by Garreth Bloor

Rise of the renewables

Investment in renewables is set to grow in SA

Renewable energy in SA is set to increase with investments
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In addition to the continent’s potential, renewable energy projects are underway on a large scale in South Africa, following on the backs of both commitments to internationally bench marked targets as well as local and foreign investment into the sector. 

In the latest move the United States export-import bank just signed a deal worth $2 billion (R17.5-billion) in loans to South Africa funding renewable energy projects involving US companies – the deal was strongly endorsed by both the bank’s president and US Secretary of State, Hillary Clinton.

While procurement processes remains fairly straightforward as regards listing the requirements in terms of the end goals required of those bidding, Michael Bean of Step Strategic Venturing told journalist Lynley Donnelly that the industry was still highly regulated, which made it difficult for smaller companies to enter the market as more than merely service providers to larger firms.

With permission granted by relevant agencies for feeding renewable energy grid now confirmed, and given the legislative go ahead through National Energy Regulator of South Africa, the method by which one can engage in procurement has become the key “how to” issue. The global energy sector is clearly transforming.

Future economies will increasingly be powered by renewable energy sources which currently include wind-based energy, solar, biomass, biogas, hydro-energy and geothermal energy.

As a result global investment in companies and projects in this sector has grown from just $22 billion (about R193 billion) in 2002 to $155 billion (more than R1.3-trillion) in 2008, according to the United Nations. The climb has continued to be steady and South Africa has joined the trend with pronouncements indicating it seeks to lead.

The favourable financing environment, conducive to raising the funds necessary to enter the procurements process, shows an opportunity driven market in these early phases of meeting renewable energy targets. 

Investment in renewable power in Africa is set to grow from a total of  $3.6-billion (R31.6-billion) in 2010 to $57-billion (about R500-billion) by 2020, accompanied by huge foreign direct investment in energy infrastructure, according to government. 

Making the market more conducive to smaller players through the right legislation is perhaps the most important next step in South Africa’s renewable energy agenda. 

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