Climate risk is our reality and we need actions today to shape the future of business and society
We operate in an interconnected system that requires a healthy society for it to achieve sustainability in profits and business. This is against a dire backdrop in which the world has now recognised that trillion-dollar losses could occur due to inaction on climate change.
By Jehaan Anthony
Economists have warned that the potential economic costs of damage from climate-related disasters and extreme weather could be staggering. In 2018 the US alone incurred a loss of around $160 billion due to such disasters, and these numbers are only expected to increase as hazards become more complex and unpredictable.
In Africa, the energy crisis coincides with the dual threat of climate change, which is driving the imperative for renewables, not only to plug energy gaps but also to deliver power to drive sustainable economic growth as the continent has seen a rapid escalation of extreme weather events such as tropical cyclones, severe droughts, wildfires and floods. Already, climate change in Africa has caused an estimated $38 billion damage in two decades. Adding to this is a heavy reliance on fossil fuel – South Africa, which relies on coal for 80% of its power, is also said to be warming twice as fast than the rest of the world.
Rolling power outages are red flagged as a high-risk scenario that’s expected to continue until at least April 2023 and probably a lot longer. In June last year, President Cyril Ramaphosa raised the licensing threshold for self-generation power to 100 MW, with an option to sell into the grid, which will allow residential estates, shopping centres, mines, factories and other providers to not only generate their own electricity, but also to power nearby communities and help support economic recovery. This will help reduce dependency on Eskom and the government, and the first power-generation project in the private market has recently been approved by the National Energy Regulator of South Africa.
As the green bank, which has been on a sustainability journey for some years, Nedbank has fine-tuned our solutions for the market and offer specialised finance structures such as longer payback periods, structured repayments around the savings that the infrastructure provides, and offtake deals where the user does not own the equipment.
That said, going green encompasses far more than turning to renewable energy, and our first recommendation is to find ways to operate more efficiently before investing in costly systems.
There are always ways to use electricity more efficiently, reduce water use in operations, recycle water wherever possible and process waste in a more resourceful manner. Understand what your goal is. If you are planning to go off the grid, understand the size of the inverter (how much power you are going to need) and then build your system by buying components and adding more as and when required or as budget allows.
While it is inescapable that there is a need for urgent action to mitigate the risks associated with climate change, as failure to act now could result in huge financial losses and irreversible damage to the planet, businesses must take the lead in the fight against climate change by adopting sustainable practices and reducing their carbon footprint.
That is why funding solutions become an integral part of the solution. Nedbank Commercial Banking, for example, offers term debt funding for its commercial and agriculture clients. This provides for funding of capital expenditure to expand public access to safe and affordable drinking water, provide access to adequate sanitation facilities, improve water quality to be fit for human consumption, and increase water use efficiency through water recycling, treatment and reuses.
In short, this solves for rising water costs, mitigates against water interruptions due to drought, water scarcity or failing infrastructure, prevents unnecessary or preventable wastage and avoids business downtime.
Another is funding provided for construction, maintenance, manufacture and other components for clean energy to generate or transmit energy that would include wind, solar, hydro, biomass and geothermal power, or funding of energy efficiency initiatives that include energy efficient technologies in new and refurbished buildings, energy storage, district heating, smart grids and appliance products.
The benefits are that this would enable businesses to generate sufficient energy for own use, thereby mitigating the impact of rising energy costs, minimising the impact of power interruptions, and ensuring income generation capacity for the company and employees during power cuts. Both options could take the form of an extended repayment term of up to 10 years, considering the savings when calculating cash flow or affordability, competitive pricing and direct ownership versus third-party ownership.
Nedbank Commercial Banking also provides term debt funding for commercial and agriculture clients to invest in environmentally sound technologies and processes that promote the recycling of post-consumer products, the upgrading of infrastructure and retrofitting of industries to facilitate increased resource efficiency, substantially reduce waste generation through prevention, reduction, recycling and reuse and promote sustainable agricultural practices. This addresses the rising energy and raw material costs hindering businesses from sustained growth, enabling community upliftment through job creation and the prevention of missed revenue opportunities.
In this regard, structured solutions are tailored to each business, with competitive pricing and off-balance sheet financing.
South Africa is not alone in facing energy and water scarcity challenges – it affects the whole world. Businesses must prioritise awareness around energy challenges and water scarcity in their operations and supply chains to mitigate against climate risks, while ensuring that clients derive value that will ensure that they are on a sustainable path while reducing their carbon footprint.
Do not miss GREEN ECONOMY JOURNAL ISSUE 77 (APRIL/MAY): we talk climate finance.
This year’s National Water Week drives the agenda of ‘Water for All’, an objective which SRK Consulting has supported in many ways – one of which has been through its application of isotope technology.
Ismail Mahomed, principal hydrogeologist at SRK Consulting, has recently used isotopes to identify the source of water contamination, as a first step in resolving this threat to water security. South Africa is classified as a semi-arid country, emphasised Mahomed, and cannot afford the pollution of its scarce water resources.
In a recent address to the conference of the Network for Industrially Contaminated Land (Nicola), he explained how isotopes had proved a valuable and cost-effective technology to help resolve a contamination issue at a metals processing plant.
Fingerprinting
“A particular environment will acquire a characteristic isotopic composition or signature by virtue of the hydrogeochemical processes involved,” he said. “We can use this isotope signature for ‘fingerprinting’ – giving us clues to trace the source of water, and hence of the contamination.”
In his case study, he explained how spatial variations in deuterium and Oxygen-18 occur in the hydrological cycle – leading to a lower proportion of these isotopes in rain that falls inland than in rain falling at the coast.
“These are among the variables we can use to identify whether the source of water is from surface dams or from groundwater – as the signature from the rainfall will be retained in groundwater,” said Mahomed. “Evaporation also has an impact on this signature as preferentially lighter isotopes will evaporate from the oceans and surface water.”
Tracing groundwater
One of the aspects of the case study was considering the evaporation signature of some of the ponds on the client’s site – a signature which was different to the groundwater. Data analysed during this project suggested that there was some mixing of water from different sources in the underdrain of one of the ponds. He explained that hydrology can benefit greatly from using isotopes in the tracing of groundwater, to help determine the vulnerability and sustainability of water resources.
“The technology helps hydrologists to determine factors affecting water quality such as sub-surface processes, geochemical reactions and reaction rates,” he said. “It can also be used to better understand the relationship between surface and groundwater, and even to detect leaks.”
