Index shows South Africa is wasting its renewable energy potential

Although South Africa is the country with the most potential “by far” in terms of its renewable energy programmes, it is stuck in a the “(Fitfully) Waking Giant” category, financial services provider Fieldstone Africa said in its first renewables index for the year.

When the Fieldstone Africa Renewables Index (FARI) was introduced, South Africa was the leading country on the continent in terms of its renewable energy programme. The index ranks national markets in terms of current suitability to invest time and capital to achieve successful renewable projects.

However, the country’s reputation and position on the index began to slip owing to a refusal by energy utility Eskom to sign further power purchasing agreements (PPAs) with independent power producers (IPPs).

PPAs for IPP projects that were selected in rounds 4 and 4.5 of the government’s Renewable Energy Independent Power Produce Procurement Programme (REIPPPP), have remained unsigned for several months, seriously denting investor confidence in what was internally recognised as a highly successful programme.

“This has changed somewhat over the last two months, with President Jacob Zuma announcing in his State of The Nation address, in February, that the PPAs will be signed. However, Eskom is now trying to have old coal plants decommissioned against additional renewables and is threatening to call in the government guarantee provisions for existing IPPs,” the report read.

These issues aside, South Africa’s potential remains high. The country could rocket back to the top of the index, based on its Independent Resource Plan as it currently stands, which calls for the addition of 1 000 MW of renewable energy a year for several years. One positive development is that some small IPPs have been fast-tracked and the long-outstanding Round 4 bids seem likely to be given the go-ahead.

Meanwhile, Morocco was still leading the continent in the field of renewable energy, owing to pioneering efforts in renewable base load resulting from its commitment to concentrated solar power (CSP).

In the previous Fieldstone Africa Renewables Index, released in October 2016, Morocco was rated the top country in Africa, followed by Uganda, with Egypt holding third place. Uganda’s steady progress towards achieving its plan for building 1 500 MW of renewable generation capacity by 2020 saw it retain its second place in the latest index.

However, Zambia pipped Egypt to third place owing to its solar and hydro initiatives, underpinned by a transparent regulatory and approval regime, while Egypt’s aspiration to further develop its renewable energy programme has suffered from recent currency deregulation, leading to an exodus of international investors.

“The signals for renewables in Africa continue to remain positive as FARI shows. Initiatives on the continent seem more credible than earlier efforts, and there is certainly a variety – from large-scale, systemic programmes to incremental build-up based on long-term goals,” CEO Jason Harlan commented.

Harlan said FARI continues to track movements on renewable energy projects in Africa, the regulatory environment enabling investment in projects and the benefit to economies these initiatives bring.