South African government wants to know how to best support the small-scale renewable energy industry in a way that encourages economic growth and creates jobs. Key research questions include:

WHERE ARE WE NOW?

A.

How to balance government goals such as job creation and localisation with project bankability, quality, and affordable electricity

WHERE DO WE WANT TO BE?

B.

How to unlock small scale renewables with alternative business models to relieve stress on the supply-constrained electricity system?

HOW DO WE GET THERE?

C.

How can municipalities understand and mitigate the potential impact to municipality revenue from renewable energy?

PROJECT APPROACH

 

  • Determine baseline for local renewable energy industry within international context
  • Conduct value chain and localization analysis combining both 2nd & 1st hand industry research including industry interviews
  • Develop strengths, weaknesses, opportunities, and threats assessment to inform competitive analysis
  • Coordinate workshop with key industry stakeholders to develop and refine support programs for government

KEY OUTCOME

Government implemented several of the recommended programs and used project results to create jobs and inform goals for growth of local industry across Africa. Some of the high level recommendations are summarized in the table below.

RELEVANT STAKEHOLDER

WEAKNESS IDENTIFIED

POTENTIAL SOLUTION (HIGH LEVEL)

GOVERNMENT

Uncertain future demand

Maintain consistent and clear policy support for industry

Complex and costly procurement

Follow through with plans to simplify bidding compliance in future government programmes

Policy uncertainty and delays

Avoid delays where possible, improve communication with industry, and follow-through with commitments to RE industry

Complex licensing process

Remove/limit restrictive licensing requirements on RE projects in pending Electricity Regulation Act 2nd Amendment Bill

GOVERNMENT & PRIVATE SECTOR

Limited exports from and questionable sustainability of local industry

Implement realistic localisation strategy that can be internationally competitive, encourages exports (especially in Africa), and local skills transfer. Consider offering line of guarantees for local companies or projects.

High upfront costs

Encourage and implement alternative business models to reduce upfront costs (e.g. 3rd party ownership & financing)

REGULATOR

Unclear market rules & regulations

Implement transparent market rules and regulations that enable electricity sales by customers (e.g. net metering, wheeling)

Utility revenue coupled to electricity sales

Decouple municipality revenue from electricity sales and encourage alternate municipality financing schemes