Community-Owned Solar Initiatives in South Africa

Introduction

Since 2007, rolling blackouts have left South Africans without power for up to 12 hours a day. Eskom, the state-owned utility company, relies almost entirely on coal-fired power plants, many of which are deteriorating and run by cartels. In addition, consequences of climate change in South Africa are occurring at a rate twice the global average, with places like Nelson Mandela Bay facing a nearly decade-long drought that has reduced water levels in dams to critically low levels. When it does rain, nearby towns face severe flooding. According to the Yale Program on Climate Change Communication, a sampling of 1,547 individuals in South Africa found that respondents were more likely to experience severe weather relative to other countries surveyed.

South Africa, which produces 40% of the African continent's electricity, has had its development shaped by colonialism, apartheid, and access to cheap coal. The KwaZakhele Township in Nelson Mandela Bay has a long history of self-organization, due in part to its founding at the height of apartheid and its designation as a Black settlement. Unable to run their business or study for school after dark due to blackouts, KwaZakhele's "Saltuba Cooperative" has taken matters into its own hands. A group of 36 homes have created a pilot project to produce, manage, and ideally make an income selling electricity to the municipality. This demonstration is also referred to as the "Transition Township," in reference to the transition away from a fossil-fuel based economy toward community ownership of local resources.

Beginning in 2016, researchers from Nelson Mandela University established a pilot project in the KwaZakhele Township to leverage gap tap space for community-owned solar development. A first of its kind in the country, this project is led in part by the Saltuba Cooperative and may serve as a demonstration for future income-generating, community-owned clean energy projects.

Symbolic Importance

According to Rian van Staden, South Africa's coordinator for Global 10% Renewable Energy, community-owned energy provides numerous benefits such as providing opportunities for citizens to gain control over community resources. Additionally, community ownership can decrease local vulnerability while supporting national climate and resilience goals.

The Saltuba Cooperative can serve as an example for other South African townships interested in pursuing community solar. By identifying the regulatory and financial hurdles that would inhibit solar deployment, the Saltuba Cooperative is making it easier for future communities to generate income while minimizing their reliance on fossil fuels.

In their 2024 report on social ownership of renewable energy projects, the South African Presidential Climate Commission states, "a critical aspect of a just transition in the post-apartheid context is to address [the] concentration of wealth and ensure restorative and distributive justice." Achieving climate justice in South Africa requires building wealth in communities that have historically experienced high levels of poverty and unemployment, which "affordable, decentralized, diversely owned renewable energy systems" can support.

"Gap Tap" Solar project from Saltuba Cooperative

A tunnel garden at the Saltuba Cooperative

Saltuba Cooperative’s solar array is a 5 kW installation on a carport structure in a public area, or a “gap tap.” Installed in 2019, the installation is connected to the existing electrical grid. While the project is operating, regulatory barriers have held back expansion and prevented Cooperative members from receiving compensation. Researchers estimate that approximately R170,000 per annum could be generated through the sale of excess energy.

Community-scale projects like the Saltuba Cooperative utilize existing public spaces within townships. Located between Sali and Rubali near Njoli Square, Saltuba benefits from the participation of 36 nearby households. Project land also houses a community garden irrigated by grey and rainwater, a scale and bailing machine for recycling, and an internet cafe "smart building" made from reclaimed materials. Four households also have gutters that feed rainwater into a tank and storage dam, and grey water from solar-powered washing machines provide water for the gardens. Planting under tree shade has also helped conserve some water, as Nelson Mandela Bay is still experiencing an intense drought.

The Transition Township hopes to leverage more of Kwazakele's 120 gap taps, as well as the rooftops of 25 member households, to scale up to 100 or even 150 kW. Ideally, all generation would be connected to a bulk meter and fed to a a single substation, which may require additional cable laying and wiring throughout the community. Alternatively, an array could be constructed further from town and connected to a medium-voltage substation, though the direct community benefits would likely be lesser. However, several gap taps have been zoned for housing development or private developers by the municipality, thus complicating future buildout.

Patrick Brennan and Janet Cherry, two members of the Transition Township project team, suggest that other land in KwaZakhele could similarly be reclaimed to support local, renewable energy. For example, the coal-fired Swartkops Power Station was decommissioned 20 years ago and could be a hub of industries based on renewables, food production, and manufacture of recycled materials. This, in turn, would support the local economy.

The Presidential Climate Commission modeled the impacts of similar projects in their report, Social Ownership Models in the Energy Transition, recreated in the table below:

Grid-Tied (Gap-tap) Project Statistics

Number of Household	35
Household capacity allocation	5 kW
Available collective allocation	0.18 MW
Total PV capital expenditure (CAPEX)	2,1000,000 ZAR
Total operating expenses (OPEX)	43,750 ZAR
Total production from solar PV	263 MWh/year
Municipal off-take/local electricity market	263 MWh/year
Price per MWh	1,200 ZAR/MWh
Total revenue	315,000 ZAR/year
Levelized cost of energy (LCOE)	1,048 ZAR/MW
Economic impact	1,604,621 ZAR
Carbon removed	2,573 tons
Local jobs in South Africa	3
Indirect jobs	2

Land Availability

With the hope of converting 120 gap-taps and each having approximately 1,000 square meters of space, the project is expected to require 120,000 square meters or 0.12 square kilometers. In general, approximately 1.8 square meters is required for each 250 W panel.