The United Nations’ World Water Day is also being celebrated in March, with the organisation warning that countries are not making enough progress in meeting Sustainable Development Goal (SDG) 6. This goal aims to ensure safely managed water and sanitation by 2030 for all the world’s population. The UN has said that there is an urgent need to accelerate change, by going beyond ‘business as usual.
Must move faster
“The latest data show that governments must work on average four times faster to meet SDG 6 on time, but this is not a situation that any single actor or group can solve,” reported the UN. It has called upon global citizens to “be the change you want to see in the world” – by taking action on how they use, consume and manage water.
Among the approaches for accelerating action in water management that SRK Consulting has promoted in its engagements with clients is water stewardship. With water management becoming a key risk for industries like mining, consulting firm EY has rated water as the leading environmental, social and governance (ESG) risk in mining for 2023. SRK Consulting principal consultant Fiona Sutton explained that water stewardship offered a practical process for companies in mining and other sectors to collaborate more closely with partners and stakeholders in managing their shared water resources.
“This approach is also supported by valuable best practice tools like the International Water Stewardship Standard from the Alliance for Water Stewardship (AWS),” said Sutton. “The AWS Standard offers a globally applicable framework for major water users to understand their catchment and their own water use and impacts, with practical guidance on how to effectively manage these impacts.”
Water security
Growing concerns about South Africa’s water security saw Finance Minister Enoch Godongwana announce – in his recent Budget Speech – planned expenditure on national water infrastructure of R121 billion over the medium term. This included R3,7 billion in municipal water infrastructure, through the National Budget facility for infrastructure.
SRK Consulting has been extensively involved in water infrastructure, including facilities for rural water supply points. Gert Nel, principal hydrogeologist and partner at SRK Consulting, explained that these water points were vital in providing water to communities, schools and clinics which could not be reached through bulk water supply systems.
Rural support
“However, there is a need to provide more support for these stand-along supply points, to ensure they are reliable and sustainable,” said Nel. “After the installation of these facilities – such as boreholes and water treatment systems – there is seldom any backup support or funding to sustain their continuous operation.”
When such facilities are planned, it is necessary to also include aspects such as training, awareness raising, mentoring and on-going support. For instance, there needs to be ready access to technical support for breakdowns, and training on how to regularly maintain or service the equipment. This will extend the life of the installations and improve their value to the community – while reducing the risk of water-borne diseases.
SRK Consulting works with both the public and private sectors in their water management interventions, and applies a range of scientific and engineering disciplines to help achieve the goal of ‘Water for All’.
Securing funding for the installation of rooftop solar for commercial enterprises
The large capital outlay for solar installations will require many businesses to approach financial institutions which, in turn, will need to consider the most suitable way to secure their investment.
By Mashudu Mphafudi, director and head and Michael Bailey, associate – Finance & Banking practice
It is estimated that stage 6 loadshedding is costing the economy as much as R900 million per day. Many businesses are looking to self-generate power through the installation of rooftop solar as a way to reduce the impact of loadshedding and possibly avoid retrenchments or, at worst, closing their doors.
Rooftop solar
In the 2023 state of the nation address, President Cyril Ramaphosa announced various measures to combat the country’s existential power crisis, including the declaration of a state of disaster, a new Minister of Electricity, and loans and incentives to move South Africans onto solar energy. The President said that the Government was “going to proceed with the rollout of rooftop solar panels”. The bounce back loan scheme, implemented initially to assist with the impact of COVID-19 pandemic, will now be used to assist with the rooftop solar rollout and allow banks and development finance institutions to borrow directly from the scheme to facilitate the leasing of solar panels to the customers.
The Minister of Finance announced in the 2023 Budget that from March 2023, businesses would be able to reduce their taxable income by 125% of the cost of an investment in renewables. The Government will guarantee solar-related loans for small and medium enterprises on a 20% first-loss basis, meaning that the Government will carry 20% of the loss on defaulted loans, so institutional lenders will not have to carry the entire loss. This has created a perfect storm of necessity and incentive for businesses to invest in self-generated renewable energy.
Security of the loan
As discussed in a previous alert, the initial capital cost risks being exclusionary without funding assistance. While clarity is sought on implementing the bounce back loan scheme to be launched in April 2023, lending institutions will play an integral role in assisting businesses to mitigate against the impact of ongoing loadshedding to allow businesses to own, install and operate rooftop solar.
It is common for lending institutions to require security for the loans to be advanced if a borrower defaults under a loan agreement. Although the Government will guarantee 20% of the defaulted loans, without additional security, a lender may not (in certain circumstances) be able to recover all the money borrowed under the loan agreement. It would be pragmatic to consider the circumstances of the borrower in order to assess the appropriate security to be provided by the borrower to the lender in a funding arrangement.
In our view, we would recommend that the lender consider the following securities when advancing loans for rooftop solar (the list below will have to be specific to a particular transaction and may differ from one to the other).
Special notarial bond
A special notarial bond (once registered) constitutes real security in the mortgaged property as effectively as if it had been expressly pledged and delivered to the holder of the right. A special notarial bond for tangible movable property must identify and describe the rooftop solar secured in a manner that makes the rooftop solar readily recognisable. A special notarial bond must satisfy the requirements outlined in the Security by Means of Movable Property Act 57 of 1993.
It must be noted that rooftop solar installation and construction will ordinarily occur after the lender advances the monies to the borrower. Accordingly, the special notarial bond will only be registered when construction has been completed and the rooftop solar is “readily recognisable”. If the borrower fails on its obligations under the loan agreement, the lender may have the property sold without having to approach a court for an order to that effect. The lender is regarded as a secured creditor, which means that no other creditor may attach the property serving as security specially. However, if the rooftop solar is not properly identified, the lender will rank as a concurrent creditor on the insolvency of the borrower.
General notarial bond
Unlike a special notarial bond, a general notarial bond is a mortgage by the borrower of all of its tangible movable property in favour of the lender as security for a debt or other obligation. However, a general notarial bond does not (in the absence of attachment of the property) make the lender a secured creditor of the borrower. It is not a true mortgage of movable property, but is a means of obtaining a limited statutory preference above the claims of concurrent creditors in the borrower’s insolvent estate.
Guarantee or suretyship
Guarantees and suretyships are a form of security for a principal obligation i.e. the due performance of the borrower for, inter alia, the repayment of the loan.
The decision to require a guarantee or suretyship will need to be considered on the basis of assets or balance sheet of the individual or company, respectively, providing the guarantee or suretyship to ensure that any enforcement on the guarantee or suretyship will cover the balance of the loan outstanding.
