Using the energy transition to create prosperity for South Africans
Whilst President Ramaphosa in his last state of the nation address spoke about a fourth priority intervention in his Recovery Plan, to rapidly expand energy generation capacity, I further believe that the energy transition, done justly, will stimulate investment, local economic activity, local manufacturing & assembly and create new skills and jobs.
In South Africa, like so many other countries around the world, the economy is struggling amid slow or negative growth, coupled with significant debt, and widespread unemployment. We need to revive our economy and create new jobs, which we can do by harnessing our abundant natural resources and investing in technology.
South Africa has enormous potential, as well as a great responsibility to our people, our continent, and the world, to be a force for change and a force for good. This is going to be a journey of transition and firstly we need to ensure we use the resources we have to meet our energy demand. But in this process, we should also identify and put technologies in place that will make the journey to green energy production possible in our country. Other aspects to consider must include reskilling and training workers to use new technologies and collaborating on the development of green technologies.
For example, the Service Centre concept as a necessary support to these technologies, is another step to drive employment, training, and localization in the South African market. Siemens Energy’s state of the art service centre delivers industry-leading service to customers in South Africa and across Africa through providing maintenance to all energy rotating equipment.
Access to affordable, reliable, and sustainable energy is the fundamental driver for social and economic growth. We need to embrace the bountiful natural wind and solar resources at our disposal, we need to invest in technologies to decarbonize industry, and we need to develop power infrastructure to ensure availability of stable, clean energy across the country.
South Africa experienced the worst load shedding on record in 2020, with 1,500 GWh, compared with the previous high of 1,350 GWh in 2019, when the outages were estimated to have cost the economy R120 bn. As long as demand outstrips supply, the situation will worsen. With the retirement of 10GW of coal plants SA will need to build 18GW of new plants by 2030 to keep up with current demand as well.
A focus on increasing access to greener energy, and the advanced technologies associated with decarbonized energy sources, can provide new jobs, new skills, stem economic losses, and result in the creation of a stable foundation on which to build new businesses and new industries throughout the country.
I believe we can do this by focusing on three key pillars – sustainability, reliability, and affordability.
By focusing on sustainability, we can make our energy greener. To meet the goal to limit the global temperature increase to 2 °C, South Africa will need to cut its emissions by between 60% and 75% by 2050. Currently SA is seen as the most carbon intensive economy in the G20 countries, with a carbon intensity of 599 tons of CO2 per million dollars of GDP, which is more than double the global average of 286 tons of CO2 per million dollars of GDP. We need to repurpose existing coal power stations and
encourage gas infrastructure, as a cleaner alternative and a safer investment that can lead to carbon neutral power in the future, like hydrogen.
By focusing on reliability, we can make our energy supply stable and resilient. We need to increase the amount of renewable energy capacity, improve efficiency, reduce emissions, and unlock more distributed energy projects.
By focusing on affordability, we can secure access to cost-effective forms of energy, thereby improving access. Relatively clean-burning natural gas will play a major part of this. Through highly efficient, combined cycle gas turbines (CCGT), we can replace coal, and pave the way to clean burning hydrogen. The cheapest way to currently produce reliable electricity is through a mix of solar PV, wind, and flexible natural gas power stations.
These solutions will not be easy to accomplish, nor quick to realize, and they won’t be cheap to implement. But the investments we make now will bear fruit in the future, creating a multiplier effect on economic growth, for the benefit of society. Sustainable, reliable, and competitive electricity will attract industry.
Through partnerships, we stand the best possible chance to realize these solutions as effectively and as efficiently as possible. Private organizations and public institutions need to work together, now, to drive the change. Business leadership in South Africa needs to use the time before the deadline of the Paris Agreement, to transform every sector of the economy to reduce emissions.
My reflections are that the transition towards a low-carbon economy is inevitable. Over the next decades the SA economy will be fundamentally reorganized. We must ensure we are not left behind on this ‘next industrial revolution’ of fossil phase-out, as it can bring increased investment, new jobs and new skills. 2021 is offering one of the rare moments in history, when from the ashes of tragedy, we can grow green shoots of recovery.