Potential Benefits of Community-owned Solar projects

15 solar PV panels installed atop a carpark generated 5 kilowatts of electricity, which was delivered to KwaZakhele's municipal grid. Originally published by the South African Labour Bulletin.

South Africa experiences frequent power outages, with Eskom implementing Stage 6 load shedding throughout 2023. This means that approximately 6,000 MW is shed and is typically reserved for preventing the collapse of the national power grid. By adding an estimated 10 GW of renewable energy generation to the grid over the next two years, South Africa could end rolling blackouts (though this would require maintaining the performance of coal). Small-scale and rooftop solar has already been rolled out in South Africa to combat load shedding. For example, in Johannesburg, 700 sites have been selected for rooftop solar installation over the next few years. Government leaders believe that South Africa may reach Stage 10 load shedding unless electricity generation increases and demand decreases.

In places like KwaZakhele, most households qualify for Assistance to the Poor (ATTP) which allocates free electricity. The program states that, "All households who qualify for benefits from the Policy, and who consume electricity by means of a prepaid meter, will be issued with a token for 75 kWh of electricity without charge at the beginning of each month."

According to Patrick Brennan and Janet Cherry, two project researchers writing for the South African Labour Bulletin, "if the gap tap at Saltuba had a 50 kW installation it would be able to generate approximately R10 000 per month for 25 years or more... There are 120 gap taps in KwaZakhele township alone, and the community researchers of the Transition Township project calculated that:

• Initial R1.5 million investment (R60 000 per household) generates approximately R600 000 per annum in revenue (R24 000 per household) for 25 years.
• The model assumes that a portion of this amount (R125 000) will be used to cover the marginal cost to run and maintain the installation and that a substantial surplus (about R18 000) will be available for distribution to each participating household (after fixed costs e.g. loan repayments etc.).
• Average household income in the area is approximately R30 000 per annum so once a payback period is completed this has the potential to raise average household income by almost two thirds."

Ultimately, community-owned solar can allow for democratization of electricity generation. The grid-tied cooperative-owned generation model seen in KwaZakhele is both replicable and scalable to other townships where formal infrastructure is present.

Challenges for the Community-Owned Solar

Regulatory Barriers

Government regulations have recently changed so that municipalities can buy energy from local producers rather than through Eskom. In theory, this would mean groups like the Saltuba Cooperative would also be able to sell their electricity for a profit directly to buyers. However, project land is owned by the municipality, so Saltuba has needed to apply for a lease. In July 2021, households participating in the project were promised financial benefits for feeding R20,000 worth of electricity to the municipal grid. Instead, regulatory barriers have made it so that residents get credited to their electricity accounts, though no direct payments have been made.

Other regulatory barriers include lengthy and often complicated licensing and public procurement processes, as well as local regulations which differ across municipalities, which make it difficult for communities and households to engage in renewable energy businesses.

Compensation for Participating Households

There are also challenges with community members receiving profits of the Transition Township project itself. With the success of the initial 5 kW structure, the municipality promised that by July 2021 participants would get financial benefits from the project. However, households have still not been able to receive cash payment and are currently only promised credit on their electricity accounts. If the Cooperative is able to clear regulatory hurdles and actually sell the electricity being produced, it could significantly change the lives of the Cooperative members. During the initial run of the 5 kW project, the installation generated 8,800 kWh of electricity after 20 months. Assuming prepaid pricing of R2.18 per kilowatt-hour, the project created approximately R19,314 (R966 per month) in income, even with load shedding.

Community Buy-In

Despite its benefits, socially owned solar faces hesitation and concerns from community members. ATTP Program participants have expressed concerns about continued access to benefits if they were to join a cooperative, or if their household income increases due to electricity sales. Moreover, questions about the quality of solar power have given rise to concerns about it furthering energy poverty and marginalization. Finally, coal employs hundreds of thousands of individuals (see Current employment from the fossil fuel sector), and concerns around job loss due to decommissioning are common. Because of these reasons, community buy-in for cooperative and community-owned projects is both tenuous and critical, and a comprehensive Just Energy Transition must address these intersecting social and economic challenges.

Loss of Municipal Revenue

Because a significant portion of electricity produced by Eskom is routed through municipalities (an estimated 42% in 2015/16), social ownership of generation may stymie a source of revenue for townships. To combat this, close communication and coordination between "prosumers" and municipal leadership is needed to minimize potential conflict.