Cession in security
A cession in security is an agreement to be entered into between the borrower and lender in which the borrower will grant security over intangible movable property in favour of the lender. For more information on the different types of cession in security structures, see this previous article. The lender should consider a cession in security over:
· Bank accounts: The borrower will maintain bank accounts for managing its business and all amounts standing to credit of the accounts should be ceded.
· Project documents: Rooftop solar will need to be constructed and, eventually, it will provide a revenue source for the borrower or be used by the borrower to meet its electricity demands. The decision as to which project documents should be ceded will depend on the nature of the borrower’s business and the purpose of the rooftop solar.
· Debts: The borrower can cede all book debts, claims or receivables of whatsoever nature and howsoever arising (whether in contract, delict or otherwise).
Shareholder pledge and cession
As a company, the borrower is investing in its business through the installation of rooftop solar. This benefit is ultimately for the shareholders of the borrower. The lender should consider the pledge and cession of all the share capital held in the borrower and all claims of whatsoever nature which the borrower shareholders may have against the borrower.
Additional security
Although less common, a lender may consider a (i) hire purchase transaction which usually includes an option for the lessee to purchase the rooftop solar for an agreed (and sometimes nominal) amount at the end of the period of the lease or (ii) an instalment sale where the borrower (as buyer) takes possession of the rooftop solar, but the title to the rooftop solar remains with the lender (as seller) until the purchase price (including the interest ordinarily associated with the loan agreement) has been paid in full. The major risk associated with a retention of title arrangement is ensuring that the lender takes the title to, and becomes the owner of, the rooftop solar from the supplier.
Conclusion
Security ordinarily required for a loan agreement such as a guarantee (or suretyship), a cession in security and shareholder pledge and cession should, at a minimum, be provided. Additionally, for:
· smaller rooftop solar projects with completion within one year of advancement of the loan, a lender should consider the registration of a special notarial bond; and
· larger rooftop solar projects where construction will take longer than a year from the advancement of the loan, the lender should require a general notarial bond until a special notarial bond can be registered.
Although the Government has intervened to incentivise rooftop solar installations through beneficial tax breaks and a partial guarantee, a lender must consider how best to protect the entire amount to be loaned to a borrower. The decision as to the exact security to be provided by the borrower must be considered on a case-by-case basis.
South Africa’s energy crisis has a devastating impact on the country’s economy, with GDP declining by 0.7% in the 2nd quarter of 2022, according to Stats SA[ii]. Loadshedding is affecting food security, infrastructure and communication networks, as well as various key economic sectors, like mining, tourism, and manufacturing. Jan Fourie, Executive Vice President for Scatec in Sub-Saharan Africa, has described the conundrum as not just an energy crisis, but a fossil fuel dependency crisis.
Jan Fourie, Executive Vice President for Scatec in Sub-Saharan Africa.
“With abundant sunlight and wind resources, renewables present the optimal solution to our energy woes in SA. The urgency of the situation calls for increased private sector investment in renewable energy projects to fast-track the Department of Mineral and Energy Resources’ Integrated Resource Plan (IRP)[iii] and accelerate our economic recovery, by embracing the worldwide transition towards clean energy,” he asserts.
“The energy transition in South Africa has gained widespread public support, and the market may be looking to secure the necessary raw materials to fuel this shift in 2023.”
The significant upscaling in the production of lithium-ion batteries has made renewable energy price-competitive with fossil fuels, further driving the shift towards clean energy sources, Fourie adds, cautioning that the Covid-19 pandemic and the Ukraine war have seen supply chain spasms affecting commodities like nickel – a key component for Li-ion battery production.
“This could present an opportunity for SA’s metal producers to fill the global supply gap, potentially emerging as a key player in the new global metals market, and simultaneously driving a just energy transition locally,” he suggests.
In addition, innovations in storage technology have allowed renewable energy plants to produce stable, consistent, and dispatchable power, dispelling the myth that renewable energy is intermittent, or unreliable.
“Widespread investment into renewables, driven by strong tailwinds will offer businesses far more than a safety net against load-shedding,” Fourie advises, citing brand differentiation, stable energy prices, and the opportunity to fulfil corporate sustainability targets as just a few of the other potential benefits for the private sector.
“Embracing renewables is a key component of many successful businesses’ corporate social responsibility strategies, and tends to herald strengthened stakeholder relations, including with the local community, customers, and employees,” he expands.
New energy wheeling legislation and power purchase agreements such as the Renewable Independent Power Producer Programme, or REIPPPP (RMIPPPP) – under which Scatec are currently constructing three projects in Kenhardt in the Northern Cape with a combined solar capacity of 540 MW[iv] – Alleviating pressures on the nation’s energy mix.
Furthermore, the introduction of the green finance taxonomy (GFT) is bringing a measure of standardisation and transparency to the process of classifying and scoring SA’s green economic activities, helping facilitate a smooth equitable transition to a low-carbon, net-zero emissions economy,” adds Stian Kalsen, Communications Manager for Scatec.
In conclusion, the private sector in South Africa has a crucial role to play in driving the transition to renewable energy and leading the charge towards a cleaner, more sustainable future. With the growing public push for sustainability and the incentives and opportunities offered by new legislation, 2023 presents a golden opportunity for businesses to embrace renewable energy.
This will not only bring environmental benefits, but it also “has the potential to drive economic development, create jobs, enhance energy security, and buffer against the threats presented by load shedding, which is not going away in the foreseeable future,” Fourie states.
“Dispatchable renewable energy is available in South Africa right now, and it makes sense for businesses to invest in it. Already massive projects are underway that promise to protect early adopters from load shedding-related risks and help bring South Africans clean power for the future.”
“Renewables are a safe investment option for businesses at the microeconomic level, and at the macro-level, harnessing the country’s abundant sun and wind resources could hold the key to future-proofing South Africa’s energy sector,” he suggests.
“As we move into 2023, we hope to see the private sector in South Africa shift gears and stake their claim in a cleaner, more sustainable future with significant buy-in to renewables,” Fourie says.
South Africa’s power capital is being left behind in the race for renewable energy generation.
Just one renewable energy project in Mpumalanga, South Africa’s power capital, has been contracted to supply the Eskom grid – despite the planned decommissioning of six coal power stations based in the province by 2030. Data collated by Oxpeckers Investigative Environmental Journalism indicates Mpumalanga has missed out on new generation efforts implemented by the Department of Mineral Resources and Energy’s independent power producer (IPP) procurement programme, and that renewables initiatives taking place on the ground are being executed by the private sector.
