South Africa's ambitious drive toward net-zero emissions gained big momentum in 2024

11 Dec 2024

There’s more to renewable energy than environmental considerations. Green energy companies have tapped into the flexibility and efficiency that green energy has to offer.

Several renewable energy projects found their footing during 2024, in both the public and private sectors. According to a document published by the World Economic Forum in June 2024, the country’s capacity for renewable energy has “expanded rapidly” since 2011, and accounts for more than 7% of generated power.

To achieve net-zero greenhouse gas emissions by 2050, South Africa must reduce its emissions by 12% to 27%. It’s an ambitious goal, which will require serious investment into renewable energy, according to the document — but 2024 has shown that the country’s green energy industry has stepped up to the plate.

The renewable energy developer and independent power producer Mulilo finalised six new projects during 2024. Three battery storage projects, two solar farms and a wind farm are all either under construction or set to begin construction in 2025.

This is according to Jan Fourie, Mulilo’s CEO.

The three battery projects are public sector tenders in the North-West and Northern Cape provinces, which are expected to have a combined capacity of 257 MW. Battery systems, Fourie told Daily Maverick, could provide relief to South Africa’s “inflexible” power system.

“There’s limited flexibility in the system for energy sources to be quickly ramped up or down. And that's where batteries actually play a big role in terms of being able to say if there’s excess power at any point in time, you can charge these batteries and you can use it,” he said.

The renewable energy farms are private power purchase agreements, which the company will build for Sasol, Air Liquide, and Air Products. In total, Mulilo’s existing solar and wind projects are able to produce 420MW. If you use Eskom’s rule of thumb that one megawatt can power 650 average homes, then that equates to roughly 273,000 homes; and Mulilo expects more than 300MW more from its recently finalised projects.

Read more: Africa’s potential for renewable energy unmatched globally — Ramokgopa

Green renaissance

South Africa’s green energy industry, on the whole, seems to be going through a small renaissance. Teraco, a company that specialises in building and managing data centres, has begun construction of a solar power plant in the Free State.

“Driving renewable energy infrastructure investment at a time when computing applications such as artificial intelligence are using increased power is an industry imperative,” said Teraco’s CEO Jan Hnizdo.

“The need is even more acute in South Africa, given its electricity generation constraints and current levels of renewable energy penetration.”

The plant’s construction is expected to come online by the end of 2026 and will boast an output of 120MW.

Additionally, GuarantCo and British International Investment have provided $100-million in default guarantee finance to the South African green energy company Etana. This is intended to further South Africa’s green energy transition and the hope is that it will lead to an extra 500MW being plugged into the grid over the next few years.

Solar energy has seen broad use due to its practicality and scalability. The international solar energy company Neosun Energy, for instance, recently completed the construction of a 1MW solar installation on top of the Dayizenza Mall in Nelspruit.

“Financially, the project demonstrates strong viability, with an internal rate of return of 53% and a payback period of just 12 months, largely due to the Section 12B government tax incentive. The cumulative savings are estimated to exceed R164-million over the plant’s lifespan, making it a highly cost-effective renewable energy investment,” said Jeanine Jackson, head of sales for Neosun South Africa.

Competition with Eskom

It was not just environmental consciousness that gave renewable power generation an advantage, said Fourie. Renewable energy production had certain economic advantages over fossil fuels.

Read more: SA’s renewables boom: A pathway to clean power and economic growth

On a marginal cost basis, he said, pushing fossil fuels through a coal-fired power plant might be cheaper — but that failed to take into account the cost to decommission, refinance, and rebuild of fossil fuel power stations.

“And when you take factors such as carbon tax and stability relative to foreign exchange markets into consideration, renewables have some definite advantages above environmental friendliness.”

Eskom is still undeniably the largest power producer in South Africa — but some green energy companies are confident they can punch above their weight.

Read more: ‘Exponential renewables increase’ expected in SA’s revised energy blueprint

“Ourselves, with other companies like us, are ultimately competition on the generation side, because either (customers) are going to buy electrons from us, or they are going to buy electrons from Eskom. As some of the old coal-fired power stations get decommissioned and more renewables and batteries are being built, Eskom’s relative size to the rest of the market will diminish over time,” said Fourie.

One major issue facing green energy companies such as Mulilo, said Fourie, was a lack of infrastructure that prevented grid access.

“There’s about 14,000km of transmission lines that need to be built,” he said.

“It’s lagging behind significantly. I think it was a good step that Eskom and the National Transmission Company of South Africa are now split from each other. But I think there needs to be a real impetus into the investment and construction of these power lines at the various nodes where there’s kind of good capacity for projects.”

The National Transmission Company of South Africa officially started trading on Monday, 1 July 2024. The National Transmission Company of South Africa will operate under the three following licences issued to it by the National Energy Regulator of South Africa:

The operation of transmission facilities by operating and managing the transmission grid.

Trading, in terms of which it will buy energy from Eskom generators and Independent Power Producers, as procured by the minister of mineral resources and energy.

Import and export in terms of which it will import and export energy, as well as continue as the trading arm to and from the Southern African Power Pool. DM

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Competition with Eskom