Viability of Grid-Tied Cooperatives

As outlined, grid-tied projects owned and operated by cooperatives can provide robust benefits to community members, though several mechanisms must be in-place to ensure project efficacy. Organizationally, projects need clear delineation of roles and responsibilities among stakeholders (including the community, the township, utilities, government bodies, and others) as well as legal articulation of rights and expectations regarding land use. The project is then able to recuperate costs through feed-in tariff schemes (regulation allowing, see Finance below), selling electricity to an energy trader or the municipality itself, or by using the energy directly, thus reducing external electricity costs.

Civil Society Organizations

Department of Development Studies at Nelson Mandela University: Established the pilot Transition Township project to research how existing land and infrastructure can be repurposed to generate local income and sustain livelihoods. Beyond just rooftop solar, the project also looks at the use of water capture methods and small local agriculture. The Nelson Mandela University Trust also provided partial funding for the project through the Ezethu Trust.

Amandla! Resource and Information Centre: Amandla! is a publication intended to open dialogue for left-leaning social, political, economic, and environmental movements. Amandla! maintains a Resource and Information Centre which hosts information on globalization, the political economy, climate change, energy, food systems, and other topics. The Amandla! Resource and Information Centre is a project partner of the Department of Development Studies at Nelson Mandela University.

Cooperative and Policy Alternative Centre (COPAC): Founded in 1999, COPAC focuses on bottom-up tactics to develop and reconstruct South Africa post-apartheid. The Centre works alongside progressive social movements, government entities, and municipalities to achieve their vision of "building human solidarity to sustain life and a grassroots drive, just transition for system change."

KwaZakhele Community Research Team: Comprised of a diverse group of community activists, the Community Research Team documents the economic activity in KwaZakhele. For the purposes of this demonstration project, the Team has conducted surveys to understand the amount that households typically spent on electricity (and other energy sources) and food (particularly fresh vegetables). The Team has also conducted a feasibility study for installing solar in "gap taps" throughout the city.

KwaZakhele Development Agency (KDA): KDA acts as the resource base for the project. It was created by the Community Resource Team to support implementation of the demonstration, as well as spearhead replicated pilots in other parts of KwaZakhele.

Climate Justice Coalition (CJC): CJC brings together unions, grassroots organizers, community-based organizations, and nonprofits to advance intersectional climate justice. In July 2023, the Climate Justice Coalition protested in solidarity with the Saltuba Cooperative after they argued that regulatory barriers hinder municipalities from buying electricity generated by community cooperatives. These regulatory barriers make social ownership of renewable energy projects much more difficult as they demonstrate a lack of local and national support. CJC argues that South Africa's clean energy transition must center justice and prioritize projects that are owned and led by community members.

Besides these organizations, the project also included opportunities for KwaZakhele residents to participate in three working groups: Renewable Energy (10 residents), Food Production (25 residents), and Recycling and Waste Management (10 residents). The Renewable Energy working group is primarily tasked with installing, maintaining, and managing the solar PV systems that are installed throughout the community, as well as identifying potential customers of excess electricity. Partners of the Renewable Energy working group are the Nelson Mandela Bay Municipality, the Alternative Information and Development Centre, the KwaZakhele Development Agency, Rubicon Energy, and Nelson Mandela University.

While not part of the KwaZakhele pilot project, the nonprofit GreenCape still works to advance clean energy solutions, including but not limited to small-scale embedded generation (SSEG, less than 1 MWp) throughout the country. GreenCape's energy program as a whole aims to support the growth of both renewable energy and energy efficiency in South Africa, primarily by building relationships with stakeholders and identifying/dismantling barriers to the industry.

Community Engagement

In 2022, the Presidential Climate Commission published a report on lessons learned from the community and stakeholder engagement process. While not specific to community-owned solar, the Report outlines several key themes:

• Communities are willing to engage in and support a just transition but only if they are integral to the decision-making process. They are also willing to support a just transition, but they want to see meaningful economic benefit arising from its implementation.
• Communities expressed significant health concerns relating to the extraction and combustion of fossil fuels.
• The just transition is a complex and nuanced discussion around trade-offs perceived between development and climate change.
• The youth and those without children are deeply concerned about their need to secure future jobs.
• Communities are combining the pain of climate change impacts with their experience of poor basic service delivery and governance. The government is largely seen as unresponsive to community needs. Distrust with the government is largely a result of corruption and poor governance.
• Many challenges exist, such as skills and capacity gaps, language and accessibility concerns, racial dynamics, youth inclusion, and the time with which mobilization requires.
• Communities have solutions in mind.

The themes in the Commission’s report demonstrate the eagerness for communities throughout South Africa to have a voice in their clean energy future. They acutely understand the significant burdens that fossil fuels have created, as well as the inequity that can be perpetuated if their energy transition is not inclusive of local priorities and concerns. Moreover, with shaky trust in the government’s ability to respond to local needs, solutions that are created for communities by communities are a necessary component to a holistic clean energy transition.

