Corporate investment in South Africa’s renewables sector bound up in red tape

A number of world-leading renewable energy companies are waiting to invest in South Africa’s energy sector, but their investments are being held up by red tape and political considerations.

The likes of Engie and Enel Green Power have expressed interest in the African country’s renewable energy tenders.

“There is no question. Engie would bid for both solar and wind,” said Mohamed Hoosen, chief Africa power and gas officer for the French power company.

Italy’s Enel will also consider bidding if tender and market conditions are as favourable as in the past, a spokesman said.

Based on the government’s plan to add 2.6GW of as yet unprocured wind and solar capacity in 2022, the next auction could attract more than US$2 billion in investment, a Reuters analysis of industry estimates found.

Energy Minister Gwede Mantashe said in February he was seeking the agreement of energy regulator Nersa for procurements, only for Nersa to state it needed around six months to make a submission and consult the public before it could make a decision.

The government is also under pressure from unions closely aligned with struggling state utility Eskom. Workers at Eskom’s coal-fired plants are concerned that embracing renewables would threaten their jobs.

Power experts say adding renewables would be one of the quickest and cheapest ways to end outages and reverse years of economic decline in South Africa, but progress continues to be checked by delays and resistance from the coal sector.