Published on October 31st, 2012 | by Silvio Marcacci0
South Africa Approves $5.4 Billion In New Renewable Energy Projects
October 31st, 2012 by Silvio Marcacci
South Africa, one of the most coal-dependent countries in the world, has taken another major step toward a clean energy future.
The country’s energy minister recently announced approval of $5.4 billion for 28 wind, solar, and geothermal projects that will add 1.4 gigawatts (GW) of new renewables capacity to the grid. These projects represent the first round of five auctions in the country’s Renewable Energy Independent Power Producers Program (REIPP), with contracts to be signed on November 5th and generation to become operational between 2014 and 2016.
All five rounds of REIPP auctions were originally expected to add 3.725 GW of new renewable energy projects by 2016. The second round of REIPP bidding, which is a step behind the 28 first-round projects, named 19 preferred projects with a 1.04 GW total capacity and $3.3 billion price tag earlier this year. South Africa hopes to finalize the second round of projects by March 2013.
Setting Sights Even Higher
Not content with the original 3.275 GW new capacity target, the country is now targeting an additional round of bidding, which aims to add an additional 3.2 GW of new renewable capacity to the initial REIPP by 2020.
So where will all the funding for this clean energy push come from? Ironically, a large chunk could come from South Africa’s carbon tax, set to start charging the economy’s industrial sectors around $16 dollars per ton of emissions above the first 60 percent of benchmarked emissions. That fee, while small to start in 2013, would increase 10 percent every year until 2020.
Renewables Lead Overall Energy Increases
While roughly 5 GW of new renewables are a significant step forward, the initiative is somewhat diminished by the overall country context. Roughly 85 percent of the country’s 41 GW annual electricity demand is currently met by coal, and South Africa is the largest polluter in Africa and one of the 20 biggest carbon emitters worldwide.
Overall, the country is in the middle of a large-scale energy sector expansion, which also includes non-renewable sources of power. South Africa also has plans to generate 2.5 GW of new capacity from coal, 2.6 GW from hydropower, 2.5 GW from natural gas, and 9.6 GW from nuclear.
Renewable energy may not be the sole focus of South Africa’s energy outlook, but it’s an increasingly large one that could soon meet 10 percent of the country’s overall demand. Combined with an escalating carbon tax, South Africa seems to be slowly curving it’s energy sector away from fossil fuels toward a sustainable future.