South Africa’s immense renewable energy and natural gas resources will be the key to alleviating the energy crisis which continues to impact the country, according to a report, entitled 2022 Pathways for Africa’s Energy Future, released by energy markets solutions company Wärtsilä.
Recognizing this nexus, the government implemented the Just Energy Transition (JET), a roadmap that seeks to leverage up to $38 billion in funding to support the development of a low-carbon economy.
Maximizing Renewables through the JET-IP
The South African government’s JET will prioritize the development of new economic opportunities, greater levels of resources from the public and private sector, and decarbonization of the country’s electricity system. Under the country’s Just Energy Transition Investment Plan (JET-IP) 2023-2027, South Africa has identified the electricity sector, electric vehicle (EV) development, and green hydrogen production as key focus points.
In 2021, South Africa ranked as the fourteenth largest contributor to CO2 emissions in the world. Approximately 77% of the southern African country’s energy needs are provided by coal, while renewable energy technologies contribute a total 7.3% towards its energy mix. It is projected, however, that approximately 1 GW of baseload coal will be removed from the country’s energy mix over the next 30 years, thus positioning the country to unlock its renewable potential.
During the 26th edition of the UN Climate Change Conference, held in Glasgow in 2022, South Africa announced plans to reach net zero emissions by 2050, and joined the global Just Energy Transition Partnership (JETP), which will unlock up to $8.2 billion in funding between 2023 and 2027 from the U.S., UK, and EU to support the country’s transition away from coal. The country’s Government, however, indicated that an estimated $38 billion will be needed to support South Africa’s transition.
Through JETP, and in line with the country’s JET-IP, South Africa’s goal of achieving a low carbon economy will focus on the creation of jobs in new sectors such as EV development, green hydrogen, renewable energy, and manufacturing; increasing energy security and ending the ongoing energy crisis; addressing the risks of climate change, such as extreme droughts and floods; and boosting economic growth through the mobilization of over $55 million in new investment in the South African economy.
Key energy challenges for South Africa, however, include energy access – with an electrification rate of 86.15% –, volatile fuel costs, poor quality power plants, and a lack of infrastructure to support the energy transition. What’s more, geopolitical tensions in recent years have exacerbated supply disruptions, thus severely impacting electricity and food prices and leading to widespread inflation, with energy prices increasing by as much as 400% in some markets since Russia’s invasion of Ukraine.
Leveraging the JET to Support Long-Term Growth
Despite these challenges, the energy transition is poised to hold unprecedented promise for South Africa. A transition towards a low-carbon economy puts the country in a position to leverage its immense solar and wind resources to promote energy independence, prosperity, and socioeconomic development for Africa’s third-largest economy. By focusing on the development of a stable energy base over the next decade, South Africa will be well-positioned to implement renewable energy technologies while phasing out costly energy generation processes derived from coal power.
According to a modelling scenario identified by Wärtsilä, South Africa will need to mobilize an additional 40 GW of wind and solar energy by 2032 to meet its climate targets. This strategy has the potential to enable a 17% reduction in emissions and result in estimated cumulative savings of up to $26 billion for the country. What’s more, South Africa can leverage the use of natural gas as a transition fuel in reserve capacity, with renewable energy capacity standing the risk of experiencing fluctuations of between 1-30% in ideal situations and up to 60% in dire situations as a result of intermittent supply.
The rapid mobilization of renewable energy in South Africa has the potential to support universal electrification, bringing reliable and sustainable electricity to 9 million people in the country by 2032. In order to do so, however, South Africa will need to demonstrate its commitment towards the energy transition and stimulate investment into the sector through the development of clear strategies, goals, and regulatory reforms, thus encouraging high-income countries to mobilize front-load investment towards capacity building and infrastructure development.
