In our latest thought leadership webinar, our panel of Standard Bank, industry and government experts discussed the future of decentralised energy production, a topic which has become increasingly relevant in South Africa these past few years.
A decentralised solution to our energy requirements has never felt more urgently needed in South Africa. Electricity tariffs have increased significantly over the last decade (albeit off a low base), and there are no indications that this trend will not continue.
By contrast, the price of solar PV modules has fallen dramatically, down to its lowest level of $0.0135 per kWh, a significant decline of over 70% over the last few years. The $0.0135 per kWh tariff was achieved in the tender for the 2 GW Al Dhafra Solar PV project in Abu Dhabi. This is the lowest rate ever achieved for a solar power project, beating several previous record bids under $0.02 per kWh. This, combined with its renewable nature and developments in storage solutions, has made PV an increasingly attractive alternative electricity source to consumers.
Decarbonisation, decentralisation and digitisation
For the South African economy to grow at the levels of the leading emerging market peers’ group, we need to produce significantly more electricity than is currently available. An ever-increasing number of policy makers are agreeing that it does not make sense to expect the national electricity company to shoulder that burden alone.
The rapidly falling prices of solar PV modules and the increasing urgency of decarbonising the electricity supply create a huge incentive for private entities to set up their own solar generating facilities. Ideally, this needs to be supported by a more modern, digitised national grid, into which excess power from decentralised producers can be easily wheeled to supplement other consumers’ needs.
Unblocking the bottlenecks
To date, the regulatory landscape has not supported scaling the decentralised approach to the extent required. That said, there have been some positive developments around the regulations. These will hopefully streamline the application process and make it more likely that these projects will succeed. The developments include removing the 1MW self-generation output limit, removing the need for ministerial approval on certain projects and a total exemption on licences for projects generating less than 1MW.
Standard Bank’s contribution
The Standard Bank Decentralised Energy Team has been working hard at helping their clients and EPC partners to successfully commission their energy projects.
During the webinar, Standard Bank’s Berrie de Jager, PBB / head of Natural Resources, shared a few case studies from the over 150 commercial-scale decentralised energy projects that the bank has funded over the past 24 months. Our experience, combined with our decentralised energy ambitions, can help you avoid common mistakes, reduce the time for projects to be commissioned and reduce the costs associated with these projects.
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