With power issues set to dog our lives for the foreseeable future, IT resellers are ideally placed to help their customers come up with solutions for keeping the lights on.
Today, most South Africans can converse knowledgably on the various ways they can keep their homes and businesses running when the lights go out: discussions around the merits of solar energy versus generators, UPSes or inverters, lithium-ion compared to deep cycle batteries, and even forays into the possibility of harnessing wind or thermal energy sources are now common small-talk topics.
While many IT resellers are making the shift to providing alternative energy solutions, there’s another way they can help their customers weather the power drought – by providing energy-efficient and smart systems that use less electricity, increasing overall sustainability.
SA has a plan to boost renewables
By Kathy Gibson – Government has announced support for the country’s biggest investment in renewables capacity yet, along with a new renewables bid window.
Dr Kgosientsho Ramokgopa, minister of electricity in the office of the president, points out that there is currently no capacity to produce solar photo-voltaic (PV) panels locally, but a combination of financing and regulation will make it possible for innovators to make investments.
“We are calling on innovators to invest, and we will invest with you. This will enable us to industrialise, create jobs, grow the economy and ensure the future of the country.”
The energy crisis is the most onerous challenge facing South Africans, says Ramokgopa. All South Africans are adversely affected by power issues, from farmers and manufacturers to businesses and households.
Indeed, the share of South Africa’s total exports as a percentage of Africa’s exports has reduced by 20 percentage points as a direct result of load shedding.
“Doctors are reluctant to perform emergency surgery because UPSes might not kick in, thus undermining the prospects of saving a life,” he adds.
When the South African Reserve Bank (SARB) released its decision on repo rates, it was aggressive partly because of the economic outlook which is expected to grow at just 0,2% largely as a result of load shedding.
“One stage of load shedding results in a GDP contraction of 5%,” Ramokgopa points out.
With load shedding devastating all aspects of our lives, people have lost the ability to put bread on the table and businesses have closed.
“People are aggrieved and they have every reason to be so,” Ramokgopa says.
The energy plan unveiled last year aims to rid the country of load shedding through the achievement of several outcomes including: fixing Eskom and improving energy availability of existing supply; enabling private investment in new-generation capacity; accelerating procurement of new capacity from renewables, gas and battery storage; and transforming the electricity sector to achieve energy security.
The delivery workstreams needed to achieve these outcomes include: improving Eskom plant performance and strengthening the grid; accelerating new generation capacity, including private investment and SSEG; demand management; security of infrastructure; distribution and wheeling; and strengthening the transmission network.
Tomorrow’s post-cabinet announcement should include the unveiling of a new mega-big window for over 15 000Mw of renewables, Ramokgopa says.
“That is the scale of how we are looking to get renewables on stream; and are anticipating the growth of the share of renewables in the country.”
“It is important that we build sufficient productive manufacturing capacity to meet the pipeline we are anticipating.”
In this respect, government will make it possible, via blended financing, for people to invest in the renewables space, and creating financing options to make equitable access to renewables possible.
Today, Africa is an insignificant player when it comes to global energy demand, but exponential growth is expected in the years ahead. “And the role of renewables will be significant,” Ramokgopa says. “Our commitment to clean energy continues to rise; and we are going to rely heavily on innovators on the continent to take advantage of what lies ahead.”
Decarbonisation relies on platinum group metals (PGMs), with South Africa and Zimbabwe between them controlling 90% of these resources.
“We need to find ways to beneficiate on the continent, broaden industrial capacity, upskill youth to participate, and grow the economies of the continent.
“There is a nexus between the green future and the growth of our industrial base.”
Renewables are key to future energy production, Ramokgopa stresses. “Renewables, including solar, wind, hydropower and geothermal energy may account for over 80% of new power generation capacity to 2030.
“And Africa is home to 60% of the best solar resources globally.”
There are still significant challenges that need to be overcome, including: inadequate generation capacity; insufficient government investment; major backlogs; limited reach of transmission and distribution lines; climatic conditions like droughts affecting hydro energy; poor maintenance; lack of reliable fuel supply; limited access to the transmission grid; losses in transmission and distribution; urbanisation and more.
“It is not all rosy and government needs to do something to address these challenges; to create a regulatory environment that makes it attractive for private producers.”
Rooftop solar becomes more attractive
Households with their own rooftop solar will soon be able to sell excess energy back to Eskom.
A feed-in tariff regulation is currently in the pipeline, says Gabriel Kgabo, GM: distribution at Eskom.
The announcement comes as government is about to firm up legislative amendments to give effect to the two renewable energy tax incentives announced in the 2023 budget.
- Expansion of the renewable energy tax incentive – Under the enhanced renewable energy tax incentive, taxpayers who are conducting businesses will be able to claim a 125% tax deduction (in the first year) for qualifying capital expenditure in respect of all renewable energy projects – with no threshold on generation capacity. The enhanced incentive will be available for a period of two years and apply to investments in renewable energy projects brought into use for the first time on or after 1 March 2023 and before 1 March 2025.
