AfrElec: South Africa set for 5.4 GW of new wind by 2026

South Africa could add 5.4 GW of new wind capacity between 2022 and 2026, although procurement delays will see additions fall this year over 2021.

The Global Wind Energy Council (GWEC) said in its Global Wind Report 2022 that South Africa was the largest wind market in sub-Saharan Africa, with 3,168 MW of capacity already connected to the grid.

The country installed a record 668 MW in 2021, up from 515 MW of additions in 2020, most of which were projects procured during the fourth bid window (BW4) of the government’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP).

The GWEC blamed the lower figure for 2022 on procurement delays and the fact that projects already procured under BW5 would only open within three years.

“The latest BW5 in October 2021 attracted bids amounting to nearly four times the capacity awarded, resulting in a record 12 wind farms winning bids,” the report states, adding that 46 wind projects have, to date, been awarded to various developers under the REIPPPP.

The 12 wind projects that were selected are currently scheduled to achieve financial close at the end of April.

“In total, 14 GW of new capacity is expected to be added in Africa/Middle East in the next five years (2022-2026), which is primarily driven by growth from South Africa (5.4 GW), Egypt (2.2 GW) and Morocco (1.8 GW) in Africa, and Saudi Arabia (1.3 GW) in the Middle East.”

The report highlighted that South Africa’s energy mix is largely based on fossil fuels, with nearly 90% of its electricity generation derived from coal and peat, as of 2020.

It also notes that South Africa’s Integrated Resource Plan to 2030 outlines a primary role for renewable energy in the future power mix, requiring an additional 20.4 GW of renewable energy capacity in this decade.

The report further highlights the country’s 2021 Nationally Determined Contribution (NDC) pledge to limit greenhouse gas (GHG) emissions to 350mn-420mn tonnes of CO2 by a 12-31% reduction from the country’s previous NDC in 2016.

For coal, the country’s reliance on the fossil fuel means around 80% of its GHG emissions come from the energy sector, making the phase-out of coal vital for climate action.

Following a milestone agreement at COP26 in 2021, South Africa is set to receive $8.5bn to decommission, repurpose or repower coal-fired power stations and invest in renewable energy

The ongoing restructuring and unbundling of Eskom and the government’s decision to allow wind projects of under 100 MW to proceed without a licence “will further incentivise renewable energy development”, as could the “milestone” COP26 offer of $8.5bn to support South Africa’s transition away from coal.

The report warns that grid constraints in the three provinces of the Eastern, Northern and Western Cape are curtailing the roll-out of shovel-ready projects and affecting investment certainty.

Looking ahead, a number of obstacles must be overcome in order for wind and renewables in general to develop.

The report said that the South African energy market still had key challenges to overcome. Historically, regulation has favoured legacy systems based on fossil fuels. This means that regulatory changes will be necessary to support the transition to cleaner sources. Investors and financiers require as much policy certainty as possible, with supportive frameworks which allow for wheeling and the signing of direct PPAs with IPPs without ministerial approval.

Stable pipelines of wind projects can be created through continuous and regular capacity procurement, including a long-term and on-time auction schedule, as well as a more robust REI4P process that can minimise delays for selection and contract completion.

In addition, grid constraints in three provinces, including the Northern Cape, have strongly curtailed the rollout of shovel-ready projects in these areas, affecting investment certainty in new renewable projects. An updated Generation Connection Capacity Assessment (GCCA) report is due to be released in Q1 2022 to provide more clarity on capacity planning and transmission connections.

Meanwhile, new wind resource assessments in provinces like Mpumalanga, historically home to fossil fuel-generation and energy-intensive industries, could unlock further deployment.

Globally, the wind industry posted its second-best year ever in 2021, posting 12% growth and adding 93.6 GW of new capacity onshore and offshore, bringing the global fleet to 837 GW.