How renewable energy is revolutionising SA’s power grid

You can also listen to this podcast on iono.fm here.

SIMON BROWN: I’m chatting with Seithati Bolipombo , the chief commercial officer at Mulilo, an alternative energy company. Seithati, appreciate the time to talk to you this morning. At the State of the Nation Address last week the president declared load shedding over, and I think that is a fair shot. Power goes – but it’s never load shedding, just sort of structural issues. But he really did position renewable energy at the core of our country’s energy strategy. This is a significant move from our president in the Sona address last week.

SEITHATI BOLIPOMBO: Yes. Good morning Simon and thanks for having me. I think that’s correct. It is an endorsement, really, of the policy direction and I think it’s also a positive signal towards the IRP [Integrated Resource Plan] 2025 that was announced by the minister of electricity and energy last year.

So all indications are there is a serious impetus towards renewable energy contributing significantly towards our energy mix. So positive. Positive indeed.

Read:
South Africa is moving away from coal …
SA’s solar leak – and how homes and EVs could help fix the grid
South Africans are leaving the electricity network

SIMON BROWN:  Absolutely. And now that we have the load shedding, the sort of energy crisis, behind us, it is that structural change that we can start to focus on. I was going to say Eskom. It’s Eskom but it’s broader. It’s players such as yourself as we now fundamentally sort of create the energy sector that we want as an economy.

SEITHATI BOLIPOMBO: Yes, for sure. I think it has been a long time coming and the president even made a point to say no longer will South Africa be subject to a single player delivering the electricity that the country needs. I think that is a positive thing. I don’t think it’s an indictment against Eskom. I think it’s a significant shift towards growing the economy in South Africa.

One thing we know is that, if you’re going to support new mining investment, if you’re going to protect the ferrochrome industries and all other manufacturing, if you’re going to build towards ambitious targets for localisation and beneficiation and all these things, all of that requires energy security. But it also requires cost-effective energy, the lowest-cost energy that we can get that also supports sustainability. So I think those are all good things for the economy.

SIMON BROWN: You make a great point there. That was one of the concerns during the load shedding years. The load shedding was a decade, a decade and-a-half, was around that investor confidence. My sense is that [confidence] will be returning as the load shedding fades. But the other significant part of it is that renewable and the cost, because energy is a cost and cheaper is better.

We can start perhaps getting some not necessarily downward pressure but better costing, particularly for industry.

SEITHATI BOLIPOMBO: Yes, I think you need better costing. I think you need to improve the cost of energy across the board. And then I also think that you need to provide some energy security. I think you need to provide some certainty. We’re talking about the long game here if you look at the RFP [Retail Electricity Provider] … saying okay, by 2039 we want 45 gigs of power from South Africa coming from clean energy. And then the president also says towards 2030, 40% of the energy mix in South Africa will come from renewables.

Now what that starts to do for us in the private sector is it helps us to plan for the long game and that is investor confidence. That’s what we mean by regulatory certainty and all these things. We’re now starting to see the practical outworking of improving an industry.

So yes, I think I think these are all really good things and supported, you will see, by the investment in the transmission infrastructure. Again there it is the long game. We’re talking large-scale investment, large-scale infrastructure, and that will be supported by the wholesale energy market becoming much more dynamic, much more competitive, driving down costs for the South African consumer, and hopefully supporting employment and all these things that we need.

SIMON BROWN: Yes. And what we have seen over the last many years is a lot of smaller projects. A mine would put a solar plant up, or a shopping centre would put panels on its roof – so relatively small projects. Are we still going to see that? To your point, you mentioned a moment ago the very large-scale projects that then kind of feed into the grid, maybe wheeling, but feeding in – and much larger rather than small bespoke.

SEITHATI BOLIPOMBO: I think we need both, Simon. Part of the reason why we’ve turned the corner with load shedding is the supply-side factors – so rooftop solar, both in residential and commercial real estate. We have, of course, seen the deployment of renewable energy for large energy-intensive users such as mines. And of course we must give credit to Eskom for an improved maintenance protocol and an increased energy-available factor and so on.

So we will still see some contribution from the supply-side factor, people continuing to build green buildings and so on. But certainly I do think that renewable energy is a game of large scale, where you can get economies of scale as well, and so you should see the continued deployment of large-scale infrastructure or utility-scale projects across the country.

SIMON BROWN: The other [thing] mentioned by the president at the Sona last week was around transmission and independent transmission projects, which are going to sort of reform the grid. Equally important is how we get the power from A to B, and we’re very much moving in the right direction there as well.

SEITHATI BOLIPOMBO: Definitely. I think the availability of grid has the potential, if we’re not careful, of slowing down the momentum in terms of rolling out clean energy. We do have serious, serious grid constraints and we’re seeing it with our counterparts within Eskom as well. It is quite a complex infrastructure to manage. So yes, we definitely need to see some positive movement there in the independent transmission rollout programme we’re looking forward to. Of course, these things you need to make commercially viable. I think the biggest thing to unlock right now is that credit vehicle that will support the ITP [Independent Transmission Projects]; then I think the private sector will come alongside the government and do what it needs to do to help us out.

SIMON BROWN: This then starts to happen all quite quickly. I think of examples from Australia, from the UK, from other markets, which have started to focus on renewable and suddenly – I don’t know, maybe five years, a decade later – you turn around and your grid is almost a completely clean grid; maybe not 100%, but it does gather momentum quite quickly, and it’s going to be a fundamentally different looking situation in a decade’s time.

SEITHATI BOLIPOMBO: It is very possible, Simon. So yes, you’re right in terms of Australia. Europe is the same. Of course these are first-world countries and so on. But that speaks to the power of renewable energy from construction to commissioning, which means that you’re deploying energy electrons or clean electrons into the grid. That can easily be done in even four months – in some cases even 15 months. So it is a quickly deployable resource, and it’s in our interest as a country to go that way.

I think the commercial banks in South Africa certainly have developed some sophistication, so they understand how to fund these projects – and the funding deployment comes around quickly.

So yes, you’re right that compared to other coal investments and so on this is really the quickest path towards energy security and the most cost-effective path as well.

SIMON BROWN: Yes, cost-effective and quick. Just two years ago here we were sitting with load shedding and now we are talking around a green grid. It has happened in a hurry.

We’ll leave it there. That was Seithati Bolipombo, chief commercial officer at Mulilo.

Listen to the full MoneywebNOW podcast every weekday morning here.