Ed’s Note

2018 - A year of change

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Over the last few months there has been plenty to talk about in the energy industry—one of the sectors of our economy most closely watched by local and international investors. The country continues to be gripped between a dilemma of conflicting rights as the nuclear power debate rages on.

While the state argues that 9.6GW of additional nuclear capacity is needed if South Africa is to rapidly industrialise, double its electricity consumption by 2050 and compete from a position of strength in an increasingly interconnected global marketplace—on the contrary, for many, nuclear power is outdated, dangerous and has the potential to disproportionately impact South Africa’s poorest citizens. Instead, those opposed believe that African governments have a historic opportunity to reduce their reliance on fossil fuels and invest in renewables.

Today, we stand at a critical juncture. We are on the cusp of adopting clean energy at a scale never seen before. But for renewable power to continue its rapid advancement, the right decisions need to be taken. Given its increasing affordability, the applications and use cases of renewable energy have broadened. Alongside electricity production, it is providing new solutions for mobility and energy security worldwide.

As part of its commitment to the Paris Agreement, South Africa has stated plans to significantly reduce carbon emmissions, and the industry the industry is responding by playing its role in promoting energy efficiency through investing in research and development (R&D) to bring to market new technologies.

Energy industry players will take their cue in investment decision-making from the Integrated Resource Plan (IRP) 2016, which is expected to be updated by the Department of Energy (DoE) in the first quarter of this year.

The finalisation of the IRP 2016 is going to be one of the highlights of 2018, as it is expected to determine our country’s energy mix. It is expected that government will set the tone for continuation of the policy to reduce reliance on coal-generated power in favour of cleaner energy and the decarbonisation of our electricity industry. The IRP 2016 should clarify investment opportunities and open up the energy sector to new investment.

2018 may well also be the year for gas to take its rightful place as a premium energy source in southern Africa, with the finalisation of the IRP 2016 providing direction to investors on plans by government to establish a gas market in South Africa.

As we head towards the end of month two of 2018, the pipeline looks to be comprised of a number of interesting and exciting developments within the energy sector, which hopefully we will see benefit the diversification of South Africa’s energy portfolio.

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