Despite its obvious benefits, community engagement is a challenging process. According to SaferSpaces, a South Africa-based organization working to prevent crime and violence, “Community engagement has become progressively challenging as communities have become increasingly frustrated over service delivery, and relationships between local government and communities have become conflicted and difficult to manage. This gap between local government and communities has also resulted in flawed planning processes where community voices are not heard, and projects and programmes do not reflect their needs and aspirations; and where consultation becomes seen by officials and communities as a tick-box exercise rather than as something that will generate a richer, more valuable strategy.”

The Renewable Energy Independent Power Producers Procurement Programme (REIPPPP), described below, was established in 2011 to encourage timely development of clean energy projects that deliver comprehensive benefits to nearby communities. Community engagement professionals working for project developers have observed that "meaningful community engagement [is] an outcome of lengthy participatory processes which require constant engagement and relationship building in context-appreciative ways," though anecdotal evidence suggests that community development is not a high priority for many companies beyond what is legally required.

Finance

South Africa's Energy Minister, Gwede Mantashe, has called ditching coal "economic suicide" for the country, which relies heavily on the industry. Already, the indebted Eskom loses tens of billions of rand each year and is only expected to start making a profit again in 2026. Eskom asserts that it would take R300 billion (USD $20 billion) and 10-15 years for the company to fully meet national standards for SOx pollution, which would lead to prolonged outages in the meantime. During COP26, the United States, United Kingdom, France, Germany and the European Union offered USD $8.5 billion to aid in South Africa's transition. This would help Eskom decommission most of its coal-fired plants by 2050 and switch to renewables.

According to the draft South African Renewable Energy Masterplan (SAREM): "Globally, solar photovoltaic (solar PV) and wind energy technologies reached, on average, USD $0.048 and USD $0.033 per kilowatt-hour (kWh) respectively in 2021. In South Africa, they similarly reached R0.375 per kWh for solar PV and R0.344 per kWh for wind energy technologies in 2021. Economic dynamics have seen renewable energy costs drop significantly (-88% for solar PV and -68% for onshore wind between 2010 and 2021."

Rooftop solar is approximately 60% more expensive than utility-scale, at about R16 billion versus R12 billion per gigawatt, respectively. Partially due to this fact, large companies like Sasol have begun installing utility-scale projects of around 100 MW in areas with reliable solar and wind resources rather than invest in smaller projects. Despite this, rooftop solar has grown, with Eskom data showing that 4.4 GW of rooftop solar had been installed by June 2023 or four times what it was in March of 2022.

South Africa has the Embedded Generation Investment Programme (EGIP), which aims to upscale distributed solar uptake throughout the country. EGIP has a program budget of USD $200 million ($100 million each from the Green Climate Fund and the Development Bank of Southern Africa) to use as risk capital for projects. The program also aims to add approximately 330 MW of wind and solar generation through its financing.

In addition, South Africa established the Industrial Development Corporation (IDC) in 1940 to develop the country's industrial capacity and provide grants to small businesses in rural townships and communities. In particular, IDC aims to create an inclusive economy with funding specifically intended to support enterprises owned by historically marginalized identities. IDC funding serves to advance policy implementation, namely the National Development Plan, the New Growth Path, and the Industrial Policy Action Plan. Advancing environmental sustainability is a commitment of IDC, which materializes primarily through IDC's involvement in implementing JETP projects and its use of an integrated sustainable industrialization model. IDC's model encompasses four pillars: catalyzing low-carbon transitions and green growth, facilitating economic diversification and jobs-rich industrialization, supporting resilience to physical climate risks, and supporting development of regional value chains.

Nersa, South Africa's energy regulator, approved new Energy Price Determination Rules in January 2024. The new rules will shift away from the previous structure called the Multi-Year Price Determination (the effects of which will still be felt this year in the form of tariff hikes for consumers). The new rules will also remove the Regulatory Clearing Account component of tariff hikes, which had previously benefited Eskom due to the utility's dire financial situation by allowing for increasingly higher tariffs each year. The Energy Price Determination Rules will take time to roll out. Given the increasing tariffs, more and more customers are beginning to seek out alternative, independent electricity sources, meaning community solar could become more attractive across South Africa.

Cooperative-owned generation is currently unable to sell electricity to municipalities through a feed-in tariff scheme. Small-scale generation projects (i.e. those that fall under 100 kW in capacity) do not require licenses and are not regulated by Nersa. However, because municipalities can apply for distribution and trading, small-scale producers may contract with municipalities to sell electricity directly, a process which would require a third-party facilitator. While a tender for municipal electricity procurement is typical, a time of use (ToU) agreement signed by a municipality and small-scale producer could serve as an alternative, though this process would require facilitation from the National Treasury. Finally, grid-tied cooperatives could sell power to a trader or other off-taker via a power purchase agreement. While feed-in tariffs are not currently accessible to small generation projects, designing a scheme with a dedicated pool of funding separate from other social support programs would help improve financial viability.

