Renewable transition can kickstart South Africa’s economy

The transition away from coal holds immense potential for South Africa, with it having the potential to kickstart the country’s stagnant economy. 

Stanlib chief economist Kevin Lings told BizNews that the renewable transition could significantly impact South Africa’s economy if the country plays its cards correctly. 

“I do not think it is just a ‘fad’ that will peter out in a few months. There is long-term growth potential in this industry.”

To capitalise on this, the country needs to ensure that more materials and equipment are manufactured in South Africa and not imported. 

This can reindustrialise the economy and potentially turn it into an export market for the country. 

Currently, there are only two solar panel manufacturers in South Africa, and they cannot keep up with the demand from private companies looking for backup power solutions. 

This can become one of South Africa’s success stories, said Lings. 

Energy expert Chris Yelland told Newzroom Afrika that South Africa must decarbonise and leverage the funding it receives from the United States and Europe. 

“The United States, France, Germany, and the UK are really keen on helping South Africa decarbonise”, Yelland said, “South Africa can decarbonise at a significantly lower price than can be done elsewhere thanks to this.”

“The country must also decarbonise because it is “part of the club of culprits when it comes to climate change.”

South Africa is not a victim of climate change but a part of the problem as the country has very high per capita emissions and is the 15th largest emitting country in absolute terms. 

Eskom is the primary culprit, with over 80% of its electricity generation coming from coal. However, private companies also contribute to the problem. 

For example, Sasol’s facility at Secunda is the world’s single biggest source of greenhouse gas emissions. 

Yelland said South Africa “stands out like a sore thumb on the African continent and must play its part in contributing to the solution.”

South Africa has the best solar resources in the world

Solidarity’s Research Institute head, Connie Mulder, said South Africa has the best solar resources in the world, excluding the Sahara Desert. 

Solar systems in Pretoria, for example, can generate 2,239 kWh/m² a year, while in some regions of the Northern Cape, such as Nama Khoi, systems can generate even more at 2,621 kWh/m².

Solar-generated electricity is advantageous in that it can be connected to the grid within a year and is not confined by grid capacity as it can be embedded in populated areas at a small scale.

The private sector and local communities will lead this as Eskom cannot invest in new generation capacity following the debt relief plan tabled in the budget.

However, Mulder said solar is still prohibitively expensive for households to set up, which will delay the implementation of decentralised power generation.

The government’s solar tax incentives announced in the budget were a good start but are the absolute bare minimum required to incentivise the mass rollout of solar systems.

A better solution for Mulder would be to implement a feed-in tariff scheme which would pay households and businesses with solar systems for their excess electricity fed into the grid.

If implemented correctly, such a scheme would increase the potential return on a solar system investment. This would make installing solar more cost-effective.