Page 9 - KZN Business Sense 9.3 Aurelia Albert eBook

LIGHTING THE WAY:

A PATHWAY TO ENERGY RESILIENCE

Liesel Kassier, Head new generation capacity and South Africa’s progress in 1. What solutions and first industries to be affected.
of Sustainable reducing the severe limitations achieving a reliable and efficient innovations can provide However, the tax is expected
Manufacturing, in transmission grid capacity. transmission system necessary me with energy security and to soon be extended to other
Toyota Wessels The limitations in the grid have for its energy goals. the most cost-effective rates? sectors, with the expansion
Institute for become a significant obstacle
Manufacturing The combination of generation (Prioritise a mix of hybrid plans already in progress.
Studies that hampers South Africa’s and grid capacity constraints onsite generation Trade & Industrial Policy
technologies)
(TWIMS) attempts to bridge the current highlights that time will be 2. Are there cost-hedging Strategies (TIPS) 2022
supply gap and propel the
N o country’s energy transition needed to restore the South opportunities or new indicates that South African
African power system fully,
manufacturing exports have
forward. The most recent
revenue streams to be
reiterating the need for
a carbon content of around
Plan (TDP) presented by Eskom
South Transmission Development businesses to have a plan. developed from diversifying 2250 tCO2e per $1m, while
my energy supply mix?
African has emphasises the need to install The Silent Revolution most countries sit between
been left 14,218 km of new high voltage According to recent statistics 3. Can the current energy crisis 300 and 1,100 tCO2e per $1m.
unscathed transmission lines, 106 GVA be used to decarbonise my The current European carbon
by the blight of load shedding, of transformer capacity, 40 released by the South African energy source and allow me pricing tax is around €85 per
nor needs reminding of the capacitors, and 52 reactors from Photovoltaic Industry to deal with the coming net ton. The proposed timeline for
Association (SAPVIA), 2021
precarious state in which the 2023 to 2031. The estimated witnessed the installation of zero legislative pressures? implementing this legislation is
economy has been left as a investment required for these Energy security of supply, from October 2023-2026. For
result. With its need for an upgrades totals R72.2 billion by approximately 3.9-4.3 GW future electricity cost hedging this period, the burden will
uninterrupted power supply 2027, with similar investments of solar PV capacity in the and the CO2 intensity of energy primarily be administrative,
commercial and industrial, and
to sustain 24-hour operations, anticipated between 2027 residential market segments. supply are all critical factors whereby firms will need to start
the manufacturing sector has and 2031. accounting for their emissions,
been especially hard hit by This remarkable growth can be that manufacturers should be but from January 2027, the
this wicked problem. Startling penalties will be financial. South
statistics indicate that from Africa’s electricity grid will
the beginning of the year until not be decarbonised by 2027.
mid-May 2023, load shedding Therefore, alternative energy
has been implemented for a generation solutions need to
total of 134 days. To put this be sought by manufacturers as
into perspective, there was it is predicted that the United
only one day in the fourth
week of March when load Kingdom, United States,
Canada, and Japan are the
shedding was not implemented,
exacerbating the difficulties following regions that will be
faced by the manufacturing implementing similar CBAMs
sector. This problem has forced as they have published CBAM
businesses to pivot and take on regulations for consultation.
energy portfolios within their A Pathway to Energy Resilience
operational structures, adding
costs and taking away time from Resilience in the academic
core functions. Considering world is often defined as
the situation’s indications, the a system’s latent ability to
current status quo will prevail endure, despite adversity and
for a while longer. To remain to recover and maintain its
operational and resilient, existing structure after a shock.
businesses must find innovative The properties of stability
solutions to ride out the storm. and flexibility are essential to
achieving resilient systems.
Current State of Play- This combination of flexibility
Generation and Grid Capacity The latest TDP raises concerns attributed to significant cost strategising for, to allow them and strength allows firms to
Shortage voiced by Eskom regarding its reductions and improvements to remain competitive locally bounce back as they are good
ability to execute the proposed
The ongoing load-shedding in technology learning rates, and globally. at anticipating, absorbing, and
crisis is fundamentally driven by projects. They anticipate making solar installations an Regarding C02 legislation, it adjusting to changes. We are all
a lack of sufficient and reliable liquidity constraints and increasingly attractive choice is evident that the European facing a highly adverse energy
generation capacity, resulting potential tariff determinations for businesses. Union (EU) is moving faster crisis that needs innovations
in a power system starved of by NERSA (National Energy Notably, the declining costs of than initially expected. On to help us endure. It will be
electrons. In recent years, 1.5 Regulator of South Africa) to battery and storage technologies 16 May, 2023, the Carbon those that maintain stability
GW per year of capacity was affect their implementation. The also contribute to the rise of Border Adjustment Mechanism but also introduce flexibility
built and connected to the acquisition of servitudes and onsite energy autonomy for (CBAM) was fully legislated through alternate energy
grid. In comparison, 3.5 GW the necessary resource capacity companies. The distributed supply technologies that will
was lost due to decreasing to execute the plan across the generation market is also and is set to enter into force in survive. Seek an opportunity
performance and the engineering, procurement, and experiencing growth, driven October 2023. This will require where responsibility has been
necessary decommissioning construction value chain also by the potential for energy exporters to the EU to account abdicated. 
of existing coal plants. This pose additional implementation trading and aggregation. These for the GHGs embedded in their
loss has resulted in the current risks. The financial constraints innovative solutions allow processes across Scope 1-3 of
structural shortfall of 4 to 6 GW faced by Eskom have customers to benefit from diverse their emissions. This account Tel: +27 (0)31 767 5202
in power generation capacity, underscored the urgency of technology options, minimising includes the emissions that E: lisa.kinnear@twimsafrica.com
which drives the necessity to finding alternative approaches result from the electricity used W: www.twimsafrica.com
load shed. to fund and execute crucial the risks associated with long- in manufacturing processes.
term power purchase agreements
To address the generation transmission infrastructure with a single energy provider. Manufacturers tied to the South
African grid, which is still 80%
shortage, South Africa needs projects. Without adequate One could argue that there is an coal-based, will therefore face
to add 4-6 GW of generation access to capital, Eskom has opportunity where responsibility significant CO2 tax implications.
capacity per year, reaching a struggled to keep pace with has been abdicated, and therefore
total of 53 GW by the 2030s. the grid’s growing demand businesses should be engaging The iron, steel, and aluminium
However, there is a need for for upgrades and expansions. with the energy question through sectors will feel the initial impact
expediting the procurement of These limitations have impeded the following three lenses: of the tax, as they are among the

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