No Rest for South Africa's Wind Industry

The wind industry in South Africa has experienced an emotional roller coaster in the recent past. After the country was one of the most up-and-coming wind markets in the world from 2010 to 2015, expansion came to a virtual standstill under President Zuma. New hope did not emerge until last year, when Cyril Ramaphosa took over the presidency and when one of his first official acts was to sign 27 power purchase agreements (PPA) for solar and wind farms.

In the meantime, however, the euphoria has largely given way to renewed disillusion: The state-owned energy supplier Eskom has fallen into considerable difficulties. For years the company has been accused of corruption and now the pile of debt is so great that the government is drawing the emergency brake.

The problem for the wind industry is that Eskom obtains its electricity from independent producers primarily from renewables via PPAs. If Eskom can no longer pay, this has far-reaching consequences.

In his speech to the nation at the beginning of this week, Ramaphosa indicated, according to Times Live, that he wanted to split Eskom into three different companies: "Eskom is in crisis and the risks it poses to South Africa are great. It could severely damage our economic and social development ambitions. We need to take bold decisions and decisive action. The consequences may be painful, but they will be even more devastating if we delay."

But his plan was immediately met with fierce opposition from various parties. In particular, the coal industry, which still accounts for over 80 percent of South Africa's electricity supply, is afraid of change. Already a year ago coal companies tried to prevent the further expansion of renewables by court order for fear of losing jobs. Now this fear is back again.

Ramaphosa, who had already announced when he took office that he was going to revive the economy, tried to dampen the fear: "We are redesigning and repositioning Eskom for the future. This is not about 'privatising' Eskom but separating and balancing operations to make the entity far more efficient. State-owned enterprises must be fully self-sufficient and able to fulfil their developmental and economic roles. This therefore requires that those consuming services, including electricity, must pay for them."

Meanwhile, construction is continuing in South Africa. For example, Enel Green Energy (picture to the right) started the construction of 140 MW Nxuba wind farm in the Eastern Cape province, while at the same time focusing on involving the local population. Together with their local partners, Enel have committed themselves to creating local jobs and involving local companies as suppliers. The socio-economic development of the rural communities is also being promoted: the villages in the region are to be provided with free WiFi and training courses are to be held for local people. Schools are supplied with energy via mini PV systems, scholarships are awarded to pupils and a school nutrition programme is supported.

Enel alone has a full pipeline of more than 500 MW for further wind and solar projects in South Africa. Only if the local population can be permanently involved and convinced that renewables are a worthwhile alternative their support will be ensured in the long term. Then the coal industry will lose further influence.