- Rooftop solar tax incentive – With respect to the rooftop solar tax incentive, individuals will be able to receive a tax rebate to the value of 25% of the cost of any new and unused solar PV panels, up to a maximum of R15 000. The rooftop solar tax incentive will be available for a period of one year and will apply to new and unused solar PV panels that are acquired by the individual and brought into use for the first time on or after 1 March 2023 and before 1 March 2024.
South Africans have become resigned to the fact that they will need to power their our own homes and businesses wherever possible, with rooftop solar being the easiest way of doing so, says Hohm Energy’s Matthew cruise.
That this is good for country as a whole is demonstrated by the recent example of Vietnam, which added more than 9GW of rooftop solar in 2020 alone. By comparison, that is equal to nine stages of daytime load-shedding and more than the combined output of Medupi and Kusile power stations, once they’re completed.
For home owners, the numbers make sense: with the new incentives, the payback period for home solar systems is around four to five years.
“And consumers are then looking at an overall return on investment of up to three times their money back, depending on how much the price of electricity escalates.”
Webber Wentzel partners Joon Chong and Chetan Vanmali believe the demand for solar power installations will to heat up considerably this year as a result of the new incentives.
They also point out that proposed changes to the Bounce Back Loan Guarantee will incentivise renewable energy for SMEs as government will guarantee solar-related loans to SMEs on a 20% first-loss basis.
Dinesh Buldoo, MD: power at WSP in Africa, agrees that demand will increase. “South Africa has world leading and abundant solar and wind resource potential. These incentives should support the growth of the alternative energy sector as a whole and enable it to overcome upfront capital costs on individual projects in favour of long-term gains for the industry and the country.”
WSP has seen several renewable energy projects, in different regions in Africa, coming through the planning pipeline over the past several years – with evidence of significant investor and developer interest in further projects. WSP has also successfully delivered solar and wind projects through the previous four rounds of the Renewable Energy Independent Power Producer Programme (REIPPPP).
To truly unlock the potential in the renewables sector – in South Africa and on the African continent as a whole – regulations that enable renewable power generation plants to be built, and legislation and policies that support the growth of the alternative energy sector are needed, Buldoo adds. Tax incentives are one step towards making these changes.
“Private sector interest in investing in renewable power assets across Africa has been growing steadily, as the continent offers diverse renewable energy sources ranging from solar and wind to green hydrogen,” he points out. “This latest announcement by the South African Government should encourage local investment.”
But it’s not as simple as it sounds, he cautions. “Mitigating against the costs involved, especially in light of the recent volatility in equipment prices, is only one factor here. Getting the excess renewable energy generated by new private installations onto the grid, and distributed to where it’s needed, is what will make the real impact. Addressing South Africa’s grid constraints, therefore, becomes of even greater importance if the country is to maximise the momentum these incentives could create for renewable energy investment.”
Larger scale solar and wind farms are often located in remote destinations based on where the best solar and wind resources are. This results in these projects being concentrated in specific areas, leading to grid access issues since these areas often have little to no grid capacity available. Though the tax incentives could serve to incentivise rooftop solar installations in more urbanised areas, where grid access may be more readily available, transmission and distribution systems may still be inadequately developed to accept power generated from these installations.
To understand the existing grid constraints better, and aid Eskom in its overall grid planning, the South African Photovoltaic Industry Association (SAPVIA) and the South Africa Wind Energy Association (SAWEA) recently announced the launch of the 2023 South African Renewable Energy Grid Survey in conjunction with the state-owned power utility.
“Zayd Vawda, senior renewable energy engineer at WSP in Africa and chairperson of the SAPVIA grid access working group, led the development and strategic guidance of the survey,” Buldoo says. “The 2023 version of the survey will account for projects that employ wheeling and has been expanded to capture even more detail per project, which will be invaluable to Eskom’s transmission planning division. It also gives the South African renewable energy industry an opportunity to contribute to national transmission planning and development, which should add value in addressing grid constraints.”
WSP is also assisting the SAPVIA/SAWEA task team that’s leading the coordination of the solar and wind industry input to the new Eskom Grid Access guidelines. This will unblock one of the key challenges facing IPPs in South Africa.
Buldoo adds: “We believe that – as more renewable power generation plants are built as a result of recent changes in the Electricity Regulations Act, and as businesses begin to leverage the tax incentives announced in the Budget Speech – South Africa will experience intermittent excess energy in the electricity grid. This will allow the country to begin realising other opportunities, including in the green economy, such as its ambitions in the production and export of green hydrogen.
“All indications are that, by successfully leveraging renewable energy sources, South Africa can benefit greatly from the global drive to achieve certain decarbonisation targets by 2030 and become carbon neutral by 2050. Critically, these benefits will not only be from an environmental point of view, but from an economic and social one as well,” Buldoo says.