Out of the 92 renewable energy contracts concluded by the IPP Office by February 2023, the only one located in Mpumalanga is the 25MW Ngodwana biomass power plant. The majority of approved projects are based in the Northern Cape, some 1 000km away. The Ngodwana biomass plant, situated about 50km outside the provincial capital Mbombela, uses biowaste from the adjacent Sappi wood and paper mill to produce steam and cost an estimated $89-million to set up. It has been supplying Eskom with 25MW of energy since March 2022, in terms of a bilateral power purchase agreement.
Eskom said it was unable to share the details of this agreement because it is bound by confidentiality clauses, and questions sent to Ngodwana and Sappi were unanswered at the time of publication.
Bid windows
The IPP project officer said there are no other projects based in Mpumalanga under the current bid windows being rolled out by the government’s Renewable Energy IPP Procurement Programme (REIPPPP). The programme has had six bid windows since 2011.
“We have not applied a geographic-specific bid window to date,” the officer said in response to questions from Oxpeckers. “Mpumalanga has not traditionally been a preferred location for renewable IPP investments due to RE [Renewable Energy] resources being higher in the more popular provinces of Western, Northern and Eastern Cape. This is very likely to change given the current grid availability challenges.”
The province is home to six of the nine Eskom coal-fired power stations scheduled to shut down by 2035, terminating 15GW of power and putting up to 55 000 jobs at risk.
According to the Just Energy Transition (JET) plan released by the Presidency on the eve of COP27 global climate talks in November 2022, the ageing fleet of coal power plants – totalling 39GW and averaging a lifespan of 42 years – will be “retired over the next three decades, with 22GW due to be decommissioned by 2035”.
The JET plan highlights that Mpumalanga is currently impoverished and suffers negative environmental impacts from coal mining. The transition is an opportunity to address both current development challenges and impacts from the coal phase-down, it states.
Mpumalanga is “the undisputed home of the national grid”, provincial premier Refilwe Mtshweni-Tsipane said in her State of the Province Address on 24 February.
In partnership with the Presidential Climate Commission, the Climate Investment Fund and the World Bank, the province is exploring ways to diversify local economies towards the reduction of dependence on coal; reskill and upskill the labour force; and support small businesses and cooperatives in local communities to access emerging opportunities in the green economy sector.
“Our interest includes that old mines should be rehabilitated, and in the process the vast tracts of land be gainfully utilised in the new industries that conform with the Just Transition principles – such as manufacturing, agriculture and assembly of solar voltaic panels, wind turbines, batteries and others,” she said.
Cost versus location
Independent energy analyst Clyde Mallinson said the IPP Office had focused on costs rather than the location of projects approved under the REIPPPP. Projects in provinces with higher wind or solar resources would cost less and therefore be priced much lower than projects located where there were fewer of these natural resources available.
“There was no cognisance taken of where the projects were in the early rounds – the best solar was probably in the Northern Cape and the best wind was scattered among the Northern Cape, Western Cape and Eastern Cape – and so if you had a project in Mpumalanga in the first iterations of the REIPPPP, you simply wouldn’t have won because the price you would bid at would have had to be higher,” he said.
The location of these outlying projects has caused “hiccups” in the transmission of power from generating plants in other provinces to the Eskom grid for distribution to load centres, where it then reaches consumers.
“If we build more wind and solar farms in the Northern Cape and it’s a windy and sunny day, the transmission lines become overloaded – so it would become like the Grayston off-ramp [in Johannesburg] on an early morning traffic run, where Grayston Drive would be overloaded and there would be a traffic jam,” he said.
Because the rules of the REIPPPP stipulated that the contracts were “take or pay”, Eskom had to pay the IPPs even if it had to require them to curtail their inputs, he said.
“This means even if they don’t deliver electricity to the grid because the grid is congested. Obviously, Eskom is not keen to sanction further projects in areas where there may be congestion.”
He suggested a solution would be to regionalise the REIPPP requests for bids.
“Split the country up into 10 wind and 10 solar regions, say we are going to accept 10 projects in Mpumalanga and the 10 best projects in the province will be the ones that win. Projects in Mpumalanga would be compared to other projects in Mpumalanga, not projects in the Northern Cape.
“They would bid at higher prices than the Northern Cape ones because the solar resource is a bit lower, but then offer companies what is called a feed-in tariff which basically says, ‘we will pay you 75c if you build a solar plant in Mpumalanga but if you build a solar plant in the Northern Cape, we will only pay you 55c’.”
Grid connections
Democratic Alliance Member of Parliament and shadow minister of energy, Kevin Mileham, said that as the country’s energy hub where the majority of Eskom’s power stations are situated, Mpumalanga is well placed to feed energy from renewable sources on to the national grid.
“Those power stations that are being decommissioned already have grid connections in place, so Mpumalanga would have an advantage in that there would be no requirement for building good infrastructure in order to take off the energy,” he said.
The most recent REIPPPP bidding window approved projects based in the Northern Cape and Free State in December 2022. None was based in Mpumalanga – despite the JET plan highlighting that “Mpumalanga has excellent wind and solar resources, and proximity to electricity load centres, with extensive transport and transmission infrastructure that can be used to support new initiatives in clean energy and other sectors”.
Mileham said the slow rollout with procuring renewable energy projects through the IPP’s Office could be attributed to state interference when Eskom refused to sign power purchase agreements from the REIPPPP’s bid window 4.
“They [the state] have played an enormous role in the delay with the rollout of renewable energy projects,” he said.
“South Africa used to be one of the global leaders in the rollout of utility scale renewable energy, but in 2015 Eskom put the brakes on, and the ANC from a policy perspective said, ‘we are not so keen on renewables anymore’, so you saw that people who were willing to invest weren’t given the space to invest.”
To take advantage of investment opportunities, Mileham said regulators should have clear rollout plans showing where opportunities for renewable energy generation are, and make the regulatory environment more attractive.
“There needs to be a clear rollout plan showing where the opportunities exist and showing where good infrastructure exists for people to connect to. Make that information publicly available and then stick by it. Then they need to get out of the way and let the private sector get on with doing business,” he said.
In response to Oxpeckers’ questions, the Eskom media desk said the Department of Minerals and Energy, as the procurer of the REIPPP programme, selects preferred bidders based on the assessment criteria stipulated in the request for proposals.
“Eskom, as the buyer, will conclude power purchase agreements with the preferred bidders based on Eskom’s acceptable risk assessment of the transaction.”
Asked when Eskom expects to ramp up new generation IPP agreements in Mpumalanga, the media desk said the department “will factor in, among other requirements: technology, optimal renewable energy resources, grid capacity and value for money to the consumer, in rolling out new generation IPP procurement programmes which are not location specific”.
