Finance and Economic Opportunities:

[a] What is the total amount of electricity added to the grid by independent power producers in the Western Cape?

Including only utility-scale projects, developed through the national Renewable Energy Independent Power Producer Procurement Program [REIPPPP], a total of 8 272 GWh^[1] of energy has been produced by projects in the Western Cape since inception of the program. This equates to approximately 1 576 GWh of renewable energy generated annually [based on 2021 numbers¹]. The Western Cape uses approximately 20 331 GWh per annum [based on 2020 numbers¹]. It is notable that small-scale embedded generation [SSEG] projects in the province might also be provided by IPPs instead of being self-built, but the details are not available and are cumulatively small in relation to the utility scale plants.

[b] What is the total generating capacity of these independent power producers?

Through the national Renewable Energy Independent Power Producer Procurement Program [REIPPPP], a total of 592 MW of renewable energy is currently operational in the Western Cape. These projects feed directly into the national grid and are further transmitted and distributed by Eskom. An additional 785 MW of renewable energy projects located in the Western Cape was allocated preferred bidding status in Bid Window 5 of the REIPPPP but these projects have not yet reached financial close. Lastly, 128 MW of hybrid energy is allocated to Western Cape based projects in the Risk Mitigation Independent Power Producer Procurement Programme [RMIPPPP], which have also not yet reached financial close.

[c] What is the total amount of electricity that needs to be added to the grid to avoid load-shedding in the province?

Currently, all generation plants feed into a central national transmission network. As a result, the amount of new generation capacity that is needed nationally at present to avoid loadshedding is estimated to be between 4-6000MW [equivalent to 1000MW for each stage]^[2]. Given that the Western Cape accounts for 9-11%^[3] of the country’s electricity consumption, it could be estimated that between 360-660MW of additional dispatchable electricity generation capacity would be required just for the Western Cape. Note, however, that at least an adjustment to the national load shedding standards [i.e. by Eskom] would be required as well as significant network reconfiguration will be required to enable this.

There are several mechanisms that can be used to reduce or avoid load shedding:

1. i. By installing embedded generation, whether at private off -takers or as part of municipal procurement, the total load on the Eskom grid can be reduced. This creates space for Eskom to lessen the likelihood of national load shedding during times when the renewable energy projects are generating energy. This does not currently automatically reduce load shedding for the Province, although engagements are to be undertaken to see if this can be changed. One of the remaining issues to be flagged is that installing dispatchable energy sources^[4] in certain local grids can reduce the stages of load shedding experienced by a particular area if allowed in agreement with Eskom. A good example is the City of Cape Town which often is allowed by Eskom to run at one stage of load shedding lower than the national grid due to dispatchable energy sources on the grid [e.g. the Steenbras hydropower system and diesel generators / turbines, the latter of which is run at high cost to the City].ii. There is potential for creating micro-grids that run completely off-grid, thereby insulating the users on the micro-grid from load shedding. These tend to be cost-prohibitive for now until energy storage prices come down enough to make them feasible.

[d] What is her Department doing to stimulate the growth of this industry in the province?

The Department’s Municipal Energy Resilience [MER] Initiative is a multi-faceted approach to growing the industry while addressing the energy challenges in the Western Cape. The MER initiative looks at improving energy resilience [energy security, energy affordability, and low carbon] in municipalities across the Western Cape through facilitating, supporting and positioning for the implementation of energy infrastructure development [public and private] that supports economic growth, municipal financial sustainability, and a low carbon pathway. The MER Initiative’s short-term goal is to enable 500MW of new low carbon energy generation capacity in the Western Cape by 2025.

 Currently, the work is focused on several areas, all of which support the growth of the industry – either directly or indirectly [through building / strengthening the enabling environment]:

1. 1. i. Private sector enablement:
   2. 1. Work continues to further enable private sector to take up renewable energy through direct [business queries, events] and indirect [market intelligence reports, industry briefs, case studies, website] engagements with energy sector businesses and with businesses wanting to improve their energy resilience. A green economy funder database is updated annually and is freely available online.
   3. 2.  Work is underway to engage directly with large electricity users on Western Cape municipal grids in order to develop an understanding of their needs and requirements, which will guide strategic thinking [including municipal electricity infrastructure planning] going forward.
   4. 3. Significant time is currently being spent on the enablement of electricity wheeling on municipal grids, which will allow private sector entities to transport power over the grid to another business / organisation / facility [i.e. this can be a business transporting energy to its various facilities or a business selling and transporting energy to other businesses], while ensuring that costs are allocated correctly i.e. a fee can be charged by the municipality for the use of its grid for this movement of power, which forms a new revenue stream for the municipality [to maintain its network and ancillary functions]. Wheeling reduces some of the geographical limitations of renewable energy, such as too little space, or non-ideal local solar / wind resources.
   5. 4. The department has also continued to drive the uptake of small-scale embedded generation [SSEG i.e. rooftop PV] at the private level though creating an enabling environment for renewable energy, with 21 out of 24 local municipalities allowing small-scale renewable energy on to the grid, and 20 of these having feed in tariffs that allow households and businesses to be compensated for feeding their excess energy back into the municipal networks. Lastly, the MER team is due to look at the municipal SSEG registration process in order to help streamline it.
2. 1. ii.  Municipal Procurement:
   2. b. Over the last financial year, significant work has been completed regarding the unlocking of municipal direct procurement of renewable energy from IPPs. This includes the creation of an Energy Projects Report, as well as a roadmap towards procurement including all the processes that must be followed. The next steps underway include supporting municipalities such as the City of Cape Town and other MER candidate municipalities through feasibility up to procurement and contracting Independent Power Producers to build the plants.

                         To support this work, the Municipal Energy Resilience Fund was set up to fund 13 preparatory studies at 8 Western Cape municipalities. These studies include Electricity Master                              Plans^[5], Energy Master Plans and Cost of Supply Studies^[6], and are currently underway. 

1. 1. iii. Enabling Infrastructure: Infrastructure has been identified as a major potential roadblock in the implementation of renewable energy at scale and pace. This component focusses on understanding, quantifying and implementing enabling infrastructure components such as grid capacity and battery storage. A strategy and roadmap [which will involve engagements with multiple strategic stakeholders, including at a national level] is under development.
2. 1. iv. Enabling systems: This component is focused on the exploration of a potential municipal pooled-buying facility, developing financing landscapes, unlocking municipal financial models and localization opportunities in renewable energy and electric vehicle segments. The localisation opportunities work supports and is supported by the Atlantis Special Economic Zone, which is a greentech zone expected to attract significant investment in the energy sector amongst others over the next two decades.
3. 1. v. Strategic Management: Work is underway to develop provincial long-term energy strategies, including building Western Cape Government positions on gas and green hydrogen. This will form part of a provincial Integrated Resource Plan for electricity, which will plot the most cost optimal energy route given policy priorities. The work also includes advocating for and providing technical inputs into required changes to policy, regulations and technical standards. These clear policy positions, plans and inputs into regulations and standards provide clear market signals to industry that the Western Cape is open for and will enable investment of this nature.

[1] REIPPPP focus on Western Cape| Provincial Report Volume 3, DMRE, December 2021 - https://www.ipp-projects.co.za/Publications/GetPublicationFile?fileid=90c2b83b-8ad9-eb11-954d-2c59e59ac9cd&fileName=20210409_REIPPPP%20Provincial%20Report%20Vol3_WC_Dec%202020_vFINAL.PDF.