefit both parties for joint first projects with the new<br />
turbine generation.<br />
Collaboratively optimising projects to enlarge the value pool.<br />
By jointly optimising projects in early development phases, the OEM<br />
and the utility can unlock value pools that would not be achievable<br />
for the utility alone. Tackling the full envelope of cost and yield can<br />
reduce LCOE by up to 30%. Without fair sharing of the additionally<br />
generated value, the OEM would not optimise projects to their<br />
full potential, but only to the point it is profitable for the OEM (for<br />
example, up to a certain threshold value, such as target LCOE).<br />
Important elements of joint optimisation include:<br />
• Comprehensive optimisation of turbine selection and layout<br />
in iterative workshops across the OEM’s and utility’s turbine,<br />
electrical, and civil engineering. Configuration decisions and<br />
power curve customisation are made on a component level,<br />
based on net present value and LCOE impact.<br />
• Transparent, bottom-up planning of operations and maintenance<br />
costs over asset lifetime, leveraging OEM data and best practices.<br />
• Lifetime operations and maintenance cost and yield optimisation,<br />
enabled by access to anonymised turbine data beyond the own<br />
fleet, such as historical failure rates.<br />
Going beyond traditional partnerships. Best-in-class partnerships<br />
go beyond joint LCOE reduction and supply security – pushing the<br />
potential to create value even further.<br />
Successful extended partnerships in the market include:<br />
• Joint M&A activity. Combined market knowledge to identify<br />
opportunities and exclusivity for a first call in M&A opportunities.<br />
• Asset and liability pooling. Pooling assets and liabilities across<br />
projects to enable portfolio-level benefits.<br />
• Joint market-entry strategies. Entering new markets with<br />
combined power and aligned interests.<br />
• Equity stakes. Perfectly aligning long-term incentives, such as<br />
with a joint venture or acquisition of an equity stake in a partner.<br />
THE WAY FORWARD<br />
So how can you find out if closer OEM collaboration and a<br />
partnership approach are the right strategies for you? We suggest<br />
starting with three steps:<br />
• Review your project development approach and identify<br />
the most pressing issues.<br />
• Assess the robustness of your current procurement strategy<br />
and your collaboration model with OEMs.<br />
• Analyse your portfolio fit for a partnership and quantify the<br />
potential joint value creation.<br />
*Article written by Hanjo Arms, partner, Oskar Schmidt, principal and Jan Weber, consultant.<br />
Framework agreements create<br />
value by standardising procurement<br />
processes across projects and by capturing<br />
scale advantages for large pipelines.<br />
Figure 2. Utilities and turbine suppliers can create win-win partnerships.<br />
30<br />
31
ENERGY<br />
ENERGY<br />
Wind energy’s<br />
LEADING ROLE<br />
in South Africa’s<br />
ENERGY ACTION PLAN<br />
SAWEA believes that for the country’s energy security challenges to be addressed, a holistic view of<br />
available renewable energy sources should be considered. Not only does this provide consumers<br />
and businesses with options; it will also enable a fertile economic environment.<br />
BY SAWEA<br />
Following the National Energy Crisis Committee’s six-month<br />
progress update on implementation of the Energy Action<br />
Plan (EAP), released earlier this year, the South African Wind<br />
Energy Association (SAWEA) has commended the government’s<br />
transparency and inclusion of the public on its progress towards<br />
addressing energy security, and has welcomed the changes.<br />
However, it has advised that there are a number of key focus areas<br />
that require additional intervention and swift action within the five<br />
objectives outlined in the plan, with a clearer scope of wind energy<br />
integration, mainly infrastructure investment in wind projects.<br />
Wind, as one of the most cost-effective renewable energy sources,<br />
has significantly demonstrated its positive economic contribution<br />
with a total procurement by wind IPPs during construction and<br />
operations to date amounting to over R9-billion.<br />
32<br />
Accelerated procurement through the<br />
REIPPP programmes and increased<br />
private offtakes is what is needed to<br />
resolve the energy crisis in the country.<br />
Fundamentally, the Energy Action Plan is a tool that will hold<br />
government accountable to ensure thorough deployment of the<br />
identified objectives to ensure an energy secure future that includes<br />
the integration of wind energy.<br />
Unpacking these objectives and what the expectations for the<br />
wind sector are, SAWEA’s chief communications officer, Morongoa<br />
The wind sector is a driving<br />
force of economic development<br />
in South Africa.<br />
Ramaboa, explains in relation to the EAP’s overall long-term objective<br />
to achieve energy security, “We support the various interventions<br />
and those that are in the pipeline. More so, we welcome the fact<br />
that renewable energy is being embraced by government through<br />
the Cabinet’s endorsement of the Just Energy Transition Investment<br />
Plan, as well as the prioritisation of solar, wind, gas and storage<br />
projects at nine of Eskom’s power stations. We believe that this will<br />
ultimately support our urgent need for energy security, effectively<br />
reducing loadshedding and the resulting detrimental impact on<br />
our green economy.”<br />
Furthermore, the Plan’s approach to accelerating private investment<br />
in generation capacity, through the removal of the licensing requirement<br />
for generation projects of any size, the reduction of timeframes for<br />
regulatory approvals, as well as the establishment of a “One Stop<br />
Shop” for energy projects through Invest SA, are interventions that<br />
SAWEA welcomes.<br />
However, SAWEA also values public procurement that allows a<br />
baseline of investment and creates stability in a growing industry,<br />
noting that there is room for both markets to ensure that energy<br />
security is achieved across the entire value chain in both private and<br />
public spheres. “The ideal is to create an environment that encourages<br />
and accelerates investment injection into the economy, removing the<br />
pressure from public fiscus, and to stimulate the private sector to invest<br />
in their own energy supply and furthermore create new industries,”<br />
adds Ramaboa.<br />
SAWEA believes that the reduction of timeframes for regulatory<br />
approvals based on the streamlining of environmental processes will<br />
significantly accelerate the development of large-scale transmission<br />
infrastructure. And, while it acknowledges that the state utility has<br />
conceptualised various programmes that will allow for the procurement<br />
of additional power when the grid is significantly constrained, it<br />
expects government to maintain consistency in as far as the capacity<br />
procurement is concerned.<br />
While a step in the right direction, the Association warns that<br />
