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South Africa: Renewables Rising, Coal Still King

AfricaFocus Bulletin
January 21, 2014 (140121)
(Reposted from sources cited below)

Editor's Note

"South Africa [is] the world's sixth-largest coal exporter, seventh-largest coal producer, and thirteenth-largest CO2 emitter, with per-capita emissions twice the global average. Ninety-four percent of the country's electricity comes from coal ... The country's abundant solar and wind resources offer a promising renewable energy alternative. But entrenched political interests connected to the ruling party are fighting to expand coal's role in the national economy." - Adam Welz, "The Future of Coal"

Globally, growth in coal demand is slowing, according to an International Energy Agency (IEA) report released in December ( / direct URL: It is projected to grow at an average rate of 2.3% per year through 2018, compared with 3.4% per year between 2007 and 2012. "Like it or not, coal is here to stay for a long time to come," IEA Executive Director Maria van der Hoeven said. ... "But it is equally important to emphasise that coal in its current form is simply unsustainable."

In South Africa, coal is still dominant in energy planning, although renewable energy projects are advancing rapidly, with new government support for independent power producers and new interest from investors.

This AfricaFocus Bulletin contains several background articles on these trends, both from advocates of renewable energy and from the investment analysis firm Frost & Sullivan.

For a more extensive report on the future of and obstacles to renewable energy in South Africa, see "Powering the Future: Renewable Energy Roll-out in South Africa," Greenpeace Africa, March 2013 / (PDF download).

For previous AfricaFocus Bulletins on climate and related issues, visit

++++++++++++++++++++++end editor's note+++++++++++++++++

The day South Africa got renewable energy on the grid

Blogpost by Ruth Mhlanga - September 16, 2013

[excerpt; full text available at / direct URL -

In a historic moment earlier this month, the 312,000-panel Kalkbult Solar PV plant in Kimberley became the first independent renewable producer to be built, completed and get connected to the grid in South Africa. When the project officially starts putting power into the grid, South Africa can finally begin a journey to low carbon energy production.

The 75MW project will produce in excess of 135 million kWh per year, enough to power roughly 33,000 South African households. Getting this power from a renewable source means we're putting 115,000 fewer tons of carbon dioxide into the atmosphere annually than we would be if this were a dirty fossil fuel plant.

While the plant could produce more power, the Department of Energy limits the production of this and other solar plants. They cannot allow renewable energy on the grid at its fullest because the grid infrastructure is out of date. But renewable energy's potential in South Africa is far greater than is currently being allowed.

Renewable energy could, in fact, account for 49% of South Africa's energy production by 2030, instead of the 9% that the government is currently planning. The Kalkbult project was finished three months ahead of schedule, declaring 750,000 accident-free hours. With a labour force composed of 16% women, the project created more than 500 jobs in the area. The Energy [R]evolution has the potential to create more than 150 000 of these jobs by 2030 if more projects like these are given the go ahead by the government.


The Future of Coal: An E360 Report

In South Africa, Renewables Vie With the Political Power of Coal

by Adam Welz

12 Dec 2013

Africa is often portrayed as a victim of climate change, a continent that emits little carbon yet stands to suffer the effects of the developed world's pollution. This view only holds if one excludes South Africa, the continent's richest country and the world's sixth-largest coal exporter, seventh-largest coal producer, and thirteenth-largest CO2 emitter, with per-capita emissions twice the global average. Ninety-four percent of the country's electricity comes from coal, as does almost half its liquid transport fuel.

But South Africa is also blessed with abundant renewable energy resources, mainly in the form of plentiful wind and its famously bright sun. These were largely unharnessed for power generation until last year, when the government began inviting private investors to produce cleaner electricity for the national grid. Roughly $5.5 billion has since rushed into the country's renewable energy sector, and dozens of wind farms and solar plants are now mushrooming across the landscape.

Despite the newfound interest in renewables, coal's days in South Africa are far from over. The government plans to increase coal exports and the production of electricity from coal. Observers say this is because coal is seen as cheap, the industry has a long history of delivering reliable power, and influential people — including President Jacob Zuma's son and some of his African National Congress (ANC) party's funders — have financial interests in so-called "black gold."

