Volatile Oil Prices Encourage South Africa To Turn Renewables

National Economy

The population of the Republic of South Africa is approximately 61.08 million people[1]. In 2020, 84.4% of the people in this country located in southern Africa had  access to electricity[2].

In 2021, South Africa was ranked 32nd in the world in gross domestic product (GDP)[3]. The country’s economy is dependent on the export[4] of gold, platinum, coal, cars, diamonds, manganese ore, chromium ore, and titanium ore.

Environmental Policies

In 2016, South Africa signed the Paris Climate Agreement[5], committing to a peak, plateau, and decline greenhouse gas emission program. The program is for emissions to peak between 2020 to 2025, plateau for approximately ten years and then begin to rapidly decline.

Power Generation Capabilities

In 2021, the state-owned utility, Eskom used coal (87.5 %), renewable energy (7.5 %), nuclear power (4.3 %), and oil (0.7 %) to generate electricity in South Africa[6]. Wind, solar, and hydropower are the primary types of renewable energy used to generate electricity in South Africa.

Recent renewable energy projects in South Africa include:

  • 140 MW Wind Project – In November 2020, Dutch renewable energy company, Lekela Power commissioned the Kangnas Wind project, located approximately 275 miles north of the capital, Cape Town.
  • 140 MW Wind Project – In October 2020, Italian utility, Enel commissioned the Nxuba Wind project, located approximately 450 miles east of Cape Town.
  • 123 MW Wind Project – In May 2021, South African renewable energy company, BioTherm commissioned the Golden Valley Wind project, located approximately 130 miles east of Cape Town.
  • 110 MW Wind Project – In October 2020, American renewable energy company, Mainstream Renewable Power commissioned the Perdekraal East Wind project, located 50 miles northeast of Cape Town.
  • 86 MW Solar Project – In October 2020, BioTherm commissioned the Konkoonsies II Solar project, located approximately 335 miles northeast of Cape Town.
  • 68 MW Solar Project – In September 2020, a consortium formed by the American investment firm, Ideas Fund, commissioned the Bokamoso Solar project, located approximately 650 miles northeast of Cape Town.
  • 33 MW Wind Project – In September 2020, BioTherm commissioned the Excelsior Wind project, located approximately 125 miles east of South Africa’s capital, Cape Town.
  • 7 MW Solar Project – In September 2022, the city of Cape Town announced plans to tender for a photovoltaic solar project, which must be commissioned in 204.
  • 4 MW Mini-Hydro Project – In March 2021, the South African power company, Red Rocket commissioned the Kruisvallei hydroelectric power station on the Ash River in the eastern region of the country.

Conclusions

In 2020, coal exports generated U.S. $13 Billion in revenue for South Africa[7]. In 2021, South Africa was the 5th largest coal exporting country[8] in the world.

Although South Africa is a major exporter of coal, the nation imports oil for power generation and transportation. In 2020, South Africa spent[9] U.S. $5.09 Billion for imported crude oil and U.S. $3.51 Billion for imported refined petroleum.

On 24 February 2022, Russia invaded Ukraine, prompting the United States, Canada, and the European Union to place embargos on Russian exports. The international price for crude oil increased by over 50% from May 2021 to May 2022.

South Africa’s cost for imported crude oil and refined petroleum is projected to soar, fueling rampant inflation. Volatile oil prices is encouraging South Africa to turn to low-cost, reliable renewable energy.

Jack Kerfoot

Website – “Our Energy Conundrum”

www.jack kerfoot.com

 

 

[1] South Africa Population (2022) –  November 16, 2022, www.worldometers.info

[2] Access To Electricity (% Population) – South Africa, The World Bank Group

[3] Gross Domestic Product By Country 2021 – Worldometer

[4] Observatory of Economic Complexity (OEC) – South Africa

[5] Carbon Brief – “2015: Tracking Country Climate Pledges”

[6] Our World In Data, South Africa: Energy Country Profile by Hanna Ritchie and Max Roser

[7] The Observatory of Economic Complexity (OEC) – South Africa Exports

[8] Coal Exports By Country 2021 by Daniel Workman

[9] The Observatory of Economic Complexity (OEC) – South Africa Imports

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