accelerated procurement through the trusted REIPPP programmes<br />
and increased private offtakes is what is needed to resolve the energy<br />
crisis in the country. SAWEA reiterates that a clearly-defined queueing<br />
system needs to be urgently implemented with a balanced view<br />
between publicly and privately procured electricity. It additionally<br />
advocates that Ministerial determination for over 18 000MW of new<br />
generation capacity from wind, solar and battery storage be prioritised<br />
since it was published in August last year.<br />
The EAP’s intention to enable businesses and households to invest<br />
in rooftop solar is viewed as a good start to providing reprieve<br />
from the adverse effects of interrupted electricity. This requires the<br />
development of a net billing framework for municipalities to enable<br />
customers to feed electricity from rooftop solar installations onto the<br />
grid by the utility.<br />
“To complement this move, SAWEA is looking at investment<br />
opportunities to integrate wind energy for the use of businesses and<br />
households to supplement the use of PV panels, especially in areas that<br />
prone to strong wind conditions,” continues Ramaboa.<br />
SAWEA has welcomed the establishment of a National Energy Crisis<br />
Committee (NECOM) as it demonstrates government’s willingness to<br />
collaborate with a wide variety of expertise across different spectrums<br />
within the energy mix. The Minister of Electricity’s role of coordination<br />
and working with the Minister of Mineral Resources and Energy to<br />
provide the solutions to transform the energy sector certainly inspire<br />
confidence in the industry and amongst investors.<br />
With the current energy insecurity, there’s a significant need for<br />
South Africa to have an enabling policy environment that stimulates<br />
economic growth and reliable energy supply, as well as one that<br />
builds new human capital to meet the needs of a growing renewable<br />
energy economy.<br />
The ideal is to create an<br />
environment that encourages and<br />
accelerates investment injection<br />
into the economy.<br />
According to the Integrated Resource Plan 2019, the South African<br />
power system includes 3.7GW from renewable energy, namely wind,<br />
solar PV and concentrating solar power (CSP). This is viewed as an under<br />
estimation given the movement in private offtake market. SAWEA has<br />
noticed a trend of an increase in private offtakers sourcing renewable<br />
energy, typically wind and solar PV. We believe that this will drive<br />
a competitive market able to provide new generation capacity in a<br />
cost-effective manner. This attests that the wind sector is a driving force<br />
of economic development in South Africa.<br />
“To realise our vision of becoming a thriving commercial wind<br />
power industry that supports government in fulfilling its mandate<br />
to secure energy for South Africa, we cannot afford to have a repeat<br />
of the latest failed public procurement bid window (BW6), which has<br />
resulted in the loss of investment and market confidence. Hence,<br />
the current system for allocating grid access remains a pressure<br />
point as it marginalises capable and willing organisations that can<br />
contribute significantly to the supply of electricity. So, although<br />
additional determinations are welcome, this cannot be in the absence<br />
of a solution to increased grid capacity and to ensure fair access for<br />
additional projects that are currently inactive,” concludes Niveshen<br />
Govender, CEO of SAWEA.<br />
33
DECARBONISATION<br />
DECARBONISATION<br />
CLIMATE IMPACT IMPERATIVES:<br />
resilience and decarbonisation<br />
Resilience and decarbonisation are two sides of the same coin for companies as<br />
they evolve their strategies toward climate change, according to SRK associate<br />
partner and principal scientist Philippa Burmeister.<br />
BY SRK CONSULTING<br />
decarbonisation is about limiting the company’s<br />
impact on the environment, resilience is about<br />
“While<br />
being prepared for the environment’s impact on<br />
the company’s operations,” says Burmeister. “Every responsible<br />
organisation needs to be addressing both these imperatives – not<br />
just one or the other.”<br />
DECARBONISING THROUGH EFFICIENCY<br />
Decarbonisation continues to be a strategic priority for mining<br />
companies, with targets and achievements being reported in greater<br />
detail as part of integrated reporting standards and requirements.<br />
Among the more well-publicised of these efforts are new and relatively<br />
unproven technologies that mines are still testing – such us hydrogen<br />
trucks. However, SRK Consulting managing director, Andrew van Zyl,<br />
points out that many improvements in mines’ carbon footprints have<br />
been achieved over the years – but referred to simply as efficiencies.<br />
“There are many costs in mining that are proxies for carbon footprint<br />
– such as diesel consumption in mining trucks or energy consumed<br />
in crushing and milling phases,” explains Van Zyl. “As engineering<br />
consultants, we assist clients to reduce fuel consumption through<br />
optimal design and slope of haul roads – all contributing to the<br />
decarbonisation effort.<br />
“The application of novel carbon-reducing technologies in mining<br />
projects remains important, but it does have implications for new<br />
projects’ bankability. If there is insufficient evidence of how well or<br />
at what cost a key item of equipment will work, for instance, then it<br />
will undermine the process of proving a reserve and establishing the<br />
project’s profitability.”<br />
Observed<br />
data is critical to<br />
understanding<br />
both the<br />
current and<br />
future climate.<br />
Philippa Burmeister.<br />
THE OTHER SIDE OF THE COIN<br />
Van Zyl indicates that there is a strong imperative in mining and other<br />
sectors to contribute to reducing carbon emissions, even though the<br />
climate change trend is well under way.<br />
“As good corporate citizens, it is incumbent on all stakeholders to<br />
commit to a lower carbon future even if the positive results are many<br />
decades in the future,” he says. It is critical that, while still undertaking<br />
decarbonisation initiatives, organisations need to simultaneously<br />
build resilience to prevent potential climatic changes affecting their<br />
operations. In the mining industry, the relevance of climate change is<br />
direct and explicit in tailings dam management.<br />
IMPACT ON TAILINGS DAMS<br />
“The Global Industry Standards on Tailings Management (GISTM) which<br />
the mining sector has committed to, has made it mandatory that mines<br />
build climate change into their forecasts and strategies,” says Burmeister.<br />
At a recent SRK global climate action workshop, an SRK tailings<br />
expert made it clear that climate change was already evident and the<br />
GISTM now made it mandatory that tailings dam owners develop and<br />
apply adaptation strategies in their design and management of these<br />
structures. The workshop also looked at the various tools available<br />