The state-owned rail utility is spending billions of dollars to upgrade coal export lines, and the state-owned electric utility, Eskom, is currently building the third- and fourth-largest coalfired power plants in the world, 4,800-megawatt behemoths known as Medupi and Kusile. The president's cabinet announced in August that it intends to follow them with another, possibly smaller plant provisionally named Coal 3.

Environmentalists are worried that the rail expansion and the construction of Coal 3 will lock South Africa into the unnecessary and harmful consumption and export of coal for decades to come. In addition to the climate implications, they fear for the region's scarce water resources and agricultural land, which are already being polluted and torn up by mining companies on a massive scale.

The greens are not just up against coal, but against the whole of South Africa's mining industry, which has shaped the country's history more than any other force. First mined commercially 150 years ago, coal has been at the forefront of the exploitation of South Africa's extraordinarily large and diverse mineral resources, including diamonds, gold, and platinum.

The coal industry grew significantly under the notorious apartheid regime, which came to power in 1948 and saw coal as the solution to the twin pressures of an energy-hungry post-World War II economy and international anti-apartheid sanctions. With no indigenous oil reserves, South Africa feared being cut off from imported crude, so the government invested heavily in coal-fired power plants and created a state-owned company, Sasol, to convert coal into liquid petroleum on an unprecedented scale.

Apartheid came to an end in 1994 with the election of Nelson Mandela and his African National Congress (ANC) to power. In 2007 South Africa hit an electricity supply wall. Power cuts plunged major cities into darkness and industries ground to a halt. Blaming the situation on a lack of generation capacity and an unreliable supply of coal to its existing power plants, Eskom began pulling mothballed plants into action and accelerated the commissioning of the mega-plants, Medupi and Kusile.

This has incensed environmentalists. While mining had been largely unconstrained by environmental laws throughout the apartheid era, the post-apartheid Constitution grants citizens the "right to an environment that is not harmful to their health and wellbeing" and obligates the government to pursue "ecologically sustainable development." Dirty coal, they say, should be phased out, not encouraged. Its costs in terms of climate destabilization, water pollution, and lost agricultural land are becoming too high, environmentalists contend.

Coal 3, the proposed new plant, is a particularly bad idea, they say. It "doesn't make sense economically or environmentally," says Saliem Fakir of WWF-South Africa. "It only makes sense when you look at it in terms of vested interests and the politics of the whole southern African region."

Coal 3 is likely to be built in the Waterberg coalfield that underlies a remote part Limpopo Province in northern South Africa, as well as part of neighboring Botswana (see map). Although the Waterberg is one of southern Africa's largest known coal deposits, it has remained underexploited because its complex geology and lack of water and rail lines has made it less attractive to private investors than "easier" coalfields farther south.

The Coal 3 plant would change this by guaranteeing local markets for more Waterberg mines, says Fakir. In addition, associated heavy-haul rail lines will allow access to lucrative export markets, not just for the Waterberg mines but for new mines in adjacent Botswana, too. Fakir points out that supporters of South Africa's ruling party hold coal rights in the region, and that landlocked Botswana's government has long sought a route to the sea for its abundant but almost completely unexploited coal resources.

The South African coal industry is adept at navigating the country's increasingly murky political waters. According to media reports, President Zuma's son, Duduzane, and members of the Gupta family — some of the president's wealthiest supporters — are connected to two companies, Idwala Coal and Tegeta Resources. The Sunday Times newspaper reports that Idwala admitted to the Department of Environmental Affairs that the company had illegally diverted a public road and a river, destroyed part of a wetland, and illegally discharged pollutants as part of its mining operations. Tegeta has been mining for two years without environmental authorization or a water use permit, according to the Afrikaans-language newspaper, Beeld. But there's little official talk of prosecutions in these cases — the government instead has emphasized its efforts to retroactively legalize the mines' infractions.

Other media reports say that the ruling ANC, operating through a front company called Chancellor House, effectively owns 25 percent of Hitachi Power Africa. State-owned Eskom granted Hitachi a lucrative contract to make the boilers of the two giant Medupi and Kusile plants.

The coal industry argues that South Africa's antiquated electricity grid is unable to handle the intermittent power produced by solar photovoltaic installations or wind farms, and that southern Africa has some of the world's largest coal deposits. It's folly, the industry argues, to leave the billions of dollars and thousands of jobs that coal represents just lying in the ground.