Project Funding for the Transition Township

Funding for the Saltuba Cooperative's 5 kW solar installation came from the Ezethu Trust. Support for Unrated Researchers (CSUR) also gave the project R282,960 to support seven Master's and five doctoral students researching the project. Additional funding from Daad, the German state funding agency, was used for design of the smart building that accompanies the solar panels.

By 2020 the Cooperative had gotten support from the municipality's economic development department, which has provided funding to expand the project to two additional gap taps which would include 50 more households in the town.

For future projects, the Presidential Climate Commission recommends unconditional grants to ensure social benefits of the project reach citizens.

Tax Incentives

Two tax incentives affect rooftop solar in South Africa: 1) up to R15,000 could be claimed by individuals for the installation of rooftop solar panels, so long as specific conditions about the panels and installation are met; and 2) for businesses, up to 125% of investments can be claimed. The second incentive is referred to as the 12B incentive. These tax provisions are intended to reduce strain on the national grid and drive local investment in solar, provided that incentives are large enough to be tenable to individuals. That said, tariff restructuring led by Nersa and Eskom may undermine these incentives. For example, in 2023, a former senior manager from Eskom announced that the utility was applying to increase the capacity charge, which would likely increase electricity bills of customers looking to reduce reliance on Eskom's generation. Additionally, Nersa is undergoing stakeholder consultations for determining new fee structures which would encourage constant consumption, which renewables' variability makes difficult.

Just Energy Transition Partnerships

South Africa is actively participating in the newly formed Just Energy Transition Partnership (JETP), which aims to expedite decarbonization measures. South Africa's efforts focus on its electricity system. The JETP's governance is overseen by an Independent Partners Group led by the United Kingdom and a Presidential Climate Finance Task Team. In the first six months of the partnership, five working groups focused on finance, power, hydrogen, transportation, and implementation were established to provide technical expertise.

The national utility Eskom is in deep debt, only surviving through state bailouts. Lack of capital has slowed progress for South Africa's energy transition, so the country was the first selected for the JETP. "Advanced" economies will provide USD $8.5 billion (R161.21 billion) to support decarbonization in the country.

Socially owned projects in South Africa could be hindered by a lack in transparency of JETP investments. To ensure project viability, the Presidential Climate Commission has created several financing recommendations: 1) unlock further funding sources from municipal and national governments, 2) establish clear accountability mechanisms in loan agreements, 3) clearly articulate requirements and responsibilities that investors must abide by with respect to the communities they aim to benefit, 4) improve oversight in loan agreements from international financiers, and 5) remove allocation limitations for social ownership within the JETP framework.

National Energy Information in South Africa

Renewable Energy Target

In 2021 South Africa updated its Nationally Determined Contribution (NDC) with a bolder decarbonization pathway. Targets include reducing the upper range of emissions by 17% for 2025 and 32% for 2030, relative to 2010 levels. Updated renewable energy targets will be made available upon the publication of the South African Renewable Energy Master Plan final draft, following consultations with social partners. In the 2019 update, South Africa's Integrated Resources Plan (IRP) aims to add about 6 GW of distributed generation to the national grid.

Current Power Capacity Mix

Energy Source	Operating Capacity(MW)	Note
Coal	43,624.1MW	43,131 MW owned by Eskom
Oil & Gas	622MW	1 operational plant: Secunda power station
Nuclear	1,940MW	1 operational plant: Koeberg nuclear power plant.
Hydropower	3,492MW	-
Solar	3,228.9 MW	At/above threshold of 5 MW. Includes solar PV and solar thermal technologies.
Wind	3,742 MW	All are onshore wind, at/above threshold of 10 MW

Bioenergy: There are no major utility-scale (30mw+) bioenergy projects in South Africa. However, about 5% of the country’s energy consumption came from bioenergy in 2020, which were likely demand from cooking and heating.

Prospective Power Capacity

The U.S. International Trade Administration estimates that approximately 500 MW of solar PV could be installed across South Africa per year, reaching 7.5 GW by 2035. The commercial and industrial sectors comprise about 70% of new solar PV installations. Beyond just solar, renewables as a whole are expected to comprise about 17% of South Africa's power generation mix by 2032.

Energy Source	Announced	Pre-construction	Construction
Coal	1,500 MW	-	1,600 MW
Oil & Gas	6,465 MW	10,177 MW	-
Solar	456 MW	3,873 MW	1,759 MW
Wind	215 MW	1,670.5 MW	733 MW

Fossil Fuel in South Africa

Fossil Resources and Retirement

Coal

South Africa is the world's seventh largest producer of coal. According to Global Energy Monitor's Global Coal Mine Tracker, the country mines at least 270.913 metric tons per annum of coal across 78 operational mines. The industry supplies feedstock for about a quarter of the country's liquid fuel for vehicles.