for adapting to climate change and developing more resilience.<br />
“While a key focus was on tailings dams, these tools are applicable<br />
to all types of adaptation – to try and understand what the future is<br />
going to look like,” Burmeister adds. “They include models to predict<br />
how climate patterns will change, so that companies can start adapting<br />
their plans to suit changed conditions.”<br />
The same tools also have value for industry and agriculture – as<br />
they all need to adapt to potential climate extremes, increased<br />
temperatures and changes in rainfall patterns.<br />
FINDING THE RIGHT MODELS<br />
Burmeister highlights that there is a vast amount of data available<br />
on which models can be developed, but it is difficult to know which<br />
models and data are most relevant to the site in question.<br />
“An aspect that received extensive discussion at the workshop was<br />
developing our own in-house capacity in climate change resilience<br />
– a key area of which is the range of models available for climate<br />
forecasting,” she adds. “Each model has its own advantages and<br />
disadvantages, and we have to advise clients on which ones best suit<br />
their location – and how to correct bias using observed data.”<br />
An important aim of this work is to generate a selection of<br />
scenarios based on data which comes with a relatively high level<br />
of confidence. Building on SRK’s existing skills in this field, the<br />
process is working towards every SRK project team having solid<br />
insights into how the climate will change for the sites at which their<br />
projects are based. This allows the engineers and scientists in each<br />
team to reflect on the impact such changes are likely to have for the<br />
activities of the project covered by their specific disciplines.<br />
OBSERVABLE DATA<br />
“If future rainfall figures can be to some extent quantified, then it<br />
gives engineers a basis on which to assess possible impacts and<br />
responses in the mine’s daily operations,” she says.<br />
She emphasised the importance of confidence in data as a vital<br />
starting point to building better climate change resilience. While<br />
models are useful, they need to be tested and “trained” with the<br />
READ REPORT<br />
THOUGHT [ECO]NOMY<br />
use of observable data from the site itself. This meant that mining,<br />
industrial and agriculture sector players need to implement effective<br />
monitoring systems for climate indicators such as temperature,<br />
rainfall, humidity, evaporation and wind speeds.<br />
“This on-site meteorological monitoring – when conducted<br />
accurately – makes it possible to select the most appropriate models<br />
for a site, and to improve the performance of those models over<br />
time. Data confidence is the single biggest hurdle that we need to<br />
overcome, and observed data is critical to understanding both the<br />
current and future climate.”<br />
RISK FROM EXTREMES<br />
Climate change resilience is not just about understanding how<br />
average temperatures and rainfall will change but also how historical<br />
climatic patterns and extremes will change. Indeed, climate change<br />
is expected to have a greater impact on extremes – meaning that<br />
there may be even more rain in already rainy months or spikes in<br />
temperature in the hottest times of year. It is these extremes that<br />
pose some of the greatest risks to operations.<br />
While this has implications for mining, it will similarly require<br />
consideration from other industries that may need to carefully<br />
consider the operating levels on equipment or storm water designs.<br />
Potentially the greatest impact will be felt in agriculture, where<br />
even a small shift in the timing of a dry or wet period could have a<br />
devastating effect on crops.<br />
“The focus will remain on decarbonisation as companies align with<br />
growing expectations from investors, funders and other stakeholders,”<br />
concludes van Zyl. “However, climate change adaptation to build<br />
resilience will allow organisations to prevent disruptions, damage<br />
and losses associated with current and future climate changes.”<br />
THE FOURTH SOUTH AFRICAN CLIMATE CHANGE TRACKING REPORT | The Department of Forestry,<br />
Fisheries and the Environment | [2021]<br />
South Africa is undertaking a variety of actions to respond to the causes and effects of climate change.<br />
South Africa’s response, through adaptation and mitigation actions, is guided by the National Climate<br />
Response Policy (2011) and the National Climate Change Adaptation Strategy, and with international<br />
greeneconomy/report recycle commitments as stipulated in the updated Nationally Determined Contributions (NDC).<br />
Consideration needs to be made to come up with smart indicators to be tracked overtime to inform policy<br />
and decision-making. The development of relevant and strategic climate indicators requires taking a step<br />
back from the siloed approach to to focus on the system approach that integrates environmental, social and<br />
economic dimensions. The environment is intricately entwined within the wider societal and economic systems<br />
which cannot and should not be treated as separate entities.<br />
In recognising this complex interconnectedness, the approach to developing indicators to track South<br />
Africa’s progress on the national response to climate change takes a systemic approach. This holds the promise of capturing much of the systemic<br />
impact of climate change and of response measures. A systemic perspective is necessary to gain a deep insight into climate change and climate change<br />
impacts and is important for mobilising strategic responses to climate change.<br />
09 69 123 141 165<br />
centres<br />
Climatic<br />
realities<br />
The<br />
energy<br />
transition<br />
Water and<br />
climate<br />
change<br />
Social<br />
vulnerability<br />
Sustainable<br />
urban<br />
34<br />
35
ENERGY<br />
We are morally obliged to demand<br />
ENVIRONMENTALLY SOUND<br />
BATTERIES to store RENEWABLE ENERGY<br />
The energy crisis in South Africa has fundamentally changed how most people see electricity,<br />
and it took a leap in the right direction when Finance Minister Enoch Godongwana announced<br />
incentives for South Africans to invest in solar energy.<br />
BY REVOV*<br />
There’s always a tinge of irony that what should be an<br />
environmentally conscious decision is forced by the inability<br />
of the national power utility to produce enough electricity<br />
and volatile fuel prices which make running internal combustion<br />
generators exceedingly expensive – especially during prolonged<br />
periods of loadshedding at higher stages.<br />
Be that as it may, some would argue that it doesn’t matter how<br />
one arrives at the correct destination, what matters is that they have<br />
arrived. So, let’s talk solar. Very simply, as everyone reading this will<br />
understand, solar panels convert sunlight into power that can be<br />
used in homes and businesses.<br />
However, anyone who watches the Eskom updates daily on power<br />
usage will see that renewable energy is not fixed. There are periods<br />
