After stalling last year, global renewable-energy capacity additions are expected to recover strongly in 2019, supported by a solid rebound in onshore wind deployments and ongoing solar photovoltaic (PV) growth.

The International Energy Agency (IEA) expects almost 200 GW of renewables capacity to be added at a growth rate of nearly 12%, representing the fastest pace of deployments since 2015. The IEA expects 53 GW of onshore wind to be added, a 15% increase on the previous year.

The Global Wind Energy Council (GWEC) is equally optimistic, forecasting 330 GW of new wind capacity additions during the five-year period to 2023, underpinned by especially strong growth in China and North America.

Even excluding China and the US markets, the outlook remains buoyant, with GWEC market intelligence director Karin Ohlenforst expecting between 32 GW and 35 GW of wind capacity to be added yearly to 2023 across the other territories, including Africa. In fact, the organisation anticipates that nearly 7 GW of wind capacity will be added across several African economies over the five-year period, with South Africa responsible for about 1.8 GW.

The South African growth forecast has been made despite a frustrating delay in the finalisation of the long-awaited update to the Integrated Resource Plan (IRP) for electricity, which itself follows a controversial three-year hiatus in the building of new renewables plants, owing to Eskom’s well-publicised refusal to sign new power purchase agreements (PPAs).

The positive outlook for the domestic wind-energy market is, however, supported by a growing consensus that a combination of wind, solar PV and flexible generation represents the lowest-cost way for South Africa to meet new demand and close any supply gaps that will emerge when Eskom decommissions some of its ageing coal-fired power stations.

This reality is reflected in the draft IRP update, notwithstanding the inclusion of policy adjustments to cater for more expensive new coal and imported hydropower, as well as the imposition of a questionable constraint on the amount of wind and solar PV that can be added in a single year. The document expects a total of 9 980 MW of additional wind capacity to be introduced to the domestic grid by 2030.

Impressive Inroads

Despite the recent headwinds, the domestic wind sector has already made some impressive inroads.

Through the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), a total of 36 independent power producer (IPP) wind farms have been procured since 2011, representing a combined capacity of 3 366 MW. By March, 22 of these projects, with a capacity of 1980 MW, were in commercial operation and 12 more were under construction, while PPAs for two small-scale projects were still awaited.

The wind IPPs represent the largest single renewables technology procured to date under the REIPPPP, accounting for more than half of the renewables capacity procured and representing a combined investment value of R80.6-billion. Overall, 6 422 MW of renewables capacity has been procured through four bidding rounds and 64 projects, representing 3 976 MW of generation capacity, has been connected to the grid. The combined investment across all the renewables projects has been R209.7-billion.

Crucially for the future of the technology, wind tariffs have dropped by 59% since the start of South Africa’s renewables roll-out in 2011. The average wind tariff bid during the ironically named ‘expedited round’ of the REIPPPP, which was never concluded, was 62c/kWh, compared with 160c/kWh achieved in 2011. Wind tariffs are, thus, now cheaper than new coal-based generation and in line with solar PV tariffs, which have fallen by an even more dramatic 83% over the same period.

“Based on this fact, we expect wind energy to form a large part of the least- cost energy mix in the next IRP,” South African Wind Energy Association (SAWEA) CEO Ntombifuthi Ntuli tells Engineering News.

Cost Competitive

This sentiment is supported by research conducted by the Council for Scientific and Industrial Research Energy Centre, which shows that the least-cost mix for South Africa in 2050 will be one comprising 70% solar PV and wind, with wind-derived energy contributing 164 TWh against an assumed yearly demand at that date of 392 TWh. To support such production, the installed wind base by 2050 would be nearly 68 GW.

Another study, titled ‘Pathway towards achieving 100% renewable electricity by 2050 for South Africa’ and compiled by academics based at LUT University, in Finland, concludes that a fully renewable- energy-based system, comprising mainly solar PV and wind, will be at least 25% more cost competitive by 2050 than the generation scenario currently being considered by policymakers.

The authors argue, therefore, that the country’s energy policy should be immediately revised to place solar PV and wind energy at the core of the future electricity system.

Such a large-scale roll-out is underpinned by a domestic wind resource that has been found to be superior to that of most other countries. The Wind Atlas for South Africa, which is a high-resolution wind resource map covering all nine provinces, has confirmed that, besides high-quality coastal resources, there are vast inland areas that have wind resources that compare well with international wind resources. In fact, research suggests more than 80% of South Africa’s land mass has enough wind to support load factors of between 30% and 45%.

