Signing and gazetting of Section 34 a welcome step towards energy resilience

We welcome the signing and gazetting of the Section 34 Ministerial Determinations by the Minister of Mineral Resources and Energy, Gwede Mantashe, today (25 September 2020) as this opens the way for the procurement of 11 813 MW of new electricity capacity in line with the IRP 2019 and paves the way for the more energy security in South Africa and the Western Cape.

We have been calling for the Minister to take this important step in opening up the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) bid window 5, the Gas Independent Power Producer programme (GasIPP), and energy storage procurement.

We now call on the Minister to maintain the urgency required to ensure procurement and power purchase agreements are finalised to bring these projects onto the grid, and we look forward to the Minister providing more clarity on when and how municipalities could also participate as purchasers of electricity where appropriate and not only Eskom, as has been the historical precedent.

We note that the gazette indicates that the procurement programmes shall “target connection to the grid for the new generation capacity as soon as reasonably possible”. This is important as the Risk Mitigation Independent Power Procurement Programme procurement (RMIPPPP) of 2000MW is unlikely to sufficiently bridge the supply gap due to ongoing constraints experienced by Eskom both in maintenance and decommissioning.

In addition, we note that the determination allows for deviations from the timetable set out in the IRP to the extent necessary taking into account all relevant factors including prevailing energy security risks, the time required for efficient procurement and the required construction timelines for new generation capacity facility. Given the CSIR projections of a significant capacity gap and that renewable energy and gas construction lead times are relatively short (18-24 months), these technologies offer the quickest path to mitigating losses to the economy due to load shedding (already estimated at R160 billion for 2020 to date) and should therefore be prioritised.

Additionally, investment in this green infrastructure, in line with post-Covid-19 recovery opportunities, are estimated to provide R40 billion of investment per year to the economy  in South Africa.

This investment is in line with our strategic objective of growing the green economy in the Western Cape . The REIPPP bid window 5 and subsequent bid windows would provide a pipeline of projects that would support development of the local supply chain and would not only support green infrastructure and green industrialisation, but also contribute to energy security, job creation and economic growth in the Western Cape.

In fact, I visited the Perdekraal East Wind Farm this week, which is a great example of how private sector investment in renewable energy infrastructure not only contribute to power supply  but can also create jobs and grow the economy in the Western Cape.

And so, we will continue to do everything we can to support businesses to participate in the growing green energy sector and to become more energy resilient in the Western Cape.