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Dire warnings on energy crunch raise questions on green investment

Energy experts forecast that power cuts could get '10 times worse' by 2026 unless government shows political will to back renewables

The latest wave of power cuts – or 'load-shedding' as the government prefers to call them – could be a foretaste of a wider electricity crisis over the next four years, according to a new report by Cape Town-based consultancy Meridian Economics.

Nationwide power outages by 2026 could be 10 times worse than their lowest ebb in 2021, it warns, unless the country sharply boosts generating capacity.

Yet President Cyril Ramaphosa's government remains divided over strategy: specifically, about the mix between fossil fuels and renewables and the pace at which the country retires its massive coal-fired power stations (AC Vol 62 No 22, Leaders clash over climate). Eskom, the state power-utility, must decide whether to shut down a slew of ageing and poorly maintained coal-fired power stations over the next few years.

Green lobbyists are arguing for the coal plants to be phased out rapidly but they're battling with a well-organised lobby, an unlikely alliance of freight and mining companies, as well as the National Union of Mineworkers, formerly one of the most powerful trade unions in the country (Dispatches 27/4/22, President Ramaphosa shifts back to market economics despite heavy political risks). Apart from protecting their economic interests, this lobby argues that a 'premature shut-down' of the coal stations would trigger even worse power shortages.

And the Meridian report, despite its headline argument for more renewables, warns strongly against exacerbating the energy shortfall.

State officials and companies are making slow progress on agreeing contracts for renewable projects. In response to the power cuts last year, the government approved 2,000 megawatts of new power generation contracts. And most of those new projects have been snagged by legal disputes over procurement regulations and local content requirements.

The package agreed last year falls far short of what is needed, says Meridian Economics. It argues the country needs 15,000MW of solar power and 7,000MW of wind power, as well as 4,000MW of thermal energy.

The US$8.5 billion deal agreed at the UN's COP26 climate summit in Glasgow last November for South Africa to get fresh finance for green energy in return for retiring coal stations has also been held up.

Into this vacuum enter some South African companies drawing up plans for a wave of green investments. One of the most publicised is that of mining magnate Patrice Motsepe, President Cyril Ramaphosa's brother-in-law, which announced a medium-term target of adding 5,000MW of renewable power to South Africa's grid, and 2,000MW over the next year.

The plans were released by Motsepe's African Rainbow Energy & Power in partnership with Absa Bank; last year, the company launched a couple of 100MW renewable projects. Its stated determination to speed up its green projects might encourage other companies into the field should they sense that Motsepe's initiative will get political backing.

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