South Africa Lowers Local Content Requirements to Mitigate Energy Crisis
South Africa is suffering from an unprecedented energy crisis. To tackle frequent black-outs and achieve energy security, in July 2022 President Cyril Ramaphosa announced a set of actions, including improving the availability of existing supply, increasing private investment, and procuring new capacity from renewables.
South Africa has lowered the amount of local content needed in solar panels and started a review of plans for the country’s energy balance, the National Energy Crisis Committee (NECOM) has said in a report
NECOM was established to oversee
the implementation of the most important aspects of the Energy Action Plan, which were outlined by the country's president in his address to the nation in July. On 21 January the committee released a six-month progress update on implementation of the plan.
According to the report, the quantity of local materials in solar panels has been reduced to 30 percent from 100 percent to make it easier to produce panels and accelerate new generation capacity.
Agreements to implement 19 out of 25 projects under the so-called 5th Bid Window of the country’s renewable-energy program have been signed for 1,800 MW of new capacity. The projects are expected to proceed to financial close and construction. The report stated that a “pragmatic approach” to local-content rules will ensure that construction starts on time.
“The relevant government departments are working together to ensure that projects from Bid Window 5 of the renewable energy program can start construction on schedule. This includes taking a pragmatic approach to the local content requirements for these projects, prioritizing the need to build new capacity as quickly as possible,” the report read.
Apart from that, the Integrated Resource Plan 2019 - an infrastructure program for South Africa's electricity sector - is being reviewed, with a completion target of March 2023, “to update assumptions regarding energy availability and technological changes". It is expected to reflect the country's energy needs and climate commitments.
The committee, which is run by the office of President Cyril Ramaphosa
, also noted that a total of 162 MW of surplus capacity has been identified from existing independent power producers (IPPs) as part of the government's immediate measures to mitigate blackouts.
"Work is underway between the IPP Office and generators to unlock this capacity, including additional grid strengthening required," the committee said.
The report highlighted that an additional 300 MW of power has been imported from neighboring countries, and the work is underway to increase imports from the region, as NECOM is planning to import as much as 1,000 MW this year.
As for the country's utility firm Eskom, according to the committee its outage funding for the present financial year ending March 2023 has been increased to 9.5 billion rand ($555Mln) from 8.2 billion rand to enhance the reliability of its generation capacity. The firm has also launched a Standard Offer Program to buy 1000 MW of power from companies that have existing generation capacity over a period of three years, and an Emergency Generation Program "to purchase additional power when the grid is constrained".
The committee recently said that it expects the power cuts to end as several measures to tackle the issue are underway and will soon take effect, including a new law to intensify power plant development.
South Africa’s government, as well as state-owned Eskom, has been facing sharp criticism as power cuts were implemented on more than 200 days last year and every day so far in 2023. This month, most of the citizens are enduring blackouts of up to 12 hours daily. The outages, known as load shedding, are implemented to reduce pressure on the grid after the breakdown of Eskom's old coal-powered plants
Earlier this month, Ramaphosa canceled his plans to attend the annual World Economic Forum meeting in Davos because of the urgency of stepping up efforts
to combat the energy crisis in the country. To tackle the issue, Ramaphosa met with leaders of major political parties as well as with NECOM and the board of Eskom
South Africa’s Finance Minister Enoch Godongwana has recently offered assurances that the government has a plan to improve energy supply in the country that will eventually lead to the end of the frequent power outages within a year or year and a half.