South Africa selects $2bn worth of renewable projects

The government is looking to reduce the country's reliance on coal

Electricity pylons are seen in front of the cooling towers at the Lethabo Thermal Power Station,an Eskom coal-burning power station near Sasolburg in the northern Free State province. State-owned utility Eskom Holdings, which relies on coal for 80% of its power output, has battled to keep pace with demand since 2005. REUTERSShow less

South Africa picked 25 wind and solar power projects to be built by private developers, part of a plan to reduce the nation’s reliance on coal for electricity and end blackouts that are curbing economic growth.

The bidders will add 2,583 megawatts of capacity to the grid using clean-energy technologies, Mineral Resources and Energy Minister Gwede Mantashe told reporters on Thursday. The projects total about 50 billion rand ($3.3bn) of investment and will create 13,900 job opportunities, he said.

The preferred candidates were announced after a so-called fifth bid window calling for 1,600MW of wind and 1,000MW of solar energy closed for submissions on August 4. The energy department plans to reach financial closure on the projects within the next six months.

An upcoming sixth bid window is scheduled to start by the end of January that’s expected to result in lower prices for electricity, Mr Mantashe said.

State-owned utility Eskom Holdings, which relies on coal for 80 per cent of its power output, has battled to keep pace with demand since 2005. South Africa has experienced record outages this year, stifling growth in Africa’s most industrialised economy as it struggles to recover from its worst contraction in at least 27 years in 2020.

President Cyril Ramaphosa since 2020 has increased efforts to add generating capacity, including an emergency power program that has become tied up in court battles.

The awarding of the new contracts will bolster his efforts to attract new investment, revive the coronavirus-battered economy, reduce the nation’s reliance on Eskom and meet its emission-reduction targets.

Developers include Mainstream Renewable Power, which was awarded the biggest allocation with a total of 12 projects. Scatec had three solar installations picked in the round.

Mr Mantashe said that South Africa’s immediate solution to electricity shortages is getting existing power plants to work “in a predictable and stable manner.”

Earlier rounds of South Africa’s renewable power procurement made it one of the fastest-growing green energy programmes in the world, before delays set in.

The selected preferred bidders committed to at least 25 per cent participation by black people in the companies that will be building the projects, Mr Mantashe said.