As recently as late 2023, South Africa has delayed closures of coal plants, which government leadership has admitted will cause the country to miss its Paris Accord commitments. South Africa committed to cut emissions between 350 and 420 million tonnes by 2030, which would largely stem from decommissioning existing fossil fuel generation. However, in November 2023, government officials confirmed that eight coal plants would be running longer than initially planned to combat the country's power supply crisis.

Oil and Gas

South Africa has historically not relied on oil and gas reserves, though the industry has grown in recent years due to dwindling coal supplies and the need for a more diverse energy system. Offshore exploration is difficult due to nearby ocean depth and currents, but with improved technology, more exploration licenses have been issued in recent years. With dismissal of appeals against drilling and natural gas growing to 3% of the country's energy supply, gas in particular is on the rise.

Data from Global Energy Monitor's Global Oil and Gas Extraction Tracker:

TotalEnergies owns all three major oil and gas units in South Africa,  all within Block 11B/12B of the Outeniqua Basin. Production for these fields is expected to start in 2026-2027.

Luiperd Oil and Gas Field (South Africa) has 105 million boe of hydrocarbon reserves with a design capacity of 210 million cubic feet/d of gas and 15000 bbl/d of condensate.

Brulpadda Oil and Gas Field (South Africa) has estimated reserves of 1.3 trillion cubic feet of gas and 80 million bbl of oil.

Paddavissie Fairway Complex, which includes Brulpadda and Luiperd, has estimated reserves of 3.4 trillion cubic feet of gas and 192 million bbl of condensates.

Current impacts from fossil fuel

With climate change happening at twice the average rate in South Africa, drought has devastated the region. In January of 2023, the Ipomfu Dam was at 7% -- the lowest it has ever been since its construction in 1983. The Churchill Dam, which supplies water to parts of KwaZakhele and New Brighton, threatened to run completely dry in April of 2023. By May of 2023, rainfall finally came, but not enough to break the drought. However, the sudden heavy rainfall did cause flooding, and roads were closed with 200+ people in KwaZakhele having to evacuate.

Smog and coal ash are pervasive in South Africa's coal belt, with the city of Johannesburg ranking among the most polluted in the word, rivaling Beijing and New Delhi. An unpublished study from South Africa's government, through the state-owned Council for Scientific and Industrial Research, shows that more than 5,000 South Africans die every year in the nation's coal belt because the government has failed to enforce its own air quality standards. Since 2015 Eskom and the smaller Sasol have received waivers that allow them to go past these limits since the companies are too indebted to address the issue.

More conservative studies show air pollution from Eskom's coal power stations causes approximately 2,200 deaths annually, as well as 94,000 cases of asthma symptom days in children, over 9,500 cases of bronchitis in children, 2,800 cases of chronic bronchitis in adults, and 2,400 hospital admissions. In addition to health impacts, the extremely unreliable nature of South Africa's coal-reliant grid has exacerbated economic and social issues, including 1 million lost working days per year. As decommissioning of coal plants is further delayed in Eskom's Integrated Resource Plan and Emissions Reduction Plan, health and economic impacts will multiply.

According to A Presidential Climate Commission Report on community and stakeholder engagement, coal communities in South Africa has called for reparations for the health impacts of mining and energy production, mapping of value chains to ensure phase-downs present tangible benefits for communities, and increased transparency and monitoring.

Employment

It should be kept in mind that unemployment in South Africa has been devastatingly high for years, hitting 34.9% in September of 2021. Additionally, the International Renewable Energy Agency estimated that South Africa's Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) spurred directly employment, with job-years doubling from 63,291 in 2016-2017 to 63,291 by the end of 2021. Unfortunately, since many of these jobs are construction in nature, employment is not long-term. Only about 10% of jobs created were filled by women.

The Saltuba Cooperative's solar installation is co-owned by the landowners that surround the public gap tap where the solar is installed. Cooperative members decide on hiring and paying for workers to maintain the infrastructure.

Current employment from the fossil fuel sector

As of 2019 200,000 workers were employed in South Africa's coal sector, including mining, transport, and energy -- or 1% of formal employment. 50,000 of those jobs were associated with coal-fired power plants run by Eskom. An additional 90,000 people are employed as coal miners, with residents in mining towns relying on the coal as a lifeline.

According to the Presidential Climate Commission, if South Africa successfully pursues a net-zero by 2050 scenario, ~60% of current mining workforce jobs are at risk of being lost. On average, each mine worker also has ~5-10 dependents.

In 2017, Eskom announced that it would close five coal-fired plants, causing workers to lose their jobs across power stations, coal mines, and coal transport. In protest, thousands of coal truckers blocked road access into the city of Tshwane and blamed Eskom's focus on renewable energy for the closures.

Prospective employment from the renewable energy sector

Established in 2011, the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) has generated an estimated 18,132 jobs by creating a supportive environment for private investment in South Africa's clean energy sector.