Environmentalists counter that the sun and wind are the answer to South Africa's serious electricity shortages, which have crippled industries and repeatedly plunged major cities into darkness in recent years. They also stress the threat that coal mining presents to vital rivers and farmland, a warning echoed by agricultural unions across the country.

Most of South Africa's coal mining currently takes place in three centrally situated coalfields that encompass a large area of Highveld east of Johannesburg, a region that was an uninterrupted sea of grassland and wetland before European settlement. The grassland, when plowed, turns into excellent cropland, and about half of South Africa's soybeans and a quarter of its corn is now grown there.

Many coal seams in this region are shallow, inviting the attention of stripminers who have ripped up hundreds of thousands of acres. Other miners have dug shafts down to deeper seams. The result is a ravaged landscape. Some important rivers are now so polluted by acid mine drainage, which seeps out of abandoned mines, that they can no longer be used by farms or factories. Underground coal seam fires, some of which have been burning for decades, cause smoking sinkholes to appear.

In January 2012 the town of Carolina, which lies downstream of major coal mines, lost its entire municipal water supply overnight when a huge volume of acid mine drainage was washed into its drinking water reservoir by heavy rains. Residents rioted in protest. It took nine months for the state to restore clean water to the town.

The government has also acknowleged that 21 of Eskom's coal suppliers were operating outside the law, without environmental authorizations or the required water use licenses. As with the Zuma/Gupta mines, the government sought to retroactively legalize these operations rather than prosecute their owners.

Although coal clearly maintains high-level support, other energy sources may soon challenge its dominance. Geological studies indicate that South Africa may have large, deep deposits of shale gas, for which broad-scale prospecting is likely to begin soon, and coal companies are paying careful attention to a growing renewable energy sector.

The solar potential of South Africa's western half is extraordinarily good — it's dry and clear for most of the year — and many parts of the country have high wind energy potential. Since 2012, when Eskom began inviting private companies to bid for contracts to supply renewable power to the national grid, local and international investors have jumped in with enthusiasm. Each bid round for contracts has been oversubscribed.

Google has plowed $12 million into a South African solar farm, and the international consulting firm Frost & Sullivan recently estimated that South African solar installations could be providing grid power for as little as half the cost of coal by 2020.

In its latest update to its Integrated Resources Plan, released this month, the South African government said it would likely reduce the scale of the Coal 3 project by more than half, to no more than 1,500 megawatts, in part because of a projected decline in the country's electricity demand and projected increased supplies of domestic natural gas and hydropower imported from other African countries.

Coal 3 now faces several hurdles. Eskom's own experts don't like it, says Fakir, because the Waterberg region is water-scarce and supplying the water required to operate it will be extremely expensive. Eskom also lacks cheap capital to finance Coal 3's construction, Fakir says. The U.S. and the United Kingdom also recently announced that they would no longer fund most new coalfired power plants, either directly or via the World Bank, although China and various multinationals may still provide the cash.

Large coal mining companies, unsure of the domestic market and the effect of a carbon tax that might be introduced in 2015, are now focusing on the expansion of the world's largest coal export terminal at Richards Bay on the Indian Ocean to increase exports to India and China. Key government powerbrokers support that plan.

Greenpeace Africa's climate and energy campaigner, Melita Steele, sees Coal 3 as a last-gasp attempt by the coal industry to entrench itself in the region's future.

"In the coming months and years the renewable projects that are being built now will come on stream," she says. "People will see that solar and wind power works and creates more jobs than coal. It will be very hard for the government to justify Coal 3 then, and they know it."

South Africa: Leading the Continent in Renewable Energy Market Growth

Joanita Roos | Published: 11 Nov 2013 / direct URL:

[Contact: Samantha James, Corporate Communications Africa]


South Africa is seen as a preferred entry point for international companies and investors into the rest of Africa based on the global competitiveness index compiled by the World Economic Forum. With the Renewable Energy (RE) industry in South Africa developing so rapidly, it could also serve as a springboard into other countries in Africa in this nascent industry. Africa and in particular, South Africa, has a high level of RE potential available, writes Joanita Roos, Research Analyst for Energy & Power at growth consulting firm, Frost & Sullivan.