Land deals
Among the priority investment areas identified by the JET plan is the repurposing of coal-mining lands.
Eskom has signed land lease agreements with four IPP investors, around Medupi power station in Limpopo and Tutuka power station in Mpumalanga. These agreements entail the commercial lease and use of land parcels where there is sufficient grid capacity.
According to an Eskom document on the land-leasing programme, it “will attract an estimated investment of some R20-billion to areas traditionally associated with coal-fired electricity generation”.
The first land parcels were issued to the market for tendering in April 2022 and closed in May 2022. Up to 2 000MW of alternative energy is expected to be produced once the project development and required regulatory processes for these projects are fully developed.
The four IPPs investors who signed agreements with Eskom in October 2022 for a combined total of 6 184ha on 21 farm portions were HDF Energy South Africa, Red Rocket SA, Sola Group and Mainstream Renewable Power Developments.
Questions sent to three of the IPPs about the details of the land deals, their project plans and costs were unanswered at the time of publication. HDF Energy South Africa responded that they were still in the planning stage, and would provide details at the end of May.
The second phase of the land lease programme’s tendering process was launched in December 2022 and was due to close on 27 February. The power utility expects this phase to yield up to 500MW of new generation capacity from IPPs.
Eskom’s media desk said the IPPs lease the Eskom land, construct their assets and, on completion, wheel the energy through the grid for own use or to sell to other consumers.
Asked why the energy generated by the projects from the land lease agreements won’t be bought by Eskom, the media desk said, “The objective of the programme is to expedite bringing new MWs [megawatts] online. For IPPs to sell energy to Eskom it will require DMRE capacity allocations, Nersa concurrence and confirmation of cost recovery, processes that generally take long.
“For IPPs to wheel electricity for own use will drastically reduce timelines to bring these much-needed MWs to the system.”
The details of the land lease agreements would not be made public, the desk said, “since the agreements have sensitive information – such as pricing, market rentals and IPPs details”.
Mining self-generation
Mining companies, some of the biggest carbon emitters through their production processes, are leading the transition to renewables in the province “where the sun rises”, via private solar projects that power their own operations. JSE-listed gold producer Pan African Resources has pioneered self-generation at its Evander Gold Mine near Secunda. Its Elikhulu solar energy plant is the first embedded project bigger than 1MW to receive the stamp of approval.
Currently producing 10MW of embedded power for its own operations, it plans to ramp this up to 22MW in 2023. To be licenced, projects have to fully comply with the National Energy Regulator’s (Nersa) Renewable Power Plants Grid Connection Code and have confirmation from Eskom that a grid connection is possible.
The Elikhulu plant is made up of 26 640 bifacial solar panels on 20,1ha of land repurposed from a demolished workers’ hostel, and supplies around 30% of the mine’s electricity needs.
The total costs of the project were around R150-million and it boasts a reduction of about 26 000 tons of CO2 emissions. According to Wayne Allen, group manager at Pan African Resources, 150 people were employed over a period of a year during the development of the solar plant.
“The company started developing its own solar plant in February 2019, and the main reason was the electricity tariff increases that have happened over the past few years, which averaged 11.8% per year. We know the latest hike is said to be 18.6% and is about 6% above inflation, so that is mainly part of the reason we built this plant,” he said.
“The project’s objectives were to reduce the exposure to Eskom’s unstable grid and leverage the economic benefits of using renewable energy, acknowledging that it has become cheaper than Eskom power,” said Allen.
Pan African Resources estimates the savings in its first year can reach up to R3-million a month – equivalent to R100 000 a day – and could add up to R1.2-billion over 20 years.
Nkosikhona Yeko, senior construction and site manager at Juwi Renewable Energies, which was enlisted to build the solar photovoltaic plant, said now it is operational its day-to-day activities, which include landscaping and maintenance, employ a total of six people – a feat that brings great satisfaction to the contractors in the renewable energy space.
“It gives me satisfaction when I see that the objective [of a project] has been achieved, and when I see the people out there who previously did not have the opportunity of getting jobs now getting jobs, and also the people without skills now getting skills through these projects,” he said.
The company is also working towards building an 8MW plant at their operations in Barberton, closer to the provincial capital.
“That process is far down the line. The feasibility process was completed and we are preparing to break first ground on the project within the next two months,” he said. More mining companies in other provinces are investing in embedded generation after the licensing threshold was increased from 1MW to 100MW in 2021. Some of the companies that have announced embedded solar PV plans of varying capacities include Sibanye-Stillwater, Anglo American Platinum, Gold Fields, Harmony Gold and Impala Platinum.
Powering up Mzansi: embracing the Renewable Energy Revolution
As the cost of South Africa’s unreliable power supply continues to increase at rates much higher than inflation, it has created a drive for transitioning to more reliable, lower cost/predictable renewable energy. However, given South Africa’s vast renewable energy resource, the question remains: why is the uptake in renewable energy and renewable energy penetration levels lagging behind global achievements?
By Krishna Pillay, Director at Cresco Advisory
South Africa’s energy obstacles
South Africa is impacted by leaderless change in the energy sector, driven by business needs that receive almost no support from government. The big gap between supply and demand is heading towards an uncertain and sometimes unstable equilibrium limited only by an inflexible policy regime. It has been 15 years since the first instances of load shedding in 2008, yet the situation is worsening.
As a country, we are seeing the electricity supply shortage due to insufficient available capacity brought about by various inadequacies of the past decade, now manifesting in load shedding. This is largely as a result of a lack of investment in new generation capacity and transmission capacity, and a lack of life cycle planning around long-term maintenance interventions in electricity generation and supply infrastructure. There is also the issue of poor generation operating performance. Eskom, with an installed base load capacity of 45 947MW cannot meet summer demand which averages at about 30 000MW.
Overcoming challenges to enable a transition to renewable energy
Big business and energy intensive users are increasingly recognising that if they do not address the supply side, there is a real possibility that it could be detrimental to their very existence. Major energy consumers in the region need to get on board with developing and implementing long term energy strategies that ensure sustainable, reliable, cost-effective solutions to energy supply. In fact, most recent renewable energy projects are already coming in at tariffs lower than current Eskom tariffs, even at a relatively small scale. This is driving organisations to therefore make investments for competitive advantage.
A stumbling block, however, is that an investment in renewable energy projects is often disproportionately high for the vast majority of organisations. Characterised by relatively low returns on investment and long payback periods, the risk of assets becoming stranded is real for many commercial and industrial organisations, particularly for mining companies. A long term mitigant for this risk therefore lies in the ability to freely trade this energy if internal demand drops.
