Minister invites Nordic companies to invest in SA’s energy sector

May 14th, 2019, Published in Articles: Energize

Speaking to representatives from the governments of Denmark, Finland, Norway and Sweden at a breakfast prior to the opening of the 2019 African Utility Week conference and exhibition in Cape Town, Jeff Radebe, the minister of energy, said that South Africa has a distinguished relationship with the Nordic countries which supported the country during its liberation struggle and have further extended support to the democratic government. The country is grateful, he said, that Nordic governments have supported South Africa to set up policies in the energy sector through bilateral and multilateral relationships.

Need for energy investments to grow the economy

The minister said that the president of South Africa, Cyril Ramaphosa, has committed to grow the economy, create jobs and ensure the industrialisation through increased investments. Currently, South Africa suffers from a very high inequality of income, has high youth unemployment and a very low rate of economic growth. The government needs to address these three challenges urgently. The energy sector is the engine of economic growth and needs investments.

Energy minister Jeff Radebe with representatives from the governments of Denmark, Finland, Norway and Sweden (source: Twitter).

Energy constraint in South Africa

The South African energy sector is constrained. For the economy to grow, electricity generation capacity has to increase now. In addition, the electricity infrastructure is old and in need of more investments to accommodate intermittence due to the deployment of renewable energy, Radebe said. The energy sector in South Africa, like the global energy sector, is going through a transition to increase the generation of electricity from clean sources. We need to make it accessible, affordable, secure and sustainable energy for all. This brings its own challenges.

South Africa’s energy mix

South Africa is richly endowed with coal and more than 80% of its energy is generated by coal-fired power stations. We need to embrace technologies which will enable the country to use clean coal technologies with reduced emissions. We intend to use programmes such as carbon capture, storage (CCS) and use.

Although the CCS technology is not yet commercialised at large scale in South Africa, we remain hopeful as the use of coal in South Africa is about affordability, sustainability, job creation and economic growth. I hope that Nordic companies represented here will continue to work on clean coal technologies and can assist South Africa and many other regional countries which are also dependent on coal as a major source for the electricity, he said.

Renewables

Radebe added that South Africa has been supported by Nordic countries to develop the renewable energy sector. Today, the country has a successful renewable energy independent power producer programme. Most of the Nordic companies have accessed opportunities from the renewable energy sector as technology suppliers, power generators and advisors to the sector.

The success of the renewable energy sector in South Africa has also led the Southern African Development Community (SADC) energy sector to emulate and develop their renewable energy sectors. South Africa is finalising the latest update to its integrated resource plan and renewable energy is part of the energy mix. The country hopes companies from Nordic countries will participate once the bidding process begins, he added.

Social challenge of unemployment in South Africa and the role of energy investment

According to Radebe, one of the major social challenges in South Africa is youth unemployment. The country’s population is largely made up of young people; those who are below the age of 35 years constitute 66% of the total population. However, 42% of youth are not employed or being educated. This represents 8,2-million people. The energy sector needs to ensure that investments in the sector creates employment and business opportunities for young people.

Most of South Africa’s youth do not have the requisite skills to enable them to participate in the energy sector. The country would encourage Nordic companies to support skills development for South African young people so that the country does not have to depend on imported labour, he said.

SADC energy sector needs and opportunities

The minister said that some Nordic companies are involved in regional projects. Energy or electricity access in the SADC region is very low with some countries being as low as 28%. The SADC energy ministers have endorsed an energy programme with specific projects which cover gas, hydro power projects, solar and wind, and a few coal power projects. The list also includes interconnectors to ensure that the Southern African Power Pool can trade smoothly through a transmission infrastructure configured for the uptake of renewables.

In light of the need to transition to cleaner energy, the SADC energy ministers approved the development of the SADC regional gas master plan which covers the evaluation of the available gas resources and existing markets, a gas utilisation strategy, supply and demand analysis, infrastructure development plans, identification and linkages of value chains as well as institutional, regulatory and fiscal frameworks. The above are major areas of focus for the region which also presents opportunities to investors which have an interest in gas development, renewable energy and energy efficiency in the region, he said.

Energy, water and food nexus in the region

According to Radebe, ss a country and a region, Southern Africa has taken note of the energy, water and food nexus issues. SADC energy ministers took a ministerial decision in 2018 that the region will finalise the development of a nexus investment framework which will drive the planning and implementation of joint projects and initiatives which will enhance job creation, as well as water, energy and food security in the region. This is an important area where the region needs the support. This especially important for South Africa which is a water scarce country, being one of the top 20 driest countries in the world.

Conclusion

The minister said that the South African energy sector is poised to grow. The country needs the finance, technology and skills to increase its electricity generation capacity. Investments in the sector should ensure that job creation, industrialisation and development of energy equipment manufacturing is relocated to this country so that the down-stream benefits are also enjoyed here. As indicated earlier, markets for such products will be available in South Africa, Southern Africa and the sub-Saharan region which has huge energy poverty challenges. The minister expressed the hope that some Nordic companies will invest in the energy sector in South Africa.

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