Research shows Africa could meet 50% of its energy needs using renewables by 2050. Picture: THINKSTOCK

IN THE wake of last year’s Paris climate summit, it is worth noting that contrary to the gloom that has set in following SA’s rating downgrade and the firing of finance minister Nhlanhla Nene, SA boasts one of the fastest growing renewable energy sectors in the world. From a total investment of a few hundred million rands in the sector in 2011 to more than R160bn now, investment in renewable energy has reached almost 5% of gross domestic product.

It is one of the only sectors outside the mineral-energy complex that is actually creating jobs, and it attracts huge inflows of foreign direct investment.

Yet, while 21st-century technologies take off in SA, the government states its preference for investing more than R1-trillion of public funds in 20th-century nuclear and coal technologies that others are either dismantling or discontinuing — R200m has been budgeted this year alone for "nuclear preparedness".

The transition to a low-carbon world is well under way regardless of the Paris summit. SA is just being caught up in this revolution. Renewable energy expanded at its fastest rate in 2014 (130GW), despite the decline in oil prices, which many predicted would halt the extraordinary growth in renewables that has taken place worldwide since 2009. Renewables accounted for more than 45% of net additions to world capacity in 2014.

Based on current trends, renewables, which accounted for 22% of total global capacity in 2013, are expected to rise to 26% in 2020. According to the International Energy Agency, two-thirds of net additions to power capacity by 2020 will be renewables. Wind power now globally costs the same as coal power, and coal-based energy is rising everywhere; 2014 was the fifth consecutive year that investment in renewables exceeded investment in new fossil fuel-based energy, reaching $242.5bn that year compared to the $132bn invested in new fossil fuel-based capacity.

Given the rising real cost of the Medupi coal-fired power station (from R70bn initially to R300bn in the end, according to well-informed sources, making it the third largest in the world), renewables are in effect at grid parity per MWh in SA. This explains the phenomenal success of the renewable energy independent power producers’ procurement programme managed by the Department of Energy.

Contrary to the renewable energy feed-in tariff approach adopted in many other parts of the world; led by the Treasury, which was worried about price-setting and rent-seeking, SA adopted an auction approach whereby independent power producers would bid for allocations set by the government with no predetermined price.

Bidders had to meet strict criteria including lowest price, approved funding, plus a minimum of 40% South African entity participation and a minimum black ownership of the project company of 12%, with a target of 20%. Local communities must also have a minimum 2.5% shareholding.

With each of the four calls for proposals since 2011, the local content requirements also went up. As a package, SA’s renewable energy build programme is one of the most progressive in the world.

By last year, 92 projects had been approved to construct 5,000MW of capacity, and so far, all have come in on time and on budget. The big advantage is that the bulk of funds come from local private and state banks: Investec’s exposure is R75bn, Nedbank’s is R25bn, the Industrial Development Corporation’s is R17bn and the Development Bank of Southern Africa’s is R5bn, plus involvement by RMB, Absa and Standard banks, the Public Investment Corporation and private investment funds.

Big players such as Italian multinational Enel landed major projects because they could undercut the competition on price — Enel is getting out of fossil fuels by shutting down 23 of its coal-fired power plants in Italy and becoming a lead player globally in renewable energy (targeting Africa). SA’s radiation levels are so high, it takes half the time to pay off a solar-power plant built in SA compared to one built in Italy.

The installed energy capacity of Africa is equal to France, and yet it is growing fast and has a billion people. If Africa energises using fossil fuels, the world will never meet its climate targets. Hence the launch in Paris of the Africa renewable energy initiative, which has attracted pledges worth billions of dollars from many governments.

Research shows Africa could meet 50% of its energy needs using renewables by 2050. This would be a game changer. And SA’s investment in renewable energy shows it can be done. SA could lead the energy revolution if it were to cancel its plans to reproduce outdated nuclear alternatives.

Prof Swilling is with Stellenbosch University’s Centre for Complex Systems in Transition