Solar projects can give Upington a place in the sun
Upington has long been defined by the production of export-quality grapes, raisins and wines cultivated on the rich flood plains of the Orange River.
However, the town — along with Kathu and Bokpoort — is well positioned to reap the unlikely benefits of SA’s growing focus on renewable energy, especially solar.
Over the past few years, the Northern Cape has attracted a raft of renewable-energy firms, keen to set up shop in SA’s sunny desert region, now also a special economic zone.
“There is the Aries Solar Energy Facility in Kenhardt and the Bokpoort Concentrated Solar Power Project in Groblershoop, both of which are operational. At least four more projects are in different phases at the moment,” says Harold McGluwa, a constituency leader in the area and chairman of the opposition DA in the Northern Cape.
Also recently launched was a solar plant, estimated at a cost of R12.6m, to meet the energy needs of Upington’s airport.
While solar projects have not displaced agriculture’s importance to the Northern Cape economy, they have provided new opportunities for growth, says McGluwa.
“For example, the Bokpoort plant in Groblershoop created 1,300 construction jobs and it is estimated that R2bn worth of components were sourced locally,” he says.
Yet, unmet job expectations in a place where few have a chance at formal employment, is fuelling local discontent.
McGluwa refers to “a lot of complaints” being received over the lack of wider gains and the perception that “it’s just certain people with higher qualifications” who are deriving some benefit from the projects.
“For our communities, there is nothing in it for them ... there is no better life for them.”
The irony is that employmen-creation is among the intended benefits of attracting investment in renewables, such as solar.
The catalyst for this new sector is investment in large energy plants. The premise is that this in turn would generate demand for components, spawning manufacturing capabilities, to be followed by economic growth and jobs.
Such potential for harnessing solar energy is not lost, even on major oil producers such as Saudi Arabia. The kingdom is hoping its solar-power programme will generate 7,000 jobs and build a local manufacturing industry that can export products to the world, reducing domestic demand for its crude oil, according to Bloomberg.
In May, Bloomberg also reported plans by Russia to proceed with its biggest-yet auction for renewable energy, seeking to award contracts to purchase 1.9GW of clean electricity as well as attracting investments to support jobs.
In SA, the big boost for solar has been the Renewable Energy Independent Power Producer Procurement (REIPPP) Programme, which offered incentives to investors to generate electricity from renewables to sell to Eskom.
The programme has since been suspended — and is regarded by some as being a victim of its own success — as it gave ammunition to opponents of the government’s plan to build several nuclear power plants. But it attracted R196bn in investment between 2011 and 2015, showing what is possible from conscious support for the development of renewables.
Even then, the uptake of renewables in other sectors, including the development of a support industry appears to have lagged behind in SA. Yet the solar industry is listed as a priority, along with other green industry investments, under the Department of Trade and Industry’s Industrial Policy Action Plan.
“From a components side, and in particular reference to the REIPPPP programme, there are prescribed minimum local content requirements, as well as incentives for increased local content through both the bid process and the construction and operations phase,” says Kieran Whyte, head of energy, mining and infrastructure at Baker McKenzie, a Johannesburg law firm.
“The minister of energy, in her latest budget speech, also prioritised the solar water heater programme, which aims to install solar water heaters in disadvantaged households.”
Wilco de Villiers, a consultant in the sector, says the incentives offered by the government to investors are mostly accelerated tax writeoffs that allow for a project to be cash-flow positive from year one, “something that is great for any real investment”.
“The rules for these incentives are strict and it only applies for the first 1MW,” De Villiers says. “The main requirement still lacking is proper feed-in tariffs” for those selling energy to Eskom.
Driving the demand for renewables, even in SA, are constantly declining costs, says Ross Harvey, a senior researcher at the South African Institute of International Affairs. Whyte points to a movement towards rooftop and industrial solar projects that, if the regulatory frameworks are clarified, should provide growth in the sector to make up for the stagnation in the REIPPPP programme.
Harvey is encouraged by the City of Cape Town’s plans to establish a special economic zone specifically for green economy initiatives.
The Western Cape aims to facilitate independent generation of 135MW through solar photovoltaic installations by 2020 and is working with municipalities to ensure they can approve solar installations to help hit this target.
“At last count, 11 municipalities have systems in place to approve applications and this is out of 16 in SA,” says Colin Wardle, a spokesman for Wesgro, the province’s development agency.
“This system enables households and businesses to feed their solar-generated power into the municipal grids and get compensated for it.
“This year, the provincial government had committed to installing solar photovoltaic panels in five of its buildings, [issuing] an energy services tender for its health facilities and other buildings and negotiating green leases with the property owners of its rented buildings.”
It helps a lot that solar photovoltaic installation prices are dropping by an estimated 21%-45%. However, just as important for the uptake of solar is the advance in technology in the development of batteries to store the energy.
“And as battery technology starts to make leaps, the solar options will simply become unbeatable in capital terms anyway,” says Harvey. “I think what’s holding back massive solar uptake at this stage is the lack of smart-grid availability and battery storage.”
Yet the critical link will be regulation and policy coherence among government departments. Under the Integrated Resources Plan, SA has committed to another 17,600MW of solar energy to be installed by 2050 which, according to Whyte, indicates that increased investment in photovoltaics and related industries is envisioned.
This commitment means solar technologies and the accessory industries that they support will continue to play a role in SA’s economic future.
The African Development Bank’s New Deal on Energy for Africa has set as its target universal access to electricity across the continent by 2025, much of which would come from renewables.
However, for Upington, the downside could be that the town is far from the urban source markets for energy.
Yet it is still at the beginning of what promises to be a solar revolution that would also go a long way in dealing with Upington’s – and SA’s — unemployment problem.
WHAT’S HOLDING BACK MASSIVE SOLAR UPTAKE … IS THE LACK OF SMART-GRID AVAILABILITY AND BATTERY STORAGE