Surge in Q3 renewables registrations to 2GW may signal market shift from loadshedding to economics

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Despite welcome relief from loadshedding in South Africa, a total of 3.3 GW of renewable-energy projects were registered with the National Energy Regulator of South Africa (Nersa) this year, with more than 2 GW registered in the third quarter alone.

Analysis conducted by Gaylor Montmasson-Clair, senior economist at Trade and Industrial Policy Strategies, indicated that the surge in registrations during the quarter, from 606 MW in the first quarter and 732 MW in the second, could be attributed to a few large projects.

These included a 475 MW solar PV project in the Free State, which Montmasson-Clair described as the biggest single registration since such projects were exempted from licensing in 2021, as well as a 380 MW wind farm in the Western Cape, a 310 MW wind farm in Mpumalanga and a 240 MW wind project in KwaZulu-Natal.

He said the strong performance during the quarter, which was the second best since the licensing exemption was introduced, may indicate that economics rather than loadshedding was now driving the market.

The highest number of registrations recorded in a single quarter was the 2 467 MW registered by Nersa in the first quarter of 2023 when South Africa was experiencing almost daily loadshedding.

Montmasson-Clair noted the prominence of wind projects, as well as the rise in registrations in the Mpumalanga province; developments that were supportive of both system stability and diversity and a just transition in the main coal region of South Africa.

Electricity and Energy Deputy Minister Samantha Graham-Maré also highlighted the rise in registrations during the third quarter, describing the surge as a milestone and a "sign of confidence in South Africa's renewable-energy market".

"Our goal is to accelerate even more gigawatts of renewable energy by continuing to remove unnecessary institutional red tape and making South Africa an even more attractive proposition for investors," Graham-Maré said in a statement.

Her commentary follows confirmation by Electricity and Energy Minister Dr Kgosientsho Ramokgopa that the procurement framework was being reviewed for projects procured through public bid windows.

Such projects had faced relatively more difficulties in recent years in advancing to financial close than was the case in the private-to-private market, for which Nersa registrations offered a proxy.

Particular attention was being given to ensuring that future procurement processes were conducted in a way that available grid was utilised, through curtailment and possible regional bidding rounds, as well as to the streamlining of grid-connection processes.

Consideration was also being given to holding smaller, more frequent bid windows so as to improve competitive outcomes and create a smoother pipeline of projects around which local industrial capacity could be developed.

The outlook for private procurement, meanwhile, was difficult to forecast, with Montmasson-Clair noting that the quarterly data were heavily influenced by a few large-scale projects.

"But, overall, 2024 looks like another solid year for the private market," he said.

The pipeline of private projects being tracked by Operation Vulindlela, which is a joint initiative of the Presidency and the National Treasury, stands as 22.5 GW, while the latest edition of the South African Renewable Energy Grid Survey pointed to projects with a combined capacity of 133 GW at various stages of development across the country.

The result represented a dramatic increase from the 66 GW highlighted in the 2023 edition.