An estimated 0.6 to 1.4 million jobs could be created between 2020 and 2050 assuming South Africa works towards net-zero by 2050. However, major questions remain as to whether those jobs would be located in coal-reliant regions like Mpumalanga, where about 5% of formal workers are employed in the coal and related power generation sector.

Governmental information

Related governmental policies and papers

South Africa has made strides in passing climate-friendly legislation in recent years, but much of it includes substantial exemptions for the coal, oil, and gas industries. However, the country's high carbon intensity does make it less competitive in international markets where carbon-related penalties may apply. In addition, in 2023 the newest draft of the Integrated Resources Plan (IRP) came under heavy scrutiny for drastically reducing previous plans to bolster wind and solar generation to only 8,000 MW of new capacity by 2030. The plan also delays the decommissioning of 13,000 MW of coal before 2034, and no additional closures between 2035 and 2045 (leaving 18,000 MW of coal online in 2050, up 10,000 MW from the 2019 IRP.) The plan also envisages large increases to the gas and nuclear sectors, at 4,220 and 14,000 MW respectively. In the absence of a just transition plan, the 2019 IRP maintains annual build limits on renewables, which is intended to bolster investor confidence.

In 2021, the Electricity Regulation Act was amended, allowing for small producers of renewable energy to sell up to 100 MW of electricity without having to apply for a license to do so. That same year, private sector regulations were reduced, and in 2022, licensing for Independent Power Producers (IPPs) was removed altogether. This has led to an explosion in renewable development throughout South Africa. Under the rules of the Municipal Finance Management Act (MFMA) private power producers can now sell energy back to the grid, though households (such as those in the Saltuba Cooperative) cannot sell electricity to the grid and would need to receive an exemption.

Policy Recommendations

The Presidential Climate Commission has developed a set of policy recommendations to support cooperative and socially owned solar generation:

1. Develop a standardized public procurement process and standard agreement for small-scale energy generators (less than 100 kW) to sell directly to municipalities. This would require support from the National Treasury.
2. Any future feed-in tariff (FiT) schemes should be subsidized at a premium price to ensure economic benefits reach community members while meeting basic needs and increasing social mobility. The FiT must be structured such that working class households are not unduly affected by increased retail rates for electricity.
3. Where electricity sales are not feasible, households should receive free basic electricity credits.
4. The national government must actively support municipalities as they develop new revenue models for electricity sales. Any new revenue models should encourage businesses, middle-class households, and township residents to contribute to the grid.

The Commission has also identified soft recommendations that would foster a supportive environment for socially owned renewable energy models. The national government should consider developing the following:

• Regulations that encourage and support cooperative ownership, in terms of both rule and funding structures.
• Forward-thinking industrial policies that include provisions on protective tariffs, taxes, and means to support local transition industries.
• Amended national legislation to allow for decentralized systems, which existing policy does not consider.
• Adjustments to Nersa authorities, and the Electricity Regulation Act overall, to increase compatibility with community- and cooperative-owned renewable generation systems.
• Introduction of incentives for municipalities that would counteract potential impacts that socially owned renewables may have on electricity resale.
• Land access reforms that can reduce eviction vulnerability and ensure that community members benefit, both economically and environmentally.
• Dedicated funding for pilots, which must be identified by the Finance Commission and the Revenue Collector.

Other considerations for future policy planning are:

• 15 years ago, the Government of South Africa announced plans to roll out rooftop solar across the country, though these plans were halted due to conflicting political ambitions.
• Licensing, coupled with the Municipal Systems Act, may make social ownership models more challenging to implement in remote areas.
• Limitations stemming from national austerity policies may hinder socially owned generation projects from receiving loans and financing.

Relevant governmental ministries and political coalitions

National Energy Regulator of South Africa (Nersa): The primary regulator overseeing electricity generation, piped-gas, and petroleum pipelines in South Africa in accordance "with government laws and policies, standards and international best practices in support of sustainable and orderly development."

Department of Mineral Resources and Energy (DMRE): The DMRE works to promote economic growth and development, social equity, and environmental sustainability throughout South Africa by regulating and promoting mineral and energy sectors. Given South Africa's mineral wealth, DMRE aims to spread those benefits across the populace.

Department of Science and Innovation (DSI): DSI aims to drive socioeconomic progress in South Africa by investing in research and innovation. The goal of the Department is to "improve the lives of South Africans in an innovative and inclusive way." Among its work across economics, workforce development, public health, and other issues, DSI has created driving policies that address innovative approaches to both energy and climate change.

South African Photovoltaic Industry Association (SAPVIA): SAPVIA is the "voice" of solar PV in South Africa and works to shape the regulatory environment and policy development through education, stakeholder engagement, partnerships, and public-private collaboration. SAPVIA envisions greater energy security, policy and market alignment, and environmental and market sustainability in South Africa's electricity sector by 2035.

South African Energy Storage Association (SAESA): As the national trade association dedicated to supporting deployment of energy storage, SAESA works with independent power producers, electric utilities, energy service companies, financiers, insurers, legal firms, installers, manufacturers, and suppliers to address technical, political, and market challenges.

