Large scale renewable energy project to create jobs and develop local communities in South Africa

Changes in procurement of renewable energy in South Africa has helped prices drop significantly. A new UNEP DTU project will look at the effects on local industry and affected communities.

January 18, 2018

Public procurement of renewable energy systems in South Africa has seen intense changes in recent years. One of the aims of these changes has been to make sure that production of solar and wind energy contributes to the development of local industry and local communities.

“Prices for renewable energy has been dropping at a steady rate in South Africa, but we are still not sure how investors and local industry have reacted to the changing landscape of energy procurement, and what the impacts of these changes have been in a development perspective,” senior researcher at UNEP DTU Ivan Nygaard explains.

The Danida fund for development research (FFU) has committed to the funding of Tendering sustainable energy transitions; A UNEP DTU project headed by Ivan Nygaard that will be looking at the market-based transition towards Renewable energy in South Africa from a community and industrial development perspective.

The last few years, large scale solar PV and wind projects have rapidly spread on the African continent, and the current project contributes to an emerging body of research on barriers, policy drivers and impacts of this development carried out by UNEP DTU Partnership,

The project

The Renewable Energy Independent Power Producers Procurement Programme (REIPPPP) in South Africa has been a game changer in terms of stimulating the deployment of large-scale renewable energy while at the same time attempting to unlock possible pathways towards more sustainable economic, industrial, environmental and social development.

With the funding from FFU, this UNEP DTU project will examine how local developmental impacts are prioritized and ensured in renewable energy tendering schemes in South Africa. An analysis that can prove useful for other countries in Sub-Saharan Africa and internationally.
The project aims at increasing knowledge of transitions toward sustainability in the energy sector of emerging economies, including sustainable development of local communities and local industries.

Until now, over 6,000 MW of renewable energy power has been procured across 102 projects under REIPPPP from its start in 2011. This amounts to a total investment of around US$ 15 billion.

To put that into perspective Ivan Nygaard compares the numbers to Denmark, where there has been installed a total capacity of wind power of 5,000 MW.

FFU grant

The Consultative Research Committee for Development Research (FFU) is a programme committee under the Innovation Fund Denmark administered by the Danida Fellowship Centre.

The funding covers a pilot project starting in April 2018 and ending in the fall of 2020. FFU has granted 5 million DKK to the project, which will be carried out by UNEP DTU, DTU System Analysis, DTU Wind Systems, the Danish Institute for International Studies and our partners at Stellenbosch University and University of Cape Town.

Part of the outcome of a FFU pilot project will be to develop an application for a full scale 5 year FFU funded project.

Not just looking at price

REIPPPP has achieved much recognition for its effects in significantly reducing the price of electricity in South Africa. Through the programme, the price of renewable energy has dropped to levels near the price of coal-produced power.

But price is only one of seven specifications used in selecting project proposals from private developers. The seven specifications aim at creating broader societal development and include specifications for locally sourced goods and services in order to stimulate industrial development, and specifications to support socio-economic development of the affected communities.

While the REIPPPPs contribution to limiting the use of coal in the energy supply in South Africa is well documented, the development outcomes of new interactions between investors, industries, communities and government are still poorly understood.

With a specific focus on wind power projects developed under REIPPPP, the Tendering Sustainable Energy Transitions project will generate new knowledge on the potential development implications of renewable energy tendering schemes and study whether and how REIPPPP has fostered broader developmental objectives.

Drawing on in-depth fieldwork

The research will be based on fieldwork jointly carried out by the Danish and South African university partners. It involves long-term fieldwork in government, industries and local communities, using ethnographic fieldwork methods, such as observation and interviews.

Government agencies¸ project developers, international technology suppliers, industry experts, universities local municipalities, NGOs and local community groups will be involved in the research, and Ivan Nygaard believes the outcome will not only build on UNEP DTU expertise in the area but be part of creating better procurement schemes for renewable energy.

“The end result of our research will be valuable insights, that can be used both for academic purposes and by policy makers in countries across Sub-Saharan Africa and globally. Especially when it comes to designing and adopting schemes for the production of renewable energy”.