As results season draws to a close, there’s hardly a large energy user in SA that has not outlined plans to bring private power generation into its business. There’s a wave of sizeable green projects on the horizon, with some set to come online as early as next year.
Earlier this year, Gold Fields announced a 40MW solar plant at its South Deep mine, a project that is on track for completion in the first half of 2022. Though this was to be the biggest renewable self-generation plant in SA, it now pales in comparison with other projects in the pipeline.
Harmony Gold is building a 30MW solar PV plant in the Free State, and plans to bring an additional 70MW-80MW of renewable energy into the mix in the next 18 months.
Anglo American Platinum is progressing with a 100MW solar facility at its Limpopo operations, with commercial operation targeted for the end of 2023.
Meanwhile, precious metals miner Sibanye-Stillwater has a 50MW solar PV project in the works at its gold operations, expected to be in operation by 2023. A further 175MW of solar projects are planned for its platinum operations, and the group is tendering for up to 250MW of wind energy.
Earlier this year, Sasol announced plans to roll out a whopping 1,200MW of renewable energy projects by 2030.
Glencore is piloting co-generation technology, converting waste gas from its ferroalloy operations into electricity, and is looking to expand this. The group is also considering solar and wind options.
South32’s Hillside smelter, which consumes an enormous 1,200MW of power, is implementing an energy efficiency programme. Executives say they expect the technical challenge of providing continuous power to the smelter to be met with green energy in the next decade.
It’s not been easy to quantify the wave of green projects in big industry. The Minerals Council SA’s most recent estimate was of more than 2GW of power projects in the pipeline among its members, but there are quite a few projects beyond that now.
Private projects are proliferating elsewhere, too, with recent announcements from hospital group Mediclinic and telecoms giant Vodacom.
We need a huge portfolio of projects to close the [electricity supply] gap
— Jevon Martin
A primary driver is the pressure for companies to decarbonise in the face of mounting climate-change concerns. Another is cost: renewable energy projects, in some instances, will produce electricity at half Eskom’s tariff.
An amendment to the Electricity Regulation Act allows projects of up to 100MW to go ahead without a generation licence, lifted from 1MW previously. The move was recently lauded by Minerals Council CEO Roger Baxter as the most significant policy reform enacted by the government in 20 years.
Fanele Mondi, CEO of the Energy Intensive Users Group (EIUG) of Southern Africa, says most of the projects that have been announced were in the pipeline before the licensing cap was lifted. That means SA has likely yet to see the impact of the regulatory move.
"But it certainly is still a good move," he tells the FM. "We believe that it will open a lot of other projects that may have been undecided."
While the current pipeline of green projects could go some way to plug SA’s yawning electricity supply gap — estimated to be 4,000MW-6,000MW in the next five years — there is a marked difference between installed capacity and actual output.
"A 50MW solar PV facility doesn’t necessarily produce 50MW 24/7," says EIUG chair and director Jevon Martin. "On a 24-hour average, it produces somewhere closer to 26% of that. So I don’t think there’s necessarily going to be an oversupply in the short term … We need a huge portfolio of projects to close the gap."
There are still numerous hurdles to be cleared before many of these projects reach financial close, including a host of regulatory approvals, which can range from the subdivision or rezoning of land and approvals from local municipalities to environmental authorisation.
"You would need approvals from Eskom in terms of grid access and contractual agreements that govern connection to the grid and the operation of a plant in parallel," says Martin.
Then there’s the "individual suite of agreements between the independent power producers and the off-takers in an application to Nersa [the National Energy Regulator] for either registration or licence, depending on the size of the project. So it’s definitely not a done deal," he says.
With the market opening up, Eskom’s role will inevitably change. For industry, the utility will still be critical in providing consistent, base-load power when the sun is not shining and the wind is not blowing.
But as the green wave gains momentum, large power users are working closely with Eskom around increased renewable energy penetration and the right mix of technologies to ensure grid stability, Martin says.
"From a large power user’s perspective, we view Eskom as a partner, and we need to ensure its survival to ultimately ensure our own."
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