South Africa plans to expand use of renewable power as the coal-dependent nation expects traditional, centralised generation plants to “disappear”, energy minister Jeff Radebe said.

Renewable power from independent producers currently accounts for 3.8GW, less than 5% of the energy sold to consumers, but the country’s expansion into cleaner power generation has already had a “significant” economic impact, Radebe told reporters in Pretoria. He said South Africa has made various commitments to reducing climate change.

Under President Cyril Ramaphosa, who is leading a drive to attract US$100-billion of investment, Radebe revived the national renewable energy programme that was once the world’s fastest growing, but had since stagnated. The minister signed agreements with 27 independent power producers, or IPPs, in April after more than two years of delays.

Big centralised power generation plants will disappear and replaced by distributed generation, mini-grids and batteries

“Big centralised power generation plants will disappear and replaced by distributed generation, mini-grids and batteries,” Radebe said. Ramaphosa announced plans to split financially strapped state-owned utility Eskom into generation, distribution and transmission businesses under a state holding company in his 7 February state of the nation address.

Unions have resisted the IPPs because the labour groups anticipate job losses at Eskom as the independent producers are added to the grid. South Africa is dependent on the mining and burning of coal for more than three-quarters of its electricity generation. Job losses in the coal sector have no link to the expansion of renewable power, Radebe said.

Mitigate the consequences

Through a transition to cleaner power, South Africa should concentrate on finding ways to mitigate the consequences faced by coal miners and communities where the mines are located, he said.

Earlier rounds of the renewable IPP programme were “relatively higher in pricing”, though the government has “no intention” to renegotiate the contracts and costs have come down in subsequent rounds, he said. The refinancing of some projects will be considered on a case-by-case basis. — Reported by Paul Burkhardt, (c) 2019 Bloomberg LP