South African electricity consumers will continue to experience rapidly escalating tariffs and declining system reliability. With a widely acknowledged national generation shortfall of between 4000MW to 6000MW, SONA 2022 highlighted that “the electricity crisis is one of the biggest threats to our economy and social progress as a nation”.
Solving energy is the number one catalyst for economic growth
Energy demand modelling of unconstrained economic growth against the current 2019 IRP energy planning indicates that the supply gap will continue to widen as much as 13,000 MW by 2030 if no accelerated energy capacity plan is realised. Load-shedding intensity will also continue to escalate from 2021 levels to include regular Stage 3 and 4 outages in the coming years.
PwC estimates that the negative economic impact of load-shedding since 2020 has even surpassed that of the COVID-19 pandemic on the South African GDP and at an estimated total cost of unserved energy in the economy (COUE) of R101.73/kWh; closing this energy supply gap is one of the most critical enablers for sustainable business, economic growth, and job creation.
How quickly should we transition to renewables: Closing the supply gap however must go hand-in-hand with the Energy Transition and decarbonising our economy. There is no doubt that the world is on a Net-Zero journey which means we must ramp-down our use of fossil fuel technology whilst ramping-up the deployment of renewable energy technologies. South Africa has the benefit of excellent renewable resources in both the intensity and correlation of wind and solar, that will greatly assist us on this journey. As evidenced through the record low prices achieved in 2021 for our national procurement of Independent Power Production, renewables are our lowest cost option for new energy generation.
What does this mean for the Automotive sector?
As global emissions policy has accelerated towards Net Zero targets, global manufacturers have had to rapidly transition to new energy vehicle platforms and net zero commitments. The automotive sector is a critical sector for South Africa and to ensure continued global competitive trade must also be able to achieve such targets. As part of an energy intensive industry, reliant on carbon intensive Eskom supply, significant enterprise and supply chain transformation will be required to ensure sustainable business.
South Africa has strong national ambitions and growth opportunities as a green economy, which will directly create jobs, attract investment, and ensure a globally competitive economy. Although this approach is broadly endorsed by our national policies and ministries, we need to accelerate implementation to ensure a sustainable business environment. This will require significant investment as well as collaboration and the automotive sector will by necessity of global time pressures be a market leader.
We can realise a bright and green future, if we can fix our current energy supply crisis in time.
Contact: Jason Daniel
Email: [email protected]