A robust policy and legislative framework are precursors to business confidence for long term investments, such as investing in power projects. Some of the generation risks that we see currently include: market policy and rules; IPP generators licensing and permitting, as well as grid access; merchant plant participation in the market; and embedded generation, roof top commercial and residential generation access to the market.
Furthermore, the lack of resource to connect new generation capacity in high renewable energy resource locations remains the number one risk for new capacity, alongside wheeling rules that levels the playing field and ensures the right of ownership of the energy pumped into the grid.
The minister has a point when he says that existing generating units need to be fixed, which requires proper planning, commensurate budget, skills and time. However, this is not entirely necessary. The best way forward will be to identify the units that have the best chance of being brought back to reliable service with the least effort, time and cost – much like the 80:20 principle. This may help Eskom overcome stage 6 load shedding by reducing the forecasted unplanned outages by half.
While the transmission grid is very reliable, the transmission problem is under capacity, particularly in high renewable energy resource parts of the country. There are many reasons for this, but most notably, inadequate investment in grid capacity projects. This has resulted in wind projects in the Eastern Cape and Western Cape, and solar projects in Western Cape and Northern Cape not being given preferred bidder status in the last Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) round due to not having secured grid connections.
The solutions are readily available
Policy and regulatory changes already mooted by government need to be implemented with haste to bring about structural changes to the electricity supply industry. Policy initiatives supported by legislation must be designed to attract new private investment, however, this will depend on what structural changes leaders are willing to make to foster true unfettered access to the grid. This in turn will help build investor confidence from both the private and public sectors, resulting in an efficient, adequately recapitalised transmission business.
Government needs to enable free and unfettered access to the grid. This will involve separation of the transmission wires business from the system operator, with Eskom focusing on the wires business as a national asset, and the system operator set up as an independent business – either fully privatised or as a public private partnership. Measures have to be put in place to build confidence and attract investment in the transmission wires business, while implementing a transparent cost reflective transmission tariff to encourage investment and user confidence.
Another solution is to facilitate commercial and industrial embedded generation projects as well as bespoke off site projects with wheeling to consumer sites. Furthermore, accelerating the introduction of a multi-market which, when mature, will facilitate investment in merchant renewable energy plants that will not rely on long term bilateral Power Purchase Agreements.
In conclusion, South Africa needs to speed up grid strengthening in the high renewable energy resource regions. Unless the changes are not dealt with speedily, we will continue to see stage 4 and higher load shedding on a daily basis, and renewable energy penetration will be limited by the progress made on grid strengthening. In reality, the ultimate goal is to get to a point where energy intensive commercial and industrial consumers can enter into bi-lateral contracts with energy traders for base load renewable energy participating in a liberalised energy market.
Rooftop solar: SA’s best option to immediately address loadshedding
The loadshedding being experienced in South Africa has crippled our economy and negatively impacted the general wellbeing of its citizens. It seems that lately every discussion, whether it be around the boardroom table or braai, revolves around possible solutions to address the loadshedding crisis.
By Anton Ackermann, associate, and Margo-Ann Werner, director in the corporate and commercial practice at law firm, Cliffe Dekker Hofmeyr (CDH).
The South African Government has, perhaps not at the pace required, implemented various electricity policies to try alleviate the pressure on the national grid, while transitioning away from coal. The Independent Power Producers Procurement Programmes (IPPPP) were finally rolled out following a long delay, with risk mitigation and the fifth and sixth bidding rounds being held between 2020 and 2022.
While several preferred bidders have been selected and some have reached financial close, the construction periods range between 18 and 24 months for most projects.
The recent amendments to the Energy Regulation Act 4 of 2006, especially the removal of the 100MW threshold for embedded electricity generation, has encouraged several companies to establish their own embedded electricity generation facilities, with several large mining and industrial companies aiming to achieve carbon neutrality between 2035 and 2050.
While IPPPP projects serve to address capacity constraints on the national grid, and large-scale renewable embedded generation presents electricity security to industry while lessening the demand on the grid, these developments cannot provide the immediate relief required to address loadshedding.
A possible solution to provide immediate relief for the national grid, and one which is aligned with South Africa’s international climate change commitments and the just energy transition towards a carbon neutral economy, will be to introduce rooftop solar feed-in schemes for corporate and residential buildings.
Feed-in tariff
The South African Government published an Energy Action Plan in July 2022, which sets out the plan to end loadshedding in South Africa. The Energy Action Plan outlines five specific actions to address the current electricity shortfall, with one of the actions being to “unleash businesses and households to invest in rooftop solar”.
To encourage rooftop solar installations at business and household level, Eskom intends to develop a feed-in tariff for small-scale embedded generators (SSEG) and National Treasury will consider the expansion of tax incentives for residential and commercial installations.
It was announced in the 2023 budget speech that “individuals who install rooftop solar panels from 1 March 2023 will be able to claim a rebate of 25% of the cost of the panels, up to a maximum of R15 000. This can be used to reduce their tax liability in the 2023/24 tax year. This incentive will be available for one year”. Feed-in of electricity means the feeding of unused electricity back into the grid, where a person may receive credit on their electricity bill or receive payment as per the agreed feed-in tariff.
This was further emphasised by Ramaphosa, during the 2023 State of the Nation Address, “to incentivise greater uptake of rooftop solar, Eskom will develop rules and a pricing structure – known as a feed-in tariff – for all commercial and residential installations on its network.”
A recent update on the progress made within the last six months since the publication of the Energy Action Plan, provides that a net-metering tariff was submitted to the National Energy Regulator of South Africa (Nersa) for approval and that work is underway to develop a net billing framework for municipalities.
Vietnam case study
The installation and roll-out of rooftop solar systems at national level has seen success in other countries. Vietnam saw tremendous growth of rooftop solar installations for residential, commercial and industrial premises between 2019 and 2020. The success comes with the implementation of two successful feed-in tariff rounds during 2019 and 2020, whereby generous feed-in tariffs were provided, with 9.35 US cents/kWh for 2019 and 8.38 US cents/kWh for 2020.
The feed-in tariff rounds resulted in adding over 16 449GWp in the space of two years, with more than nine GW of rooftop solar installed during 2020 which resulted in over 100 000 rooftop solar systems deployed over residential, commercial and industrial premises.
Vietnam’s success can be used as an example by South Africa to also encourage rooftop solar installations. We have already seen South Africa following this approach in the Western Cape, with the City of Cape Town’s recent announcement that businesses and residents will be paid for feeding surplus electricity into the grid, with a feed-in tariff of R1.04/kWh, which is 25c per kWh more than the approved feed-in tariff of 78,98c/kWh, in order to encourage investing into SSEG. The success of this feed-in scheme will be watched and monitored in order to see if the model can be implemented across other municipalities in South Africa.
