With South Africa’s state electricity utility in dire financial straits and straining to meet demand, the government has reverted to courting independent renewable energy producers to help power the continent’s most industrialized economy.
President Cyril Ramaphosa, his Energy Minister Jeff Radebe and the Treasury have all recently heralded solar and wind-powered plants as the answer to meeting South Africa’s future electricity demands, citing falling costs and environmental considerations. The government also needs private investors to help fund new infrastructure: Eskom Holdings SOC Ltd., which generates about 95 percent of the nation’s power, can’t afford to maintain its aging coal-fired plants, never mind build new ones, and the Treasury has no cash to spare.
Renewable energy companies have reason to be skeptical. South Africa initiated one of the world’s most successful renewable-power programs starting in 2011, which garnered more than 200 billion rand ($14.4 billion) in investment from 112 producers. But projects were stalled for almost three years during ex-President Jacob Zuma’s rule as he and Eskom officials pushed to build nuclear plants, a deal that was tainted by corruption allegations and was shelved when Zuma was forced to step down a year ago.
President Cyril Ramaphosa, his Energy Minister Jeff Radebe and the Treasury have all recently heralded solar and wind-powered plants as the answer to meeting South Africa’s future electricity demands, citing falling costs and environmental considerations. The government also needs private investors to help fund new infrastructure: Eskom Holdings SOC Ltd., which generates about 95 percent of the nation’s power, can’t afford to maintain its aging coal-fired plants, never mind build new ones, and the Treasury has no cash to spare.
Renewable energy companies have reason to be skeptical. South Africa initiated one of the world’s most successful renewable-power programs starting in 2011, which garnered more than 200 billion rand ($14.4 billion) in investment from 112 producers. But projects were stalled for almost three years during ex-President Jacob Zuma’s rule as he and Eskom officials pushed to build nuclear plants, a deal that was tainted by corruption allegations and was shelved when Zuma was forced to step down a year ago.
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“They’re putting things right,’’ said Mike Rossouw, an independent energy adviser. “The renewables outlook is getting better and better.’’
Read more on how the Zuma administration derailed renewable energy.
Eskom’s operational and financial woes stem from years of mismanagement and massive cost overruns on two new coal-fired power stations that should have been finished in 2015 but are running years behind schedule. The government now plans to split the utility, which produces three-quarters of its power from coal, into generation, transmission and distribution units in a bid to get it back on track. The move should make it easier for the renewable energy plants to supply the national grid.
That’s imperative because financiers are becoming increasingly reluctant to fund coal-fired projects, amid a global move toward more environmentally friendly forms of energy, according to Radebe. The shift will be aided by improvements to batteries and other technological advances, he said.
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