South Africa gains USD 30 million in six months from Scatec's solar energy

In just the first six months of this year, South Africa gained $30 million (400 million rand) thanks to solar power generated by Scatec Solar’s three solar plants. These gains are calculated on the basis of a study conducted by the nation’s premier Council for Scientific and Industrial Research (CSIR), which examined the benefits of renewable energy to South African economy.

Scatec Solar contributed 190 MW of the total 1 GW of solar energy produced in South Africa.

According to the CSIR study, two factors contributed to the “huge” financial benefits from solar energy.  Firstly, the generation of 1.06 TWh (terawatt-hours) of total solar photovoltaic power produced in the country enabled Eskom, South Africa’s electricity supply company, to save 2.1 billion rand in fuel costs as the solar power replaced electricity that would otherwise have had to be generated from diesel and coal-fired power stations.  Secondly, the power shortages avoided due to the generation of solar power benefitted the economy by 3.1 billion rand.  The power supply situation was so tight that had it not been for the contribution of 1 GW of solar energy, more than 100 hours of demand would have gone unmet during this period. 

South Africa faces severe power shortages. In the first six months of 2015, load shedding or power outage occurred during 82 of 181 days, according to the CSIR report. Regular power cuts contributed to the South African economy contracting for the first time last quarter in more than a year. Authorities recognize the crucial role solar energy can play in augmenting power supply. Speaking during a visit to the Northern Cape Community of De Aar, South Africa’s Minister for Trade and Industry, Rob Davies said: “The Solar Energy Program should be acknowledged as a game changer in the energy space, and the one that will create opportunities for the communities.”

Eskom’ s direct cash savings of 2.1 billion rand in fuel costs and the macroeconomic benefit of 3.1 billion rand was offset by the 3.1 billion rand tariff payments to the Solar Independent Power Producers, resulting in a total gain of 2.1 billion rand (USD 157 million) from solar power between January and June 2015. Of this, the gains from Scatec’s solar energy alone is USD 30 million.

The CSIR study analyzed the benefits of both wind and solar energy. Of the total benefit of 8.3 billion rand to the South African economy, solar accounted for 5.1 billion rand (USD 380 million).  Of the fuel savings of 3.6 billion, solar energy contributed 2.1 billion rand or nearly 60%. Of the 4.6 billion rand benefit to the economy from avoiding power outages, solar contributed 66% (3.1 billion rand or USD 231 million).

 “Our study shows that the trend that started in 2014 continued and speeded up in 2015 and that renewable energy provided a huge net financial benefit to the country” says Dr.Tobias Bischof-Niemz, head of CSIR’s Energy Center. This is an updated study of the one conducted by CSIR last year, which showed that South Africa reaped a benefit of 0.8 billion rand from renewable energy in 2014.

Scatec Solar is a leading solar Independent Power Producer in South Africa. An early mover, Scatec Solar (SSO) entered the South African solar market in 2010.  In April 201I5, Scatec Solar was awarded an additional 258 MW under the REIPPP program, which will be realized in 2017.  SSO will operate the solar plants for at least 20 years.

The scope of the CSIR study did not include measuring the time and costs saved due to rapid deployment of solar power nor it’s proven environmental benefits: solar energy is clean, safe, noiseless, non-polluting and avoids carbon emissions.

The potential for growth in South Africa is immense as wind and solar energy currently account only for 2% of the electricity sent out onto the grid. According to the CSIR study, while wind supply fluctuated, the supply of solar photovoltaic power was “very stable” during all six months from January to June 2015 when the study was conducted.