Balancing costs and benefits
The roll-out of rooftop solar at such a large scale will come with its teething problems, with some of the challenges being the initial capital cost required to install solar systems, which may result in the exclusion of low-income households from participating in and benefiting from solar feed-in schemes. It is also important to ensure that feeding back into the grid makes financial sense to owners.
With additional costs such as bi-directional flow meters, possible connections fees, stringent connection and installation requirements and municipal requirements, feeding back into the grid may result in an additional expense if not regulated properly.
The expansion of rooftop solar also holds a potential challenge for Eskom, with more businesses and middle-class homes biting the bullet to install rooftop solar, Eskom will likely see a decline in use from regular paying customers, resulting in further financial woes for the embattled state entity.
The potential is there for South Africa to quickly add additional capacity to its ailing grid by encouraging the installation of rooftop solar on corporate and residential buildings. We have heard all the right things being said and will wait to see if the regulation thereof will encourage rooftop solar to become a beacon of light during dark times.
Engineers make an impact in driving sustainable development
By embedding sustainable development principles, engineers contribute directly to and have the benefit of seeing the impact on lives and environments around us.
In his first two years of working, Lloyd Wallace designed a rural water scheme for a community in Northern KwaZulu-Natal. When he had the opportunity to visit the site much later, the community saw the branded vehicles and ran out to thank the team for providing them with water. “It was an amazing experience personally to see the impact of my work as a junior engineer,” says Wallace, Technical Director and Expertise Lead for Infrastructure Advisory at leading consulting engineering and infrastructure advisory firm Zutari. More recently, Zutari led a workshop between municipal officials and community representatives to unpack the public housing that the City of Cape Town administers to over 300 000 people.
“Our work brought these groups together to talk about the issues. It was the first time that both sides were able to see how difficult the situation was from each other’s perspective.” The insights from this work have been incorporated into a large training and business optimisation programme that Zutari has been supporting the Department of Public Housing with over the last three years.
“At numerous stages on projects throughout my career I have been amazed to see how much impact engineers can make in driving sustainable development,” highlights Wallace. Engineers operate in a space where they can influence how infrastructure is designed to meet different ideas of value creation. By embedding sustainable development principles and, more importantly, mechanisms to measure the impact of projects in terms of the UN Sustainable Development Goals (SDGs), engineers contribute directly to changing the status quo, and have the benefit of seeing their efforts impact the lives and environments around us.
Due to the skill set that engineering equips young people with, there are numerous opportunities even before qualifying. Wallace says he funded two years of tertiary education and was then able to obtain bursaries for six years of additional studies, during which time he worked as well. “There are lots of opportunities to get funding if your marks are good and you actively build the right networks.” For example, Zutari recently employed 90 graduates in its most recent intake, and puts in place development plans and opportunities for these young engineers, scientists and advisors to find their ideal place in the business to maximise their growth.
Wallace started off studying civil engineering at the University of Pretoria as a bursary student of construction company Aveng. After realising that construction was not for him, he moved to a water consulting engineering company and did his honours degree in environmental engineering part-time, again on a bursary. He then took up a role as a general civil engineer, with most of his projects in the solid waste engineering space. This started with the design of landfills and waste containment facilities, but quickly transformed into waste management, which was much more exciting.
“Managing waste – think black bags and recycling – is as much a social issue as it is a technical issue, and this paved the road for the journey that led me to where I am now,” says Wallace. In 2016, he was fortunate enough to be awarded one of ten annual scholarships offered by the Swedish Institute to South Africans to complete a master’s degree in engineering in Gothenburg, Sweden, for two years.
Wallace opted to study industrial engineering, a field that links business and engineering – and to his surprise it was all about innovation and how we organise industry, business and teams to find new ways of doing things. “My team does exactly this: We search for new ways of solving very complex issues around infrastructure development.”
In his current role, Wallace looks at how infrastructure fits into an organisation’s goals to drive impact and success. He leads a team of diverse people, not only engineers, who assist clients to build the right infrastructure to meet multiple needs. “We focus on making investments in infrastructure sustainable so that everything still works in 20 to 50 years’ time.” The team specifically aids with creating projects where the public and private sector join forces to have a bigger impact. “We create business cases and investment strategies, we help assess and manage project risks and we also help companies with lots of infrastructure improve their businesses to deliver bigger and better impact,” explains Wallace.
His future plan is to concentrate on being an enabler to the business for embedding sustainable development principles and guide technical teams to frame the impact of their efforts in terms of the SDGs and wider impact metrics. “We are especially interested in being the connectors that help private and public entities come together to collectively solve the huge infrastructure challenges facing South Africa and the continent. I have learnt over my 15 years as an engineer that the challenges are very complex, and we need to all come together to collectively frame and solve the issues. Engineers cannot do it alone.”
His advice to young people contemplating a similar career path is: “Do not get too hung up on worrying about if you ‘fit’ the engineering mould. The industry is evolving and there is an amazing opportunity to bring creative skill sets to the table to solve the world’s biggest problems. Engineers are very much trained to be problem solvers, and this leads to a very exciting career with options downstream. Do make sure you keep your maths and science strong, but do not forget to invest in things like your people and emotional intelligence skills, too,” concludes Wallace.
World Engineering Day on Saturday 4 March is an opportunity to celebrate engineering and the contribution of the world’s engineers to a better, sustainable world.
Eskom gears up to support growth of e-mobility sector in SA
Eskom recently announced that it is positioning itself to play an important role in supporting the development of the electric mobility sector in South Africa.
Speaking at Africa’s Green Economy Summit held in Cape Town, Eskom Group Executive for Distribution, Monde Bala, stated that the organisation has pledged to be part of the anchor market for electric vehicles (EVs) to make a positive contribution towards local market stimulation.
The power utility said it has joined the list of local sponsors for the E-Fest Electric with a R2.1-million sponsorship, which will profile Eskom’s microgrid technology and mobility solution.
Eskom said that it has already submitted the residential time-of-use (ToU) charging tariff to the National Energy Regulator of South Africa (Nersa) for approval.
This will enable EV owners to achieve significant savings when using the off-peak and standard periods to charge their cars, encouraging EV uptake and boosting electricity sales.
