In June of last year, South Africa increased the threshold for companies to produce their own electricity without a license from 1 MW to 100 MW. Generation projects will still need to obtain a grid connection permit to ensure that they meet all of the requirements for grid compliance. It was a surprising but very […]In June of last year, South Africa increased the threshold for companies to produce their own electricity without a license from 1 MW to 100 MW. Generation projects will still need to obtain a grid connection permit to ensure that they meet all of the requirements for grid compliance.
It was a surprising but very welcome move to raise the threshold soon after it been proposed to be set at 10 MW in the Draft Schedule 2 to the Electricity Act. This move was seen as a major catalyst for private sector investment into the electricity sector. This move will go a long way in relieving pressure on Eskom and the government and is one of the quickest routes to plugging the country’s massive deficit in the electricity generation sector. South Africa’s current installed generation capacity is about 50 GW, but the country is currently experiencing its worst ever period of electricity rationing.
It looks like raising that threshold has started to bear fruit in a big way! Johannesburg-based Gaylor Montmasson-Clair, a Senior Economist at Trade, Industrial Policy Strategies (TIPS), has just showcased this in some awesome charts using data from NERSA, the South African Energy Regulator. In 2022, 1,659 MW of renewable energy capacity was registered with the energy regulator. There were 38 projects registered, including 14 projects above 50 MW. Most of this was registered from the end of Q2 as seen in the chart at the top of the page. If you compare with just 86 MW registered in 2021, the impact of such progressive policies is crystal clear.
The second awesome chart shows the contribution of the various renewable projects registered last year. Solar was the clear leader, making up 81% of the projects registered. Wind was next with 15% of the projects, then hydro and co-generation projects.
Looking at where these projects are by province, the North West province had 30% of the projects, followed by the Free State with 23%, and the Northern Cape with 14%.
The next chart gives some very interesting insights. From Q2 and Q3, one can see a clear rush for projects in the sunny North West and Northern Cape provinces. Gaylor says this shows a clear rush to chase the best yields. The Free State and the Western Cape then picked and took the lead thereafter. The state of the grid in the Northern Cape and the North West also gives insights into why there was an early rush to those provinces. Developers rushed to take up some of the available grid capacity in the Northern and Western Cape to enable integration of their renewable energy projects from the limited capacity available. South Africa urgently needs to invest in this area to facilitate the growth of renewables. Recently, South Africa was not able to award over 20 utility-scale renewable energy projects in the last bid round due to grid constraints.
Several large energy consumers in South Africa have started work on large 100 MW-scale solar PV plants with some built off-site where space and grid connection allows and then they wheel that electricity through Eskom’s transmission network. The solar PV sector in South Africa is getting really exciting now. Let’s see how it evolves this year.
Special thanks to Gaylor Montmasson-Clair for the charts, analysis, and insights.
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Source: Clean Technica