where more is produced, and periods where less is produced. This is<br />
the nature of the environment. Either there is good sunlight or it is<br />
overcast, either there is plenty of wind or there is not.<br />
It’s here where many who have not yet seen the light – pun intended<br />
– miss the point, and also why there comes a time in every national<br />
dialogue that batteries and large battery installations come into the<br />
spotlight. This is because batteries, configured correctly in a renewable<br />
energy installation, can store the power being produced to provide a<br />
constant, reliable and predictable flow of electricity.<br />
Understanding this is the first step of an environmentally responsible<br />
citizen. The second step is in appreciating that the battery you use<br />
affects whether you are making the most of the clean power being<br />
produced. Ask yourself: are you even aware of the carbon footprint of<br />
the batteries stacked in your garage or warehouse.<br />
Lithium iron phosphate batteries have proven, time and again, to be<br />
the best chemistry for battery storage. Lithium iron phosphate is safe,<br />
reliable, effective and enjoys a much longer lifespan than other battery<br />
types such as gel or lead acid. However, not all lithium iron phosphate<br />
batteries are the same.<br />
Some, which are called LiFePO4, are made – at the outset – for storage<br />
solutions. Minerals are mined, beneficiated and configured into batteries<br />
for the storage market. This market competes with the electric vehicle<br />
(EV) market, where increasing demand results in increasing prices.<br />
Even worse, a new class is emerging. Class B storage cells, which<br />
manufacturers and white labelers are now calling “cost effective”, with a<br />
reduced warranty and cycle life. Watch out.<br />
The batteries made for the EV market are engineered differently,<br />
to withstand harsh operating conditions such as higher temperatures<br />
and charge and discharge rates. Every EV needs to change its battery<br />
when the weight is no longer justified by the output. However, within<br />
these batteries that are removed are some perfectly sound individual<br />
battery cells.<br />
Instead of throwing the whole battery into a landfill somewhere and<br />
poisoning the planet, environmentally conscious engineers take these<br />
good battery cells and configure them into storage batteries, which<br />
we call 2nd LiFe. These batteries have comparable lifespans to LiFePO4<br />
batteries, with the added benefit of being able to withstand harsh<br />
operating conditions.<br />
Understanding this is crucial: the batteries are not secondhand –<br />
they didn’t exist until now. Rather, their individual cells are made up<br />
of the good cells that were retrieved from EV batteries and repurposed<br />
into storage battery units.<br />
It’s here where the homeowner and business owner can drive<br />
positive change and a crucial environmentally conscious mindset<br />
in South Africa’s revolution towards renewable energy: even if it<br />
has been forced on them. The carbon cost of 2nd LiFe batteries has<br />
already been paid. These batteries are as near to carbon neutral as<br />
one can find, whereas the LiFePO4 batteries come at a significant<br />
carbon cost that includes mining, shipping, beneficiation and<br />
complex logistics all the way to installations near you.<br />
Either there is good sunlight or<br />
it is overcast, either there is<br />
plenty of wind or there is not.<br />
The 2nd LiFe battery cells paid their carbon dues in their first life<br />
in EVs. Make no mistake, LiFePO4 batteries are still far better and<br />
cleaner options than the archaic chemistry called lead acid. If you’re<br />
undecided, always choose lithium over lead.<br />
Customers can drive a mindset shift. It’s about time more people<br />
look around and appreciate the immense damage we have caused to<br />
the environment. Extreme weather events and entire ecosystems are<br />
at risk. This means it is not only admirable but non-negotiable that we<br />
put the planet front and centre in all investment decisions – especially<br />
those that harness clean energy.<br />
*Written by Lance Dickerson, MD, REVOV.<br />
37
ENERGY<br />
ENERGY<br />
Bringing POWER back to LiFe<br />
<strong>Green</strong> <strong>Economy</strong> <strong>Journal</strong> interviews CEO of REVOV<br />
REVOV was founded by Lance Dickerson, former CTO of MTN, Ghana, and Felix von Bormann,<br />
former engineering consultant for Sprint, USA. Both highly-skilled engineers bring a combined<br />
50 years of experience to power up the energy storage space.<br />
2nd-LiFe batteries are not<br />
recycled batteries, and they are not<br />
second-hand batteries. This is an<br />
important distinction.<br />
that the very technology required to support sustainable electricity<br />
storage and mobility is extractive to the planet and comes with its<br />
own carbon cost. This is why 2nd-LiFe batteries are a compelling<br />
solution for those genuinely interested in “going green” and making<br />
decisions that benefit the planet.<br />
The carbon footprint of a 2nd-LiFe battery is as close to zero as<br />
possible for a storage battery – precisely because it is utilising the<br />
good cells of EV batteries and not relying on newly-mined and<br />
beneficiated components. Besides some new cabling and shipping,<br />
2nd-LiFe batteries are without a doubt the most carbon-friendly<br />
storage solution.<br />
THE SECOND-LIFE EV BATTERY MARKET<br />
The second-life EV battery market is one of great importance<br />
for many reasons. These include adding value to future<br />
energy infrastructure, creating a circular economy for electric<br />
vehicle (EV) batteries, and providing a lower levelied cost of<br />
storage compared to new batteries. The new IDTechEx report,<br />
“Second-life Electric Vehicle Batteries 2023-2033”, highlights<br />
advancements in the second-life industry. IDTechEx forecasts<br />
that the second-life EV battery market will reach US$7-billion in<br />
value by 2033.<br />
The bulk of EVs currently use Li-ion battery chemistries, and once<br />
their eight-to-10-year initial lifetime has expired, they are usually<br />
unsuitable for future EV use. Battery second use (B2U) extends the<br />
lifetime of the EV battery. Depending on the State of Health (SOH)<br />
and residual capacity of the battery, second-life batteries can be<br />
further utilised in less demanding applications, such as stationary<br />
energy storage and lower-power electromobility applications.<br />
Stakeholders must make key decisions regarding the end-oflife<br />
management of retired EV batteries. Second-life batteries<br />
created through a remanufacturing process offer benefits of<br />
maximising battery value and extending battery life, whereas<br />
recycling results in batteries losing this value prematurely. If<br />
remanufacturing is chosen, second-life BESS developers must make<br />
further decisions to ensure that the creation of their second-life<br />
systems is techno-economically feasible. Remanufacturers must<br />
consider several process operations, such as battery procurement,<br />
depth of disassembly, testing/grading, and reassembly procedures.<br />
