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South Africa’s Just Energy Transition: Advancements and Investment Plan

South Africa is making significant strides towards a greener energy landscape. President Cyril Ramaphosa’s launch of the Just Energy Transition Investment Plan (JET IP) marks a crucial milestone in the country’s commitment to a balanced transition to cleaner and more sustainable power sources. This article provides an overview of South Africa’s green energy revolution and the key initiatives driving the Africa’s Just Energy Transition.

Unraveling the Just Energy Transition Investment Plan (JET IP)

At the World Leaders’ Summit during COP 27 in November 2022, President Cyril Ramaphosa unveiled the Just Energy Transition Investment Plan (JET IP) for South Africa. This plan aligns with the Cabinet-approved National Just Transition Framework and outlines the necessary investments to achieve the country’s ambitious decarbonization goals. The JET IP aims to promote sustainable development, ensure a just transition for affected workers and communities, and foster a comprehensive societal approach.

To realize these objectives, the JET IP identifies a total financial requirement of USD 98 billion over the next five years. Both public and private sectors will contribute to this investment. The overarching goal is to decarbonize the South African economy and bring its carbon emissions within the target range of 350-420 MtCO2 by 2030, as outlined in the National Determined Contributions (NDC).

Key Investment Areas under the JET IP

The JET IP focuses on strategic investments in various sectors to drive the energy transition:

  1. Electricity: The plan includes decommissioning outdated coal-fired plants and repowering and repurposing them with clean technologies. Additionally, it emphasizes the strengthening and expansion of the transmitter grid and the increased deployment of renewable energy sources.
  2. New Energy Vehicles (NEVs): To decarbonize the automotive sector, the JET IP aims to support the transition towards green sustainable manufacturing. This initiative will contribute to reducing emissions and promoting eco-friendly transportation alternatives.
  3. Gaseous Hydrogen (GH2): The JET IP recognizes the significance of gaseous hydrogen as a clean energy source. It emphasizes essential planning, feasibilities, and investments, including port infrastructure enhancements, to boost exports and generate employment opportunities.
  4. Cross-cutting Initiatives: The JET IP also prioritizes investments in skills development and municipalities. By focusing on upskilling the workforce and enhancing local infrastructure, South Africa aims to create a sustainable and inclusive transition to a green economy.

The Green Hydrogen Energy Economy

South Africa envisions a robust green hydrogen energy economy that contributes to economic growth and climate change mitigation. At COP 27, Masopha Moshoeshoe, a green economy specialist, highlighted the country’s goal of attracting USD 250 billion in investments for the development of the green hydrogen sector by 2050. This initiative has the potential to create approximately 1.4 million jobs and generate USD 30 billion in annual revenue. However, achieving these targets requires a substantial increase in renewable power generation capacity, ranging from 140,000 MW to 300,000 MW, to adequately supply the growing green hydrogen sector. Currently, South Africa’s renewable energy capacity stands at approximately 40,000 MW.

Just Transition: Striking the Balance

South Africa faces the challenge of balancing carbon emissions reduction with the socioeconomic impact of the transition. The concept of a just transition acknowledges the need to minimize negative consequences on employment while developing long-term green energy job opportunities, especially for communities heavily reliant on fossil fuels. It also recognizes the vulnerabilities of specific locations and sectors, requiring targeted measures to address care, preparation, and social infrastructure. Reskilling the existing workforce and educating the future generation play vital roles in ensuring a smooth and equitable transition.

Coal remains the primary source of energy in South Africa. However, to meet the country’s carbon emission reduction targets, a shift towards cleaner energy sources is imperative. South Africa updated its NDC under the Paris Agreement in 2021, proposing a revised target range of 398 to 510 Mt CO2-eq for 2025 and 398 to 440 Mt CO2-eq for 2030.

Policies Supporting South Africa’s Just Energy Transition

To facilitate South Africa’s energy transition, several policies have been implemented:

  1. National Development Plan (NDP): The NDP outlines the country’s long-term vision, emphasizing sustainable development and transitioning to a low-carbon economy.
  2. Integrated Resource Plan (IRP) 2019: This plan maps out the government’s energy goals until 2030, highlighting a reduced reliance on coal-powered energy and an increased focus on a diversified energy mix that incorporates renewable energy, distributed generation, and battery storage.
  3. Renewable Energy Independent Power Producer Procurement Program (REIPPPP): Introduced in 2011, the REIPPPP facilitates the procurement of renewable energy projects, promoting the growth of the renewable energy sector in South Africa.

Furthermore, various policies are being developed and implemented, including the Renewable Energy White Paper, the Nationally Determined Contribution (NDC), and the Just Transition Framework. These policies form the foundation for South Africa’s energy transition and its departure from carbon-intensive energy sources.

South Africa’s Diversified Energy Mix Strategy

As part of its diversified energy mix strategy, South Africa’s electricity public utility, Eskom, has identified independent power producer bids that could add approximately 1,800 MW of renewable power to the national grid. These projects aim to enhance the country’s renewable energy capacity and reduce its reliance on coal-based electricity generation.

Amendments to the Electricity Regulation Act

Proposed amendments to the Electricity Regulation Act are expected to address various issues, including the electricity supply deficit, market competition, and the introduction of independent power producers (IPPs). These amendments aim to create a multi-market structure, establish a central purchasing agency, and accommodate low carbon-emitting generation technologies. The reforms also consider the timing of licensing applications, changes in transmission system operation, and the creation of additional regulatory capability. By accelerating the adoption of affordable and decentralized renewable energy systems, South Africa strives to achieve its energy transition goals.

South Africa’s journey towards a green energy transition is multifaceted and requires careful consideration of social and economic factors. The Just Energy Transition Investment Plan (JET IP) provides a comprehensive framework for the country’s decarbonization efforts, emphasizing sustainable development, inclusive growth, and social justice. With supportive policies, a diversified energy mix, and targeted investments, South Africa aims to unlock the vast potential of its green energy sector, while meeting its carbon reduction commitments and driving economic prosperity through a just transition.

Feel free to contact the Energy Transition Centre today with questions. 

·  Julius Moerder, Head of Energy Transition Centre

·  Oneyka Ojogbo, Head of Energy Transition Centre, Nigeria & West Africa

·  Leon van Der Merwe, Head of Energy Transition Centre, South Africa

Author: Memoona Tawfiq