“In line with Eskom’s Just Energy Transition (JET) vision of achieving ‘net zero’ carbon emissions by 2050, we are also aiming for zero emissions from our sizeable fleet of vehicles. We aspire to replace our entire fleet of conventional vehicles with electric vehicles by 2040,” said Bala.
Eskom said it is undertaking a pilot project to introduce electric vehicles, utility and passenger, to the Eskom fleet, which amounts to approximately 13 000 vehicles.
Plans are underway to begin the process of converting the rest of the Eskom fleet to electric where possible.
“We will soon seek suitable partners for the rollout of public charging stations at Eskom sites across the country through the applicable procurement processes. In time, these should be accessible to the public,” said Bala.
Eskom has also announced that it is deploying microgrids that will also support the growth of eMobility in the country, while also serving as an alternative solution to addressing load shedding.
Eskom currently has four sites being powered by the microgrid technology in Ficksburg (Free State), Lynedoch (Western Cape) and Swartkop (Northern Cape), supplying renewable electricity to over 200 households, a police station and businesses in that area.
According to the power utility, it is conducting feasibility studies at more than 80 project sites around the country.
Most of the identified sites will use solar photovoltaic (PV) as the primary source of energy and lithium ion batteries for storage capability.
Other sites will use micro wind turbines and small-scale hydro turbines, based on the most optimum energy source available.
The rollout of these projects will be phased over the next five years.
The deployment of the microgrids in Swartkop and Ficksburg serves as a proof of concept in using of microgrids in remote areas that are difficult to reach or expensive to electrify through the conventional means of electrification.
“On the other hand, the installation of the microgrid at Lynedoch residential area demonstrates how this technology can be used to complement the grid, serving as a backup electricity supply to households, hospitals and other facilities. As an added advantage, microgrids contribute to reducing carbon emissions because they use renewable sources,” the power utility said.
Battery storage, according to Eskom, will also be a key enabler of eMobility.
Eskom is making notable progress in this regard, with the construction of the first energy storage facility under Eskom’s flagship Battery Energy Storage Systems (BESS) project having already begun at the Elandskop BESS site in KwaZulu-Natal in December last year.
Alarm bells ring over multibillion-rand nuclear power station plan for Durban
Leading environmentalist Bobby Peek described the nuclear power option as ‘ludicrous’, arguing that the city’s plan — along with allied proposals for gas, coal and waste incineration — aimed to tie the country into unaffordable nuclear or fossil fuel energy plans.
Durban municipal leaders are hoping to install a giant 940MW nuclear power station in the city as part of a public-private sector partnership plan to reduce the city’s dependence on the Eskom national power grid, eThekwini Municipal Mayor Mxolisi Kaunda announced on Tuesday. A nuclear plant of this capacity is roughly half the size of Eskom’s 1 940MW Koeberg nuclear power plant, 30km north of Cape Town, which was set up nearly 40 years ago.
Details remain sketchy, but the controversial proposal to build a nuclear plant in Africa’s largest port city is likely to eclipse Kaunda’s announcement that the city hopes to reduce its reliance on the Eskom national grid by 20% by 2025; by 40% by 2030 and ultimately achieve 100% energy independence by 2035.
Opening the Energy Transformation Summit at Durban’s International Convention Centre, Kaunda also announced short-term plans to build a new 400MW coal-fired power station; a new gas import terminal in Durban harbour; a 300MW gas-to-power plant and a smaller 100MW solar PV plant.
He hoped the new solar and gas plants would be running by 2025 and 2026, respectively. All these proposals formed part of the city’s Municipal Independent Power Producer Procurement (MIPPP) Programme, which aimed to attract around R325-billion in investment by 2035.
On the Durban nuclear proposal, Kaunda said: “In the medium to long term, we are planning to procure an additional 2 600MW of new generation capacity to adequately boost regional transformation. eThekwini Municipality will start new procurement of 50MW waste-to-energy, 300MW offshore wind and 940MW of nuclear power in the new financial year (July 2023).”
There have been whisperings about a Durban-based nuclear power station for some time, with the old Durban International Airport in Prospecton mooted as a possible site.
After his announcement, Our Burning Planet from Daily Maverick asked the mayor if he was prepared to elaborate on the timelines, funding sources and location of the proposed nuclear power station.
Kaunda did not answer directly, stating that the city’s strategy was to support private businesses through public-private partnerships. He said the city had identified about 30 sites around the city for a variety of new energy investment projects in terms of eThekwini’s MIPPP, which formed part of a government plan to allow municipalities in good financial standing to procure electricity directly from independent power producers.
In response to our repeated question on whether the intention was to locate the proposed new nuclear plant in Durban, Kaunda simply responded: “Yes.”
In his prepared remarks to the energy summit, Kaunda asserted that: “The city’s energy transition policy was subjected to a rigorous process of public participation as informed by Section 17 of the Municipal Systems Act. Therefore, we are proud to share with you that the vision and strategic targets articulated in the energy transformation policy were formulated in consultation with the public.”
‘No consultation with the public’
But Bobby Peek, director of the groundWork environmental justice group and winner of the international Goldman Environment Prize, asked: “Who did Mayor Kaunda consult? There has been no consultation with the public about eThekwini’s future energy plans. Why were we, and other civil society groups, not consulted?”
Peek described the nuclear power option as “ludicrous”, arguing that the city’s plan — along with allied proposals for gas, coal and waste incineration — aimed to tie the country into unaffordable nuclear or fossil fuel energy plans.
The exclusion of environmental and climate crisis perspectives from the latest proposals was acknowledged, in part, at the opening of the summit by local businessman and KwaZulu-Natal Growth Coalition co-chair Moses Tembe, who stated:
‘No environmentalists’
“There are no environmentalists on the panel. We need to be clear about how we respond to environmentalists [in the context of the electricity State of Disaster]. It’s an elephant in the room…”
But if these climate crises and environmental perspectives had somehow been overlooked, inadvertently, the summit organisers nevertheless gave top billing to the future energy perspectives of the oil and gas industry.
Mineral Resources and Energy Minister Gwede Mantashe failed to pitch as advertised on the summit programme, but oil and gas industry cheerleader NJ Ayuk gave a rousing presentation in his absence as a keynote speaker.
To the applause of several of the invited delegates, the Cameroon-born head of the African Energy Chamber declared that “as someone who comes from the oil and gas industry” he was very happy to hear about eThekwini’s energy transformation proposals.
“Don’t back down to those who tell you not to use coal… Come from the back to sit at my table… I get attacked by environmentalists all the time, but I’ve got a thick skin… Nobody loves the environment more than we do. But we need to look at everything including the free market… I believe in oil and gas… and coal… and carbon capture and storage.”
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