Diversifying South Africa's renewable energy mix through policy

Valenti, Devan (2015-04)

Thesis (MPhil)--Stellenbosch University, 2015.

Thesis

ENGLISH ABSTRACT: South Africa is one of the most energy-intensive economies in the world, with around 90 per cent of its electricity generated using coal as a primary resource. As such, the South African energy system remains on a highly unsustainable path, and the potential for long-term growth and prosperity of the economy is thwarted. The alternative to conventional energy, renewable energy, has unfortunately been relatively slow to take off in the South Africa market. This is disappointing considering the country’s wealth of natural resources required for renewable energy generation. The potential of renewable energy to contribute to the South African energy mix is thus significant. The transition to a green economy, and subsequently a more sustainable energy future, is therefore achievable and realistic. However, national policies aimed at promoting the deployment of renewable energy have been thwarted by inconsistencies, lack of coordination, and proved relatively ineffective at increasing the country’s renewable energy capacity to its full potential. The recent policy changes from a feed-in tariff to a competitive tender approach dented investor confidence in the South African renewable energy industry significantly. Nevertheless, renewable energy policy in South Africa is still in its infancy, and valuable lessons are still to be learnt and incorporated into future policies going forward. A critical analysis of the current policy identifies the need for amendment to the structure of the policy landscape. The current policy strongly favours larger, more established and mature renewable technologies, whilst completely neglecting smaller and less mature ones. This not only results in a highly undiversified renewable energy mix, which has considerable negatives in itself, but also reduces the ability of the policy to capture a host of significant opportunities and advantages associated with small-scale renewable energy projects. The importance of diversifying South Africa’s renewable energy mix was therefore ones of the principal stances of this study, and intervention that ensured diversification within the industry was therefore vital. This study fundamentally designs and proposes a revised policy system that makes use of both competitive tenders and feed-in tariffs within the policy framework. In essence, this would allow for greater diversification within the renewable energy industry. The competitive tender component should be used for larger, more established technologies and projects, while the feed-in tariff should be used to drastically stimulate investment in smaller technologies and projects. By making use of a dual-mechanism system, the benefits associated with small-scale renewable energy projects can be realized without any noteworthy opportunity costs foregone. These benefits include diversification of the renewable energy mix; stimulation of smaller technologies; increased job creation; and stabilisation of supply volatility. This study recommends that the current renewable energy policy in South Africa be reassessed for both its relevancy within the South African context as well as its ability to effectively promote the deployment of alternative energy technologies. In an ever-changing and globalising world, where exogenous influences on national policies are stronger than ever, it becomes necessary and of utmost importance that policies are evaluated constantly in order to ensure their effectiveness is at optimal level.

AFRIKAANSE OPSOMMING: Die Suid-Afrikaanse ekonomie is een van die energie-intensiefstes ter wêreld, met steenkool as hoofbron vir sowat 90 persent van die land se kragopwekking. Die Suid-Afrikaanse energiestelsel as sulks bly dus op 'n onstabiele pad, en die potensiaal vir langdurige ekonomiese groei en welvaart word geknel. As teenvoeter vir konvensionele krag het hernubare energie steeds stadig veld gewen in die plaaslike mark – wat teleurstellend is as die land se rykdom aan natuurlike bronne vir hernubare energie-opwekking in ag geneem word. Hernubare energie het dus 'n aansienlike potensiaal om tot die Suid-Afrikaanse energiemengsel by te dra. Die oorgang na 'n groen ekonomie, en gevolglik na 'n volhoubaarder energie-toekoms, is daarom bereikbaar en realisties. Nasionale beleide oor hoe die uitrol van hernubare energie bevorder word, is egter tot dusver gestrem deur ongereeldhede en 'n gebrek aan koördinasie, en was gevolglik relatief ondoeltreffend om die land se hernubare energiekapasiteit ten volle te verhoog. Die onlangse beleidsveranderinge vanaf 'n toevoertarief na 'n mededingende tenderbenadering het beleggersvertroue aansienlik geskaad. Suid-Afrika se hernubare energiebeleid is nietemin nog in sy kinderskoene, met kosbare lesse wat geleer kan word en vir die pad vorentoe in toekomsplanne ingewerk kan word. 'n Kritiese ontleding van die huidige beleid wys hoe nodig 'n aangepaste struktuur vir die beleidsraamwerk is. Die huidige beleid begunstig groter, meer gevestigde en ontwikkelde tegnologieë terwyl kleiner en minder ontwikkeldes heeltemal afgeskeep word. Dit het tot gevolg nie net 'n hoogs ongediversifiseerde mengsel van hernubare energie nie, wat op sigself 'n aantal nadele inhou, maar boonop verminder dit die beleid se vermoë om vele betekenisvolle geleenthede en voordele aan te gryp wat gepaard gaan met kleinskaalse projekte vir hernubare energie. Dat die diversifisering van Suid-Afrika se hernubare energiesamestelling belangrik is, was dus een van dié studie se hoofbenaderings, asook dat ingryping ter wille van diversifisering binne die bedryf onontbeerlik is. Hierdie studie bied 'n ingrypende ontwerp en voorstel vir 'n hersiene beleidstelsel, met mededingende tenders asook toevoertariewe binne die beleidsraamwerk. Dit sal in wese ruimte laat vir groter diversifikasie binne die hernubare energiebedryf. Die mededingende tendergedeelte behoort vir groter, meer gevestigde tegnologieë en projekte gebruik te word, terwyl die toevoertariewe kan dien om belegging in kleiner tegnologieë en projekte te stimuleer. Deur 'n stelsel van tweeledige meganismes kan die voordele van kleinskaalse hernubare energieprojekte realiseer sonder die inboet van noemenswaardige geleentheidskoste. Dié voordele sluit in, om enkeles te noem, die diversifikasie van die hernubare energie-toneel; die stimuleer van kleiner tegnologieë met gepaardgaande groter werkskepping; en toenemende plaaslike produkvervaardiging. Met dié studie word aanbeveel dat Suid-Afrika se huidige beleid oor hernubare energie heroorweeg word, rakende die relevansie daarvan binne die landskonteks asook die beleid se vermoë om die ontplooiing van alternatiewe energietegnologieë doeltreffend te bevorder. In 'n voortdurend veranderende en globaliserende wêreld, met buite-invloede op nasionale beleidsrigtings sterker as ooit, word dit noodsaaklik en uiters belangrik dat beleide voortdurend heroorweeg word om die doeltreffendheid daarvan op die gunstigste vlak te verseker.

Please refer to this item in SUNScholar by using the following persistent URL: http://hdl.handle.net/10019.1/96742
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