Erthlife Africa’s Policy Advisor Bongiwe Matsoha at Open Society Foundation (OFS) event. (23 February 2021)
While we acknowledge the President’s references to climate change and the just transition, in addition to the ramping-up of renewable energy (RE) production, it was unclear from his State Of the Nation Address (SONA) what future renewable energy targets the country would pursue. We really would have liked the President to be more explicit about the long-term renewable energy plans as they relate to the just transition because according to the Council for Scientific and Industrial Research (CSIR) a more ambitious RE programme involves bringing online around 5GW of renewable energy per year, yet the IRP2019 – South Africa’s electricity plan – still imposes annual build limits on renewable energy development. As it is, we are already due for an update of the Integrated Resource Plan (IRP) and since the sector is fast evolving, we ought to have an IRP update every two years, as required.
A revised IRP would reveal that nuclear and gas are not least-cost options for power generation. As a matter of fact, gas prices have risen in the last couple of years, meaning the IRP2019 modelling is now outdated. Like coal, gas development and expansion in the country will undoubtedly have negative effects on the lives and health of communities. But not only that, developing the infrastructure needed will also be a costly exercise and because of the high capital investments required upfront, those with vested interests in natural gas will likely resist the abandonment of these assets. Furthermore, gas developments could likely raise electricity costs given the high volatility of gas markets in recent years.
We did however welcome the President appointment of Daniel Mminele as the Head of the Presidential Climate Finance Task Team. Hopefully, this will mean more transparency in terms of the allocation, monitoring and reporting of funds from the Climate Finance deal. Also, if the plan is to assist communities through this fund, communities must not just be consulted but meaningfully involved in decision-making. However, because of South Africa’s history of corruption and rent-seeking, this is a story we will be following closely.
We also noted President Ramaphosa did not mention coal nor nuclear energy in his SONA address. Given that both are particularly contentious issues at the moment and the DMRE seems to be pulling the country into a different direction than a just transition, the President ought to have made some acknowledgement of the role coal and nuclear will play in the future. Also, the President made no mention of the long-awaited Climate Change Bill, which is meant to provide “for a coordinated and integrated response by the economy and society to climate change and its impacts” and give clear legal guidance to the Presidential Climate Commission.
What’s more, is the SONA failed to unpack how unbundling Eskom would alter the power market. While we know it is supposed to open the electricity market, there is a real risk that unbundling could lead to the privatisation of power generation, as has happened in other countries, thereby resulting in soaring electricity costs. Therefore, and rightly so, unions and others are calling for different models, which allow for social ownership of renewable energy projects.
The SONA address also failed to mention electricity grid upgrades in the country’s infrastructure plans. This is quite concerning because as more projects come online, we will need a grid capable of integrating more renewable energy. As we understand it, the current grid has affected the selection of preferred bidders and, therefore, the final average cost of renewable energy projects in Bid Window 5.
Lastly, while it was encouraging to hear of the country’s plans to develop electric vehicles and a green hydrogen industry, since both rely on renewables, it is important that we understand how these fit into the broader plan for a just transition. As such, we need an IRP that is updated regularly, to reflect the current changes in the energy sector. It is also crucial that we transition away from fossil fuels, which includes gas. And the Climate Change Bill – which will ensure that the entire country pivots toward the just transition – should be finalised, as a matter of urgency.
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