A vital issue in making the country’s energy supply more sustainable is funding. Financing gets new, potentially useful green technologies out of the development phase and into the market place. Further, they fund the improvement of technologies to make them more efficient and economically viable.
Some funding avenues in South Africa include government projects, natural market forces, and personal equity.
SA Renewable Energy Programme
One significant program to keep an eye out for in South Africa right now is the government’s Renewable Energy Programme for Independent Power Producers (IPPs). The large program was initiated in 2011 to select contractors, both local and international, to contribute 3 725 megawatts (MW) to the energy grid over the next few years, generated from renewable energy sources, mostly from solar and wind energy. There are already some massive projects in place, and when all is said in done, they’ll all come up to R100 billion.
For instance, a consortium led by Solar Reserve has procured funding for three projects, which will total 238 MW altogether, and account for a whopping 20 percent share of the country’s solar energy market.
The cycle of market forces
Market forces are one way of naturally funding the research and development for new sustainable technology. Technology gets better and cheaper to manufacture, thus becomes more in demand, therefore more economically viable, and as such evokes more funding. For instance, the costs of solar technology has just about halved in the last two years, and has become more efficient. More people therefore are open to utilising solar panels, making them more in demand and more profitable, and as such more economically viable to invest in. And so technology will improve even more.
The problem is getting technology developed to the point that it is marketable and can be commercialised. And so market forces by themselves are not enough to drive green industry forward.
Funding from the private sector may be what we need to kick the renewable energy industry in high gear. However, because this industry is generally perceived as a more risky investment, and is typically less competitive than conventional energies, we also need government subsidy or regulatory incentives in place to generate funding from the private sector.
Thankfully, there does seem to be a trend towards this. The lack of sufficient energy infrastructure and the move by policymakers and regulators towards alternative energy sources have created a compelling opportunity for South African private equity to invest in renewable energy. More and more, business or personal loans in South Africa go towards funding a greener energy supply grid.
However, more factors need to be taken into account. Personal funding is not simply a matter of taking out business or personal loans in South Africa. There are certain additional attributes that require additional analysis and investigation. Such as the influence of policy and regulation on the feasibility of an investment, like the legal basis and durability of any grants, subsidies, credit enhancement programmes, and carbon or tax credits.
Queenie Bates is an avid writer and researcher, with a particular interest in the area of sustainability. She tries to stay up to date by researching energy videos and whitepapers, and anything else interesting she can find on the Internet. Image source