Permitting

In 2023, licensing thresholds for new generation projects were removed, meaning that any new facility is not required to apply for or hold a generating license, regardless of size or capacity.

Renewable Energy Power Producer Procurement Programme

Since 2011 South Africa has been running the Renewable Energy Power Producer Procurement Programme (REIPPPP). REIPPPP aims to harness private sector investment to deploy renewable (wind, solar, biomass, and small hydro) generation across the country. Since the program began, REIPPPP has created an estimated 18,132 jobs with a total investment value of R33.7 billion (approximately USD $1.8 billion), resulting in over 6,000 MW of generation allocated to winning wind and solar bids. Results of the program include significant tariff rate reductions for solar PV and wind and rural electricity development. REIPPPP also included several best practices that similar programs in other countries may choose to implement:

• Establishment of the South Africa Department of Energy (DOE) Independent Power Producer (IPP) unit: the relative independence of the unit, coupled with the technical expertise of staff, has helped reduce administrative barriers and increase overall efficiency.
• Clear and regular communication with stakeholders, led by DOE's IPP unit.
• Creation of a concise and transparent procurement framework, which can alleviate questions and pressures associated with permitting and licensing.
• Inclusion of economic development considerations in bidding process.
• Creation of an enabling environment to support project financing and independent investment.
• Leveraging each bidding round as a learning opportunity to improve program performance.
• Collaborating with international advisors to continuously improve the program through inclusion of best practices.

Since its inception, the Programme has resulted in more than 100 large-scale renewable energy projects that are owned in part by community members.

When evaluating bids through REIPPPP, 70% of scoring addresses price while the remaining 30% assesses potential social and economic development that may occur within 50 kilometers of the project sites. Certain social and economic development goals must be present in an effort to advance national goals, such as job creation, preference for local hiring and subcontracting, and supporting Black- and community-owned enterprises. Communities must also hold at least 2.5% equity in project companies. Despite these efforts, the Programme's community development requirements have significant weaknesses. For example, local labor hired for project construction tends to be unskilled and temporary. Also, there is no guidance or standardized approach to engagement, which means that community participation can vary widely and is largely dependent on individual company discretion.

Most recently, the Department of Mineral Resources and Energy launched Bid Window 7, which aims to add 3,200 MW of onshore wind and 1,800 MW of solar PV to the national grid. Bid winners expect to be announced by August 2024. Previously, Bid Window 6 saw five winning bids totaling 860 MW of solar PV capacity and no wind projects, despite the tender's intention to secure 1,600 MW. According to the Department of Mineral Resources and Energy's IPP Projects database, operating concentrated solar and solar PV capacity reached 2,697.07 MW after six Bidding Windows.

To combat load shedding, the IPP office of DOE eliminated the licensing cap and doubled procurement targets in 2022. As a result of REIPPPP, the cost of wind and solar have decreased by 55% and 76%, respectively (ZAR 1.51 to ZAR 0.62 per kWh for wind, ZAR 3.65 to ZAR 0.62 per kWh for solar).

Transmission

South Africa's generation, transmission, and distribution have been under the responsibility of Eskom, but in 2019, the Government of South Africa announced plans to separate these roles across three separate entities. This is largely due to Eskom's debt, which reached an estimated USD $23 billion.

The grid has significantly constrained transmission availability in certain areas of the country; there is little to no capacity in the Cape provinces, which have the best renewable energy resources. Transmission is focused on coal regions, which are not always analogous to where utility-scale wind and solar can be produced. There is also a tremendous maintenance backlog for existing distribution networks.

Current transmission resources

Like many sub-Saharan countries, South Africa has seen a vast increase in access to electricity in the past few decades. Between 1994 and 2018, the country connected over 7.4 million households to the grid, bringing electrification rates from 36% to 86%.

In July 2023, the National Energy Regulator of South Africa granted permission to the National Transmission Company South Africa to begin operating a transmission system within the country, a move that was lauded by Eskom.

New transmission needed for renewables

Financial Times estimates that South Africa's aging grid will require an investment between USD $20-25 billion and an expansion of nearly 14,000 km within ten years to meet existing and projected demand.

For projects like the Saltuba Cooperative, small solar installations can be tied directly into the existing electricity grid. The project serves as a test to see how the grid might cope with inputs from many townships producing power.

According to Eskom, the transmission network needs an additional 14,200 km of transmission lines by 2032 to ensure energy security. The company stated in late 2023 that there were 46 expansion projects in execution, including 26 projects to bring online 1,632 km of new transmission lines, 11,290 MVA, and enable 15,000 MW of generation capacity. New projects will support the new Medupi and Kusile coal-fired power stations, and the 267 MW Garob wind project. Much of the new capacity will support the Northern and Western Cape. The company also plans to unlock an additional 37,000 MW of grid connection between 2025 and 2033.

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