After much anticipation, President Cyril Ramaphosa has announced the appointment of South Africa’s first Minister of Electricity, Mr Kgosientsho Ramokgopa.
With the new position introduced during the President’s ‘State of the Nation’ address in February, Mr Ramokgopa has now been given the thankless task of solving the country’s burgeoning energy crisis – or what Ramaphosa has termed an “existential threat” to both the country’s economy and the very foundations of our society.
Considering how every hour of load shedding costs the South African economy some R500-million in lost revenue, the pressure is on for Ramokgopa to make good on the President’s promises.
But as the debate over national leadership’s response rages on (i.e. the state of disaster, Karpowership, Eskom bailouts, etc.), it is important to consider that, while the energy crisis is indeed a foremost priority, so too is the need for a ‘Just Energy Transition’. What’s more, we recognise that these two focus areas are not mutually exclusive. On the contrary, the crisis has shown that renewables are playing a key role in fast-tracking additional supply. As a result, they are making important socio-economic contributions in a period of great market uncertainty, and in-turn accelerating South Africa’s progression towards a ‘green(er)’ economy.
An obvious example of this is the explosive uptake of solar energy in recent weeks, propelled by households and businesses looking to get themselves ‘off the grid’. Supported with policy reform and new tax incentives, the sector is now unlocking new commercial opportunities for industry and consumers alike, with the construction of solar factories also resulting in new job opportunities for South Africans. With the proper support, similar outcomes can come from other renewable sources such as wind, which could deliver an additional 250,000 jobs and more than R150-billion in gross value-add to the economy over 25 years.
Likewise, the CEO of Anglo American – one of the leading coal mining operators in the country – believes that green hydrogen can add up to 14,000 jobs per year and unlock synergies with the platinum mining sector (which currently employs more than 170,000 people and would be expected to increase, thanks to platinum group metals being a key ingredient in the manufacture of hydrogen engines and batteries).
Together, these findings signal how the introduction of renewable energy can usher in not only advantages for the environment, but new revenue opportunities for businesses and new job opportunities for the unemployed too. Furthermore, the adoption of renewables stands to bolster South Africa’s economic security and competitiveness for the long-term, as our leading trading partners like the European Union threaten to impose significant import duties on goods manufactured in high-carbon energy markets where coal and non-renewables remain dominant.
More importantly, these developments show that while energy insecurity is an immediate crisis that demands a swift response, it does not dictate that South Africa abandon its efforts aimed at introducing a Just Energy Transition (JET). In fact, Ramokgopa can take direction from both the President and Minister of Forestry, Fisheries and Environmental Affairs, Barbara Creecy, who have publicly shared their alignment in this regard.
In his address to the nation, President Ramaphosa stated that South Africa “will continue [its] just transition to a low-carbon economy…” further adding that this would be done in a way that accounts for the current crisis and opens up the possibility of new investments, new industrialisation, and new jobs. This was echoed by Minister Creecy, who, during a panel discussion at the Mining Indaba in Cape Town, explained that national government remains committed to balancing the needs of the energy crisis with those of a just transition.
Admittedly, this will be no easy task for the new Minister, with opponents already calling on him for a laundry list of next steps. To this end, it would be wise for Ramokgopa to consult and partner with industry, which has the working knowledge, resources and networks needed to more efficiently solve the crisis and achieve JET. As a start, the Minister can simply tap into the partnerships already happening between players in the industry.
A good example of this is the ‘Innovation Partnership on Energy,’ an initiative driven by Global Alliance Africa – a UK-Aid-funded project delivered by Innovate UK KTN.
Over the past few months, Innovate UK KTN has organised several ‘Energy Advisory Brainstorms’ which brought together a group of representatives from energy producers and, among others, the likes of the CSIR, the Presidential Climate Commission, the South African National Energy Association, and the Department of Trade, Industry & Competition, and Department of Environment, Forestry & Fisheries. Together, they are exploring how innovation and international collaboration can be harnessed to unlock new opportunities for energy production and usage in South Africa.
Already, the group has identified several energy-innovation focus areas in which the public, private and civil sectors can collaborate towards:
First, innovation partnerships should be leveraged to support efforts aimed at developing a mix of small energy businesses and large corporations. A good mix of businesses will create space for more low-trained jobs, while leaving room for highly technical opportunities down the line.
Second, that innovation partnerships should tap into global expertise and look to energy solutions from multinationals and foreign markets, where we are more likely to find successful use-cases and adaptable solutions to energy security and job creation.
And third, that innovation partnerships can enhance policy redress, thanks to improved coordination across regulatory bodies and improved collaboration and knowledge sharing between industry players.
In doing so, the Innovation Partnership on Energy has also identified several first steps which South Africa should take in this regard:
Among these is the establishment of a ‘project help hub’ where businesses looking to enter the renewable energy space can receive technical and capacity-building support to equip both their operations and staff with the knowledge, resources and training they need to establish ‘green’ foundations. Another focus area is the development and implementation of new funding models (such as off-take agreements, project preparation grants, kick-starter funding, concessional debt funding, and other financial streams) to ensure that this process is well financed.
Additional priority areas include a focus on decarbonising hard-to-abate industrial sectors and creating new hydrogen commodities for export, such as green ammonia, sustainable aviation fuel, green steel, and green LPG, among others. Also, the development of South Africa’s workbench was also stressed, which entails identifying and attracting strategic foreign intellectual property rights holders to set up production houses in South Africa.
Finally, we need to take active measures to stabilise the national grid on a smaller scale using many smaller solutions. Doing so will relieve the national utility of the sole burden of power generation, while also affording greater competition and stimulating innovation across energy fields.
These are just a few of the areas being investigated by Global Alliance Africa and the Innovation Partnership focusing on a JET. Their next step is to assist industry in the building-out of project plans, gathering of stakeholders to execute on them, and exploration of new funding mechanisms to enable movement.
However, progress can only be achieved if we catalyse engagement from across the energy ecosystem. To this end, we call on Mr Ramokgopa and other players in the industry to collaborate with us, should working towards solving South Africa’s energy crisis and Just Energy Transition meet your mandate.
By Alana Kruger, Knowledge Transfer Manager for South Africa at Innovate UK KTN Global Alliance Africa