The growing competitiveness of wind has also not gone unnoticed by the private sector, with several companies indicating that they would be interested in contracting with wind IPPs in an effort to improve supply security and price-path visibility in a context of steeply rising Eskom tariffs and the ongoing threat of load-shedding.

SAWEA anticipates that bilateral PPAs with corporates and municipalities could add further impetus to domestic demand for wind energy and that a shift to such deals is likely to gain momentum once Eskom’s transmission and system operator functions are unbundled from the utility.

Bilateral PPAs have already emerged as a strong driver of wind demand in North and South America, with GWEC reporting growth in corporate PPAs in several markets, including the US, Mexico and Brazil.

SAWEA chairperson Mercia Grimbeek believes South Africa can easily compete with Chile and Australia in terms of its renewables endowment, in order to provide similar low-cost electricity for its mining sector.

To put the endowment in context, Grimbeek says that, if only 1% of South Africa’s land area were to be used for solar and wind harvesting, the endowment would be four times the size of the country’s entire coal endowment.

The regulatory framework in South Africa allows for wheeling of power, but the commercial terms hitherto offered by Eskom for use of the grid for wheeling has proved commercially unattractive. SAWEA expects that cost position to improve once the transmission and system operator functions are separated from Eskom, in line with an unbundling plan announced by President Cyril Ramaphosa as one of the preconditions for further fiscal support for Eskom.

Changing the Narrative

Despite this increasingly strong commercial proposition, South Africa’s wind industry is acutely aware of ongoing scepticism locally of variable renewable energy, particularly as it relates to local content, black economic empowerment and the perceived risk it poses to coal jobs.

Ntuli tells Engineering News that SAWEA launched an industry commitment statement in 2018, through which it undertook to collaborate with government and other stakeholders to ensure the industry’s full alignment with government policy frameworks, including the development of a transformed national renewables industry. In addition, the industry has committed to developing a domestic value chain for wind that will seek to increase black participation in the construction and operation of wind farms.

SAWEA believes that yearly wind deployments of 1.5 GW should be sufficient to facilitate the sustainable local manufacture of wind-energy components. Ntuli stresses, however, that manufacturers are risk averse and that continuous procurement, with no gaps, will be critical if South Africa hopes to attract wind-component investors. “Policy certainty and long-term visibility of procurement plans are key requirements in informing investment decisions, especially in our sector, where we have to meet local content requirements.”

She sees the lowest-hanging fruits being components that are commonly used by all original-equipment manufacturers, such as wind towers and related tower internals. “When procurement of wind energy was at its peak between 2011 and 2014, the industry collectively supported the investments in two steel tower manufacturing facilities and a concrete tower facility to service projects in the Eastern Cape and Western Cape. However, during the impasse in the signing of PPAs, one of the facilities struggled to keep operations going without growth in orders and eventually closed down. If the industry gets a commitment to procure 1.5 GW of wind energy per annum, our wind tower manufacturing capacity can actually double.”

The industry is also considering ways of making a contribution to a just transition for coal miners, whose jobs are threatened by the decommissioning of aged Eskom power stations, located mostly in the Mpumalanga province.

CSIR Energy Centre head Dr Clinton Carter-Brown told lawmakers recently that pursuing the energy mix outlined in the draft IRP 2018 would precipitate a 100 000 job decrease in coal. However, it would also lead to a net job gain as gas employment would grow to 55 000 by 2030 and renewables would have contributed up to 110 000 jobs by the same date. There would be 375 000 electricity jobs in 2020, growing to 386 000 in 2030.

Carter-Brown argues that transitioning to the future energy system will take time and, with coordinated planning, will also present major opportunities, including the production of green hydrogen and synthetic, carbon-neutral fuels and chemicals. “Opportunities for new industries abound; however, the transition to these new industries, which are aligned with the Fourth Industrial Revolution, will require new skills and research and capacity building will be key.”

Ntuli says the wind industry is committed to working with the South African Photovoltaic Industry Association on its Solar Industry Development Plan and possibly extending it into a renewables industry development plan. “This plan looks at focused deployment of solar and wind energy in declining mining regions within the Renewable Energy Development Zones and where it makes sense in terms of solar and wind resource availability. This plan is intended to positively contribute to declining employment in those regions as a result of the transition.”

Again, she stresses that the success of such an initiative will hinge largely on policy certainty and other supportive policy mechanisms such as the designation of special economic zones in coal regions to attract manufacturing investments.

“We are also open to contribute to any other just energy transition efforts coordinated by government. For instance, if government were to say a percentage of social economic development funds should be directed to the reskilling of the mining sector workforce in anticipation of a coal mining decline and associated job losses, we will support such an initiative.”