Please tell us about REVOV. What do you specialise in?<br />
REVOV is an energy storage solutions company that sells lithium<br />
iron phosphate batteries either as single units or in powerful<br />
systems of multiple batteries, headquartered in Johannesburg with<br />
branches in Cape Town and KwaZulu-Natal. REVOV is known for,<br />
and specialises in, 2nd-LiFe lithium iron phosphate batteries for the<br />
B2B market in South Africa and Southern African region. REVOV has<br />
become renowned for its 1st and 2nd-LiFe batteries which provide<br />
a compelling case to bring lithium-iron performance to the market<br />
at a significantly reduced cost. Rand for rand, REVOV is the go-to for<br />
value for money.<br />
What are second-life batteries? Why recycle batteries?<br />
This needs to be clarified at the start: 2nd-LiFe batteries are not<br />
recycled batteries, and they are not second-hand batteries. This is an<br />
important distinction. REVOV does not sell recycled or second-hand<br />
batteries. REVOV sells 2nd-LiFe batteries which are batteries that are<br />
built from repurposed cells of electric vehicle (EV) batteries. In other<br />
words, when an EV battery is replaced, instead of being discarded,<br />
it is taken apart by specialised teams, and individual cells which are<br />
still in perfect working order are removed. In REVOV’s case, we have a<br />
partnership with a world-leading EV battery company in China.<br />
The individual cells taken from the EV battery are then configured<br />
and built into 2nd-LiFe batteries with new casings, parts and battery<br />
management systems. These 2nd-LiFe batteries have a comparable<br />
lifespan to 1st LiFe batteries, and they can withstand harsher conditions<br />
because they are made from the good cells of EV batteries, which are<br />
designed for high temperatures as well as charge and discharge rates.<br />
What are the main environmental impacts associated with electric<br />
vehicle batteries?<br />
From the extraction of the raw materials to cross-country logistics<br />
to shipping and then beneficiation, all the way through to delivery,<br />
batteries come at a significant carbon cost. It is perhaps a great irony <br />
What are the advantages of REVOV’s 2nd-LiFe batteries?<br />
Comparable performance to 1st LiFe batteries at a significantly<br />
reduced cost because we are not affected by lithium supply chain<br />
shortages. The company has full local technical support and design<br />
and engineering teams, this is crucial. REVOV batteries have support<br />
that is local.<br />
IN POWER<br />
Lance Dickerson, CEO of REVOV, in 2016<br />
spent extensive time in the telecoms<br />
industry, spending seven years in West<br />
Africa working for MTN. It was during<br />
this tenure that the the impact of a<br />
failing electrical infrastructure was felt<br />
while trying to keep the MTN networks<br />
up and running. Dickerson investigated<br />
and implemented various types of<br />
backup and redundant electrical systems,<br />
however, the technology at the time was<br />
not sufficiently advanced to be able to<br />
give a reliable and cost-effective solution. On his return to South<br />
Africa in 2011, using the skills developed in the telecoms sector,<br />
Dickerson decided to focus on battery backup systems, in an effort<br />
to reduce reliability on failing grid infrastructure and the cost of<br />
diesel-based backup systems. It was at this point REVOV Batteries<br />
was born.<br />
2nd-LiFe batteries are built from<br />
repurposed cells of electric<br />
vehicle batteries.<br />
38<br />
39
WOOD<br />
FORESTRY:<br />
a greener more<br />
sustainable future<br />
Forestry South Africa<br />
The fact that the forestry industry operates in and depends significantly on natural and human<br />
resources, means that to ensure the financial sustainability of its businesses, those businesses<br />
also must ensure their social and environmental sustainability.<br />
BY MICHAEL PETER, FORESTRY SA*<br />
Forestry is fortunate in that it is a sector which can generate<br />
its own green, renewable, recyclable and CO2-sequestering<br />
feedstock and this can be done in perpetuity, if done in a<br />
sustainable manner. As such, the South African forestry sector is<br />
truly embedded in the green economy and is the very epitome of a<br />
circular economy industry.<br />
Our sector has an excellent track record in terms of environmental<br />
conservation. An example of this is that on average only 70% of<br />
forestry estates are under timber crops while the remaining 30% of the<br />
estate is set aside primarily for the management and conservation of<br />
biodiversity and to protect the country’s scarce water resources.<br />
Independent assessments on the state of indigenous forests and<br />
grasslands show that plantation forestry estates almost invariably,<br />
have much higher levels of biodiversity than any other land uses,<br />
including in many cases, even when compared to formally protected<br />
nature reserves. This is on account of the strong management and<br />
stewardship practices which are implemented by timber growers in<br />
South Africa.<br />
Forestry products are the<br />
products of the future.<br />
While there are pervasive myths surrounding the industry’s water<br />
use, the forestry sector only uses around 5% of the total water used by<br />
the irrigated agricultural sector alone, but it returns 27% of agricultural<br />
GDP and about the same percentage of jobs. Add to this the major<br />
open areas which the industry maintains around water courses and<br />
riparian zones, and the picture of the sector’s actual water use and<br />
associated environmental practices changes dramatically.<br />
When one considers further that plantations are not irrigated and so<br />
they cost the taxpayer next to nothing compared to other water users,<br />
as they do not require dams, canals, pipelines, irrigation schemes or<br />
purification plants and it becomes difficult for an informed person to<br />
conclude that plantations are bad for the country’s water resources in<br />
terms of the relative economic, social and environmental returns which<br />
the plantation industry’s water produces for the country.<br />
If that isn’t enough to convince most well-informed people, then<br />
one should also consider that compared to most other agricultural<br />
practices, the forestry industry tills the soil and applies fertilisers and<br />
pesticides (the biggest causes of pollution of South Africa’s water<br />
resources) at a small fraction of the rate and frequency of that of<br />
most other crops, most of which employ these practices every year.<br />
So, water quality coming out of plantations is better both in terms of<br />
siltation and the presence of pollutants compared to almost every<br />
other land use in the country.<br />
In terms of social sustainability, our industry is found in rural areas<br />
where some of the worst poverty exists. To have a sector that provides<br />
employment and a myriad of other social returns through Corporate<br />
Social Investment (CSI) initiatives that fund education, food security,<br />
health care, infrastructure, enterprise creation and social upliftment,<br />
