Allowing for the greater development of embedded and distributed generation assets will help to create and sustain jobs, as well as bolster energy security and business continuity, says economic development advisory company ED Platform head of strategy and growth Maloba Tshehla.
Embedded generation will reduce businesses’ carbon footprints while ensuring business continuity, especially during load-shedding. Such generation can readily be developed independently and integrated into a distributed generation network, in line with the regulations of the National Energy Regulator of South Africa and the Department of Mineral Resources and Energy.
The exemption of embedded generation systems larger than 1 MW from requiring generation licences “is analogous to the release of the telecommunications spectrum to provide better and new services, as well as providing a range of other benefits”, he says.
However, the 1 MW limit on the licensing of own-use electricity generation assets remains the main barrier to unlocking a massive market, as there are developers and end-users who are ready to put multimegawatt embedded generation systems in place, leading to a significant flow in investments by local companies to install these assets, explains Tshehla.
Additionally, with embedded generation projects, businesses can install smart meters and systems, which would represent a step towards fully realising concepts such as a smart grid, Internet of Things capabilities and the benefits of the Fourth Industrial Revolution.
“The system can communicate with the energy source, and modelling and prediction systems, as well as enable energy users to interact with the system, which provides seamless load control. This type of infrastructure architecture can allow for embedded generation within the broader energy economy and the economy as a whole,” says Tshehla.
Further, the national energy model is changing. While State-owned power utility Eskom faces a significant transition to a new energy model, end-users are demanding greater levels of autonomy and supply security.
“A new energy model does not mean excluding Eskom, but rather repositioning it to allow for greater embedded, distributed and renewable-energy generation.”
Energy outages have a ripple effect on economic activity and the attractiveness of investment opportunities; they also add to business costs in terms of insurance, profitability and return-on-investment horizons for equipment.
Therefore, renewable-energy generation capacity should be included as part of a diverse power grid to allow for the provision of good power quality by ensuring an appropriate mix of energy sources, including sources with greater inertia, to overcome any variability of renewable sources, as well as security of supply to clients, and , therefore, maintain business continuity and investment attractiveness.
Globally, there has been increased discussion around the notion of a just transition from one energy system to a new energy paradigm, says Tshehla.
The UK, for example, investigated the economic multiplier effect of renewable-energy projects on revenue, turnover and direct economic benefits in 2017, and found that renewable- energy projects represented more than double the job creation when compared with conventional energy-generation investments.
This is a significant consideration for South Africa, as many of the distributed or renewable-energy generation projects can help to fulfil economic development obligations in rural and remote areas, as well as job creation, and bolster the local economy.
This distributed economic development effect can contribute to a just transition, especially in terms of communities that traditionally depended on the coal economy, he adds.
The embedded generation market also presents an opportunity to enable people with skills already developed through sectoral education and training authorities and training schemes to be sustainably employed.
The National Qualifications Framework provides the requirements for various skills, including for installation, wiring and solar systems, which, in turn, also provide career paths that will be created as part of the energy transition.
There are also initiatives to ensure that all new renewable-energy projects, such as solar photovoltaic (PV) installations, are developed and installed correctly and safely, and comply with all regulations.
In this regard, the PV Green Card system, an initiative of the South African Photovoltaic Industry Association, aims to ensure that all installers and, therefore, installations, are compliant by providing certification and qualification frameworks.
“While the focus of discussion on a just energy transition in South Africa is predominantly on the jobs and the people currently employed in the mining and minerals industry, it needs to be on the economy as a whole, which needs to create employment opportunities for people in sectors that can grow by using more, cleaner and affordable energy,” concludes Tshehla.