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Although there have been calls for the scrapping of independent power producers from some quarters, including trade union the National Union of Metalworkers of South Africa and opposition party the Economic Freedom Fighters, government is determined IPPs are here to stay to ensure security of electricity supply.
Among other objections, the announcement of the unbundling of Eskom stirred fears job losses in the coal sector, particularly through the introduction of renewable IPPs in the generation space.
In response, Energy Minister Jeff Radebe on Sunday held a briefing to clarify government's rationale for including renewables in the country's energy mix.
Here are the five reasons outlined by Radebe:
1. Climate change
SA committed itself to the Paris Agreement to mitigate the effects of climate change. This means SA must make a contribution to a global effort in reducing carbon emissions and other "climate resilient" developments, Radebe said.
"The basic rationale behind renewable energy is therefore arresting the high negative impact of fossil fuel sources of energy such as oil and coal."
Renewable IPPs so far have reduced carbon emissions by 33.2 million tonnes, in addition to carbon dioxide and water savings of 39.2 million kilolitres by December 31, 2018, the minister added.
2. Energy policy
The decision to include renewables in the electricity system dates back to a 1998 White Paper on Energy Policy. In November 2003, the ANC-led government adopted the White Paper on Renewable Energy. It sets a target for 10 000 GW hours to be achieved by 2013. At the time, Eskom's generation was 90% dependent on coal and government had made a decision to move away from solely being reliant on fossil fuels, Radebe explained.
The Integrated Resources Plan (IRP) 2010, promulgated on May 6, 2011, indicated that by 2030, 17 800 MW of new capacity would be provided by renewable energy.
Furthermore, a Green Economy Accord was negotiated by social partners and government and signed on November 17, 2011 – which makes commitments to developing a "greener economy". Among other things, it sets a target of 3 725 MW to be generated from renewable energy by 2016.
Vision 2030 under the National Development Plan (NDP) also calls for SA to invest in skills, technology and institutional capacity to support a competitive renewable energy sector to leverage its solar resource. The NDP, adopted in 2012, states SA needs at least 20 000 MW of renewable energy by 2030.
3. Lack of investment in coal projects
Locally commercial banks such as Standard bank and Nedbank are "no more willing" to support coal-fired power projects, Radebe said.
Internationally, countries which are members of the Organisation for Economic Co-operation and Development (OECD) are also against funding coal projects due to climate concerns.
The World Bank and other international development finance institutions and commercial banks have instituted a no-coal policy.
China, India and the US and others are also down-scaling coal-fired fleets.
4. Renewable energy is becoming cheaper
Radebe said that initially, renewable energy programmes were "relatively higher in pricing", but costs have since declined. "Steep falls [have been] recorded from wind and solar PV technologies," he said.
Radebe listed an example of how wind technology was first priced at 151 c/kWh in November 2011, but has since fallen to 62 c/kWh by 2016.
5. Positive impact on the economy
Radebe highlighted the benefits of renewable energy to the economy, which includes attracting investment commitments of R209.4bn from the private sector.
Renewable IPPs have also created 38 701 job years, meaning full-time jobs have been created for 38 701 people for one year. Local communities have also benefited from over R1bn spent by IPPs on education initiatives, among other socio-economic upliftment projects.