etc, is fantastic and something we are very proud of.<br />
Besides the massive CSI programmes, there are innumerable<br />
examples of small and medium-scale timber growers and processors,<br />
who have opted to continue to use manual inputs in processes, which<br />
could be performed far more efficiently through mechanisation and<br />
automation, simply because they wish to continue to support the<br />
communities in which their businesses operate.<br />
As a country with one of the highest unemployment rates in the<br />
world, we should be putting in place mechanisms to incentivise<br />
businesses to keep putting people ahead of profits, as without such<br />
support, many businesses may not be able to sustain themselves<br />
in financial terms, unless they embrace further mechanisation<br />
and automation.<br />
In a world where economic recovery is on everyone’s lips, the focus<br />
needs to be on the activities that can be truly called green. These will<br />
not only drive a more sustainable economic recovery, but also limit our<br />
effect on the planet. Sectors, like ours, that place a strong focus on the<br />
sustainable use of a renewable natural resource, whose end-products<br />
are reusable and recyclable, will provide a blueprint for a green, circular<br />
economy going forward.<br />
Globally, people are looking for solutions that will reduce, if not<br />
eradicate, our reliance on the extraction of finite resources from our<br />
planet. They want a renewable feedstock that can be replenished<br />
and repurposed into a myriad of end-products, some which are<br />
already replacing everyday non-renewables like plastics and other<br />
fossil fuel derivatives.<br />
Forestry products are the products of the future. Be it paper<br />
packaging, wood-based fabrics, bio-plastics, timber-based buildings or<br />
futuristic green fuels, these forest products capture carbon while they<br />
grow and store it while they are in use.<br />
The rapid adoption by the rest of the world of forest products as<br />
preferred alternatives to fossil-based products, is proof positive that<br />
the entire world sees the value in the circular forestry industry and<br />
foresters are proud to be such a key part of the solution to the world’s<br />
most critical challenges.<br />
*Michael Peter is an executive director at Forestry SA.<br />
41
THOUGHT LEADERSHIP<br />
THOUGHT LEADERSHIP<br />
QUO VADIS<br />
Infrastructure Development<br />
Infrastructure performance, or lack thereof, has become a central topic in news and social media<br />
reports of late. Calls persist from economists, captains of industry and the construction sector for<br />
the state to increase its capital expenditure allocation to infrastructure development, claiming<br />
that this plays a pivotal role in economic development.<br />
BY LLEWELLYN VAN WYK, B. ARCH; MSC (APPLIED), URBAN ANALYST<br />
The author notes that despite the speed with which solar and wind<br />
power plants could be built, the grid itself does not have the capacity<br />
to distribute that power. The power lines he notes, are running at full<br />
capacity. This absence of transmission capacity has resulted in the<br />
slots for a further 3.2GW of wind capacity not being allocated begging<br />
the question of how South Africa can progress with upcoming bid<br />
windows 6.5 and 7, as well as the 6GW of renewable generation and<br />
1GW of battery storage that South Africa must procure each year3.<br />
To further exacerbate this constraint, the sites for optimum solar<br />
power plants are poorly serviced by transmission lines. However, the<br />
delivery of solar power plants is a bit easier since the resource is linear<br />
throughout most of South Africa and can be utilised locally.<br />
Media reports are also highlighting the interdependencies within<br />
the infrastructure ecosystem. For example, seven municipalities in<br />
KwaZulu-Natal face crippling water cuts due to loadshedding with<br />
reportedly hundreds and thousands of local residents likely to be<br />
without running water as electricity-powered engines are unable to<br />
pump water because of loadshedding 4 .<br />
The time required to execute<br />
essential infrastructure projects<br />
to upgrade Eskom’s power grid<br />
would result, it is claimed, in<br />
another 10 years of loadshedding.<br />
The connection is quite stark: power supply cut-offs can last for up to<br />
six hours per day, and when the power is restored, it can take at least<br />
an hour for the supply mechanisms, both in the bulk and reticulation<br />
networks, to return to full functionality. In the interim, the little<br />
remaining storage empties out and there is no replenishment resulting<br />
in supply interruptions to consumers. The ramifications go beyond this<br />
however, as power-cuts impact on water-treatment plants as well so<br />
that water cannot be pumped because it is not treated.<br />
South Africans can be forgiven for blaming government for this<br />
failure, and there is good reason to do so. After all, government itself<br />
recognises its failures in this regard. However, it would be a mistake to<br />
equate infrastructure failure as an exclusively third world problem.<br />
New Zealand<br />
Auckland’s beaches have been overwhelmed this summer by faecal<br />
bacteria after the recent bout of heavy rain 5 . The cause of this has<br />
been put down to wastewater overflows that occur when sewage<br />
spills out from gully traps, manholes, engineered overflow points or<br />
Regrettably, I have not seen evidence of sustained economic<br />
development arising out of increased state capital over the 20<br />
years and more of research into this topic. Despite decades of<br />
greater infrastructure investment allocations, infrastructure quality<br />
continues to deteriorate.<br />
BACKGROUND<br />
South Africa<br />
In South Africa, Eskom is probably the cause of most of the focus on<br />
infrastructure and its failure. This is not surprising: the country faces<br />
one of its worst energy crises since 2008. It is estimated that the failure<br />
of energy infrastructure cost South Africa around R560-billion in 2022<br />
excluding costs such as lost opportunities, cost to businesses and<br />
households and other loadshedding mitigation measures 1 .<br />
However, the focus for increased expenditure is in and of itself not<br />
enough to solve the problem. For example, and in the case of Eskom,<br />
the time required to execute essential infrastructure projects to<br />
upgrade Eskom’s power grid would result, it is claimed, in another 10<br />
years of loadshedding 2 .<br />
The funding for infrastructure<br />
is not getting translated<br />
to actual projects.<br />
42<br />
43
THOUGHT LEADERSHIP<br />
THOUGHT LEADERSHIP<br />
pump stations. From there it flows into backyards or waterways or<br />
the sea.<br />
The floods highlight another systemic failure – the ability to<br />
survive major weather events. Suzanne Wilkinson, professor of<br />
construction management at Massey University, writes that “after<br />
years of neglect, Auckland’s roads and water systems were simply<br />
unable to cope with the unprecedented rainfall and flooding seen<br />