South African Policy Certainty and associated Growth

The Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) was introduced in South Africa to reach the target of 3,725 MW electricity generated from renewable sources as stipulated in the Integrated Resource Plan (IRP) 2010-2030. The IRP, South Africa's 20 year master energy plan, is a living document, scheduled to be revised in 2013 (though likely to be delayed). The IRP is not solely aimed at least cost generation, but incorporates factors like sustainable and efficient economic growth, local job creation, addressing the demand on resources in South Africa, as well as the need to meet nationally appropriate emission targets in line with global commitments. Furthermore, a draft report of the Integrated Energy Plan (IEP) has come out for consultation, which is seen as the most important energy policy document in South Africa, aside from the IRP. The IEP looks at the full energy market in South Africa and the next IRP will be developed off the base of this plan.

The RE industry in South Africa is experiencing significant growth, due to the REIPPPP, creating an environment of relative policy certainty, when compared to other African countries. It is expected that the local content value for both Window 1 and 2 of the REIPPPP will be up to R23,205 million. Furthermore, according to the Department of Energy, up to 21,214 operational and construction jobs will be created in the first two windows. Developers are continuing to import the majority of their components from lower cost suppliers in Europe and Asia, but this may change in the following bidding windows if the local content requirement is increased. For example, the majority of the solar modules utilised in Window 1 of the REIPPPP was supplied by South Korean manufacturer, Hanwha Solar, followed by Chinese manufacturer, Jinko Solar.

Reaching of grid parity in South Africa

From 2018, it is likely that the RE market will shift from the utility-scale sector to the commercial segment, as technology costs decline and grid parity for wind and solar PV is expected to be reached in 2015 and 2018 respectively. The rapidly decreasing price path of solar PV technology has exceeded even optimistic scenarios between 2008-2012. PV is projected to become among the most cost effective generating technologies in South Africa in 2020.

Comments on relative markets outside South Africa and growth limitations associated with policy

However, the current market for RE outside of South Africa is still relatively small. Frost & Sullivan expects that the growth in market size for RE in Africa will only be a fraction of that of South Africa, based on research indicating that the focus in the rest of Africa is primarily on increasing base load power from hydro and gas sources. This does not mean that RE in the rest of Africa should be discounted, since providing RE solutions might be commercially viable on a case-by-case basis, such as supplying hybrid energy solutions to mines, schools and hospitals.

Solar resources are abundant in the majority of Africa and there are large areas available for the development of large scale projects. A key benefit of solar power supply options is its capability to operate economically at small scale. This is suitable for Africa where there is no established grid in most parts. For instance, the electrification rates in Kenya, Tanzania and Nigeria are 18%, 15% and 50% respectively. Furthermore, Solar PV Thin Film technology is particularly applicable to the African climate as it can withstand the daily heat and radiation of the continent significantly better than any other solar PV technology.

Unfortunately, the development of RE sources in Africa to date has been limited. For example, Ghana's 2011 Renewable Energy Act (Act 832) stipulates the commitment to ensure that solar PV will supply at least 20MW of the total electricity demand by 2015. With a predicted growth demand in Ghana reaching 5,000MW by 2015, this translates into a mere 0.4% contribution of solar PV in the overall energy mix. Kenya's Feed in Tariff (FIT) was first implemented in 2008 and only included small hydro, wind and biomass. The second draft of the FIT in Kenya published in 2010, added biogas, geothermal and solar PV, but according to developers, the solar tariffs were too low to attract financing. The Tanzanian government is in the process of developing technology specific FIT. Unfortunately, there have been several failed small scale solar PV projects due to sub-standard PV equipment in Tanzania. In Uganda, approximately only 2% of solar potential is utilised and there are no large scale RE projects in the pipeline. Currently, Namibia has no legal framework in place to support RE.


There are potential opportunities in the RE industry in Africa. Some regional hotspots include Ethiopia, with an emerging market for off-grid residential and agricultural solar PV applications, as well as Kenya and Ghana with a growing residential (solar home systems) market.

Frost & Sullivan concludes that due to the financial and legal systems in place, the RE industry in South Africa is looking promising and growing rapidly. This development could serve as a platform for investors and companies to enter the industry and gain a footprint into the rest of Africa. However, due to an unsupportive regulatory environment, energy underpricing, lack of technical capacity and a weak supply chain, the market growth of RE in Africa is restrained.

AfricaFocus Bulletin is an independent electronic publication providing reposted commentary and analysis on African issues, with a particular focus on U.S. and international policies. AfricaFocus Bulletin is edited by William Minter.

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