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Green Economy Journal Issue 57

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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?


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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 />

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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 />

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Glenda Kulp<br />

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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 />

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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


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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


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