in January” 6 . Just before the floods it was revealed that Wellington<br />
had not had fluoride in its water for months. Furthermore, some<br />
of the pipes in Wellington that carry wastewater away are literally<br />
120 years old, but because they cannot be seen, they have not been<br />
invested in properly 7 .<br />
The United States<br />
The United States of America – still the world’s richest country – is<br />
also not immune from a failing infrastructure. The American Society<br />
of Civil Engineers published a report card in March 2021, assessing<br />
the overall infrastructure condition as a C-, stating that there was a<br />
$2.59-trillion investment gap. The US has never received a higher<br />
grade than C- since the report card was launched in 1998 – some<br />
25 years ago 8 . As Joseph Kane from the Brookings Institute notes,<br />
Americans are familiar with its infrastructure challenge “from clogged<br />
roads to unsafe pipes to limited broadband access 9 .”<br />
POSSIBLE CAUSES OF FAILURE<br />
The possible causes of infrastructure failure and consequently the<br />
remedial actions identified for South Africa are many, although the<br />
same culprits appear consistently in international reports.<br />
The most cited one is under-investment despite government<br />
increasing its infrastructure investment budget. In a headline titled,<br />
“Construction industry encouraged by infrastructure development<br />
progress”, it is noted that President Cyril Ramaphosa announced in<br />
February 2023 that “by January, projects worth R232-billion were<br />
under construction and projects worth nearly R4-billion had been<br />
completed 10 .” The article goes on to cite the president as stating, “This<br />
investment will substantially benefit the construction industry and<br />
enable large-scale job creation, skills development and poverty relief.”<br />
This is not much different from the announcement by the<br />
then Minister of Finance, Tito Mboweni, back in February 2021,<br />
that R93.1-billion had been earmarked for economic regulation<br />
and infrastructure from consolidated government expenditure of<br />
R2.02-trillion each year over the medium term 11 . This announcement<br />
also recognised that much of the country’s infrastructure needed<br />
repair or replacement and that government had committed to a<br />
R791.2-billion infrastructure drive to address this.<br />
However, investment spending remains below the levels that<br />
preceded the pandemic, and 2020 marked the third consecutive year<br />
of decline. Yet there is a flip side to this coin: in 2021 National Treasury<br />
noted that fiscal reserves were insufficient [the emphasis is mine] to<br />
meet infrastructure development needs 12 .<br />
This message is also not new: In February 2005, then President Mbeki<br />
issued a directive that “we must make a determined effort to educate<br />
our population that our country does not have the resources [the<br />
emphasis is mine] immediately to meet, simultaneously, all the urgent<br />
needs of our people, especially the poor 13 .”<br />
Under-investment and inadequate investment are not new.<br />
In a landmark ruling, the High Court in South Africa ruled that the<br />
Makana Local Municipality be dissolved for failing to promote a<br />
healthy and sustainable environment for the community 14 . The crisis in<br />
Makana had been in the making for almost a decade, when, in 2001,<br />
it became apparent that the municipality had cashflow problems,<br />
and by 2013 it became clear the municipality was in financial distress.<br />
Despite a political intervention in 2014, the situation never improved:<br />
financial vulnerability, failure to maintain critical infrastructure and a<br />
dysfunctional billing system continued. The delivery of basic services,<br />
such as clean water, gradually ground to a complete halt.<br />
Makana Municipality is also not unique: in 2017/18 only 18 of<br />
South Africa’s 2<strong>57</strong> municipalities received a clean audit from the<br />
Auditor-General 15 .<br />
Deteriorating infrastructure has a long history. Don Ross, who at the<br />
time of writing was a professor of economics at the University of Cape<br />
Town and University of Alabama, Birmingham, wrote in 2007 that<br />
South Africa had allowed its infrastructure to seriously deteriorate<br />
during two decades of under-investment in its maintenance and<br />
expansion. That would take us back to 1987!<br />
In a piece titled On getting our money’s worth from infrastructure<br />
spending, he notes that government had at last committed funds<br />
on a level sufficient to reverse the neglect [the emphasis is mine] 16 . He<br />
adds that then President Mbeki had made repeated public remarks<br />
on how massive new infrastructure investment was the cornerstone<br />
of the government’s poverty alleviation campaign, and then Finance<br />
Minister, Trevor Manuel, attached specific numbers to this commitment,<br />
totalling some R121.8-billion.<br />
Government also set certain objectives to this commitment, one of<br />
which was to ensure that infrastructure was adequate to allow South<br />
Africa’s economic growth to keep pace with its potential. Professor Ross<br />
says that at previous investment levels this was not true for the road<br />
network, rail network, energy sector or ports.<br />
However, Professor Ross goes on to record how the funding for<br />
infrastructure is not getting translated to actual projects. At the time<br />
of writing, four provinces had spent less than 75% of their budget due<br />
to capacity constraints. In addition, he argues that there were serious<br />
problems in the awarding and management of procurement tenders.<br />
Of particular interest to this piece, is that he argues then that strategic<br />
planning had been relatively absent from infrastructure development<br />
implementation in South Africa for about 20 years.<br />
Some of the solutions for solving the energy crisis in South Africa<br />
include, as one author has argued, the need for deep change [the<br />
emphasis is mine], citing political and leadership changes at the<br />
departments of mineral resources and energy and public enterprises as<br />
part of the required changes 17 .<br />
In 2021, President Cyril Ramaphosa, acknowledged the lack of<br />
technical skills and project management capacity as one of the main<br />
obstacles to South Africa's infrastructure investment 18 . State-owned<br />
companies attribute contractions in investment to, among other,<br />
Covid-19-related restrictions in the construction sector, long-standing<br />
project delays and credit rating downgrades 19 . Numerous calls are<br />
made for increased investment, with the South African Institute for<br />
Consulting Engineers (SAICE) calling for an improvement from 13.7%<br />
of GDP as it was in 2020 to at least 30% by 2030 20 .”<br />
REFERENCES<br />
1 Vermeulen, J. 2023. Big problem with Eskom’s grid – South Africa faces 10 more years of power cuts.<br />
2 Ibid.<br />
3 Ibid.<br />
4 Dayimani, M., 2022. “Durban among several KZN areas facing water crisis as load shedding downs infrastructure.”<br />
