IPP projects key to South Africa’s energy transformation

Having sufficient energy is critical to the numerous industries that power South Africa’s economic growth and development. In light of Eskom’s inability to provide sufficient energy to the country, and South Africa’s pledge to be carbon neutral by 2050, there is significant pressure to improve the country’s power supply in a sustainable and reliable manner. Independent Power Producer (IPP) projects can reduce the strain on an overwhelmed and fast aging generation fleet, while moving South Africa towards carbon neutrality. At first, IPP projects were viewed with skepticism with few industries seriously looking into them. Cresco Director Andy Tant explains: “The initial hesitance to IPP projects and renewable energy was due to the long-term nature of these agreements at this stage of the energy market development. However, the continued uncertainty around Eskom’s ability to produce reliable energy for the country together with an increasing urgency to ‘go green,’ has seen most people change their mind.” In light of industry’s dissatisfaction with the state of energy supply in South Africa, renewable energy projects (including IPPs) are now viewed more favourably, especially by large industries that have the resources to invest in their own sustainable power supply additionally guided by their own carbon-neutrality goals. “Renewable energy and private power procurement projects are now seen as key to improving energy cost and supply to major power consumers, and kickstarting economic growth – hence the current lack of a regulated MW limit on self-generation projects, though a return to the IRP-stipulated limits is scheduled, so it is important to take action now,” points out Tant.