5 Palmer, S. 2022. “Auckland beaches overwhelmed by faecal bacteria after heavy rain.”<br />
6 Wilkinson, S. 2023. “Flood warning: NZ’s critical infrastructure is too important to fail – greater resilience is urgently needed. In The Conversation, February 13, 2023.<br />
7 Venuto, D. 2022. “The front page: floods, wastewater overflow and missing fluoride: what will it take to fix NZ water?” - NZ Herald.<br />
8 McFarland, M. 2021. “2021: When infrastructure got its due.” In CNN Business.<br />
9 Kane, J. 2019. “Aging and in need of attention: America’s infrastructure and its 17-million workers.” In Brookings Institute, April 16, 2019.<br />
10 Cokayne, R., 2023. “Construction industry encouraged by infrastructure development progress.”<br />
11 Bulbulia, T., 2021. “Government commits to improving infrastructure spending.”<br />
12 Bulbulia, T., 2021. “Government commits to improving infrastructure spending.”<br />
13 Ross, D., 2007. “On getting our money’s worth from Infrastructure Spending”. Retrieved from: http://www.sibita.co.za/<br />
14 Kotze, J., 2020. “Landmark court ruling highlights crisis in SA’s cities and towns.<br />
15 Kotze, J., 2020. “Landmark court ruling highlights crisis in SA’s cities and towns.“<br />
16 Ross, D. 2007. “On getting our money’s worth from Infrastructure Spending”. Retrieved from: http://www.sibita.co.za/<br />
17 Ibid.<br />
18 Ibid.<br />
19 Bulbulia, T., 2021. “Government commits to improving infrastructure spending.<br />
20 Cokayne, R., 2023. “Construction industry encouraged by infrastructure development progress.”<br />
OTHER REMEDIES<br />
• Reducing habitual underspending of infrastructure budgets<br />
by public service providers.<br />
• Introduction of revised procurement regulations to minimise<br />
recurring revenue management failures.<br />
• Sensitising government infrastructure departments and stateowned<br />
companies to the importance of economic and social<br />
infrastructure and the negative consequences of infrastructure<br />
neglect when renewal or replacement is delayed.<br />
• Teaching decision-makers and their support teams the importance<br />
of maintenance and lifecycle planning.<br />
• Encouraging decision-makers to enhance capacity within their<br />
departments by highlighting the role of the civil engineer<br />
in service delivery through infrastructural planning, design,<br />
construction, operation and maintenance.<br />
• Strategic coordination at the level of local projects across<br />
infrastructure sectors (roads, power, hydro, housing, etc) with<br />
respect to kinds of objectives.<br />
CONCLUSION<br />
Popular news articles and social media are hardly a source that can<br />
be used for developing major theories. Nonetheless, they do offer an<br />
immediate snapshot in time of infrastructure failures and possible<br />
causes. But can it really be that in all these country’s facing infrastructure<br />
challenges, under-investment, under-spending, lack of awareness,<br />
poor project management and corruption, among others, is the cause?<br />
To unpack this further, more in-depth studies need to be reviewed.<br />
For the next think-piece, I will analyse studies and other peer-reviewed<br />
research to determine whether there is substantiated evidence from<br />
which a theory for infrastructure failure can be developed.<br />
44<br />
45
DQS<br />
Academy<br />
DQS Academy<br />
Courses<br />
VIRTUAL TRAININGS APRIL 2023<br />
Early bird Discount 2.5% for payment 7 days before commencement date<br />
Based on the same customer focused service excellence<br />
approach that we operate within our certification division,<br />
DQS Academy is an accredited training provider that<br />
offers training to suit a variety of needs in a range of ISO<br />
standards.<br />
Choose from a range of short courses at varying<br />
competencies in Safety, Health, Environment and<br />
Quality as related to ISO 45001, ISO 14001 and ISO 9001<br />
as essentials for a business, SHE and Environmental<br />
management to other short courses facilitated at a<br />
Awareness/ Facilitation/<br />
Implementation/ Auditing<br />
ISO 9001:2015 Quality Management<br />
ISO 14001:2015 Environmental Management<br />
ISO 45001 Occupational Health And Safety<br />
ISO 22000:2018 Food Safety Management<br />
ISO 31000/ ISO 31010 Enterprise Risk Management<br />
ISO 50001 Energy Management<br />
ISO 55001 Asset Management<br />
ISO 22301 Business Continuity Management<br />
FSSC 22000 Food Safety System Certification<br />
ISO 39001 Road Traffic Safety Management<br />
ISO 37001 Anti Bribery Management<br />
ISO 27001 Information Security Management<br />
ISO 22716 (GMP) Good Manufacturing Practice<br />
ISO 28001 Supply Chain Security<br />
Ethical Trade Auditing<br />
and many more...<br />
Various eLearning trainings<br />
including, GRI, ESG &<br />
AccountAbility's: AA1000<br />
courses.<br />
professional level related to ISO standards in IT Risk, Risk<br />
Management, Business Continuity Management, Food<br />
Safety and Energy Management, as well as other key<br />
business sector standards.<br />
Our seasoned and experienced trainers will provide<br />
you with value added tuition across a range of business<br />
focused ISO standards preparing you at either at an<br />
introductory overview, implementation or internal audit<br />
level of competence to be able to usefully apply an ISO<br />
standard within your business operation.<br />
Specialised Risk Assessment &<br />
Analysis Modules<br />
Asset Management Principles and Applications<br />
FMECA/ Failure Mode and Effects Criticality Analysis<br />
HIRA/ Hazard Identification and Risk Assessment<br />
SWIFT/ Structured What If Techniques<br />
HAZOP/ Hazard and Operability Study<br />
Bow T ie Risk Assessment/ Analysis<br />
Baseline Risk Assessment<br />
Hazard Identification<br />
HACCP<br />
and many more ...<br />
Phone:<br />
+27 (0) 11 787 0102<br />
Email:<br />
academy.sa@dqs.de<br />
www.dqsacademy.co.za<br />
ISO 14001:2015 Awareness 1 day R1 904 excl. VAT 03 Apr 2023<br />
ISO 14001:2015<br />
Implementation<br />
ISO 50001 Energy<br />
Management<br />
3 days R4 914 excl. VAT 04 - 06 Apr 2023<br />
5 days R17 250 excl. VAT 17 - 21 Apr 2023<br />
ISO 14001:2015 Lead Auditor 5 days R8 <strong>57</strong>5 excl. VAT 17 - 21 Apr 2023<br />
Integrated Management<br />
Systems (IMS) Combo<br />
5 days R9 950 excl. VAT 17 - 21 Apr 2023<br />
Core Tools Training 3 days R7 950 excl. VAT 24 - 26 Apr 2023<br />
Root Cause Anaysis 3 days R5 990 excl. VAT 24 - 26 Apr 2023<br />
CLASSROOM TRAINING<br />
MINIMUM 8 DELEGATES REQUIRED<br />
ISO 31000 Risk Management 4 days R6 990 excl. VAT 03 - 06 Apr 2023<br />
IMS Awareness and<br />
Implementation<br />
3 days R7 020 excl. VAT 11 - 14 Apr 2023<br />
IMS Internal Auditor 5 days R8 550 excl. VAT<br />
Occupational Certificate:<br />
Occupational Health & Safety<br />
Practitoner NQF Level 5<br />
18<br />
months<br />
www.dqsacademy.co.za<br />
academy.sa@dqs.de<br />
+27 (0) 11 787 0060<br />
R45 653 excl. VAT<br />
21 - 24 Mar<br />
2023<br />
Starting 23 Mar<br />
2024<br />
For a full list of our courses, feel free to download our training schedule below.<br />
Simply<br />
leveraging<br />
Quality.
ENQUIRIES<br />
Contact Alexis Knipe: alexis@greeneconomy.media<br />
www.greeneconomy.media