VZCZCXRO7039
RR RUEHBZ RUEHDU RUEHGI RUEHMA RUEHMR RUEHPA RUEHRN RUEHTRO
DE RUEHSA #0810/01 1131030
ZNR UUUUU ZZH
R 231030Z APR 09
FM AMEMBASSY PRETORIA
TO RUEHC/SECSTATE WASHDC 8218
INFO RUCPDC/DEPT OF COMMERCE WASHDC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RUEHC/DEPT OF LABOR WASHDC
RUEHBJ/AMEMBASSY BEIJING 0973
RUEHBY/AMEMBASSY CANBERRA 0832
RUEHLO/AMEMBASSY LONDON 1736
RUEHMO/AMEMBASSY MOSCOW 0981
RUEHNE/AMEMBASSY NEW DELHI 0573
RUEHOT/AMEMBASSY OTTAWA 0790
RUEHFR/AMEMBASSY PARIS 1572
RUEHSG/AMEMBASSY SANTIAGO 0254
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHZO/AFRICAN UNION COLLECTIVE

UNCLAS SECTION 01 OF 04 PRETORIA 000810 
 
SIPDIS 
SENSITIVE 
 
STATE PLEASE PASS USAID 
STATE PLEASE PASS USGS 
DEPT FOR AF/S, EEB/ESC AND CBA 
DOE FOR SPERL AND PERSON 
DOC FOR ITA/DIEMOND 
 
E.O.   12958: N/A 
TAGS: ENRG EPET EMIN EINV ETRD SENV SF
SUBJECT: South Africa makes slow progress on renewable energy, but 
has ambitious plans 
 
REF: Pretoria 510 
 
This cable is not for Internet distribution. 
 
¶1. (SBU) Summary.  South Africa is a coal-based economy and little 
attention to date has been given by the government and the private 
sector to the country's significant renewable energy potential. 
Even the minimal target set for renewable energy in the country's 
energy mix by 2013 is likely to be missed by a wide margin.  The 
country does not have a viable and sustainable renewable energy 
industry.  Delegates to the South African Renewable Energy Summit 
March 19-20, 2009 outlined the benefits of using renewable energy 
sources and expressed dissatisfaction at the government's lack of 
support for the industry.  Delegates believe that renewable energy 
is the future for South Africa and that the technology will drive 
economic growth.  Bilateral cooperation in renewable energy could be 
a good opportunity for the U.S. DOE to work with the Department of 
Minerals and Energy (DME).  End Summary. 
 
--------------------- 
Purpose of the Summit 
--------------------- 
 
¶2. (SBU)  Energy Officer and Specialist joined more than 400 
delegates at the South African Renewable Energy Summit organized by 
the DME at Swan Lake Conference Centre, Centurion, March 19-20, 
¶2009.  The aim of the Summit was to undertake a mid-term review of 
progress made since approval of the government "White Paper" on 
Renewable Energy produced in 2003.  The DME also aimed to agree on a 
new set of resolutions, policy direction, and action plans to 
rapidly scale up and streamline the implementation of renewable 
energy (RE) in South Africa. 
 
------------------------------------- 
SA Coal-Based and Likely to Remain So 
------------------------------------- 
 
¶3. (SBU)  Coal supplies about 90 percent of South Africa's 
electricity and 23 percent of its liquid fuels.  Also, 28 percent of 
domestic coal production is exported earning 18 percent of total 
mineral export revenues (reftel).  South Africa has been identified 
as the 14th biggest emitter of carbon dioxide (CO2) in the world and 
hosts the biggest single point source emitter, Sasol's coal to 
liquids (CTL) plant in Secunda.  South Africa has large coal (and 
uranium) reserves, but only minor reserves of oil, natural gas, and 
hydro potential.  It is also in the midst of an electricity crisis 
with a generation safety margin that varies between 5 percent and 8 
percent, depending on peak demand and generator availability.  The 
country's current total capacity is about 41 gigawatts (GW) and 
plans are to increase this to 60-80 GW by 2025. 
 
¶4. (SBU)  The objectives encompassed in the government's electricity 
new-build program are energy security, diversified supply, and 
reduced CO2 emissions.  The initial program included 4hGJVthwhich is still in the research 
Qpebble bed modular reactor (PBMR), which is still in the research 
phase, with construction of a prototype planned for 2013-14.  The 
first-phase "Nuclear 1" of 3.5 GW of the 20 GW of nuclear power 
construction has been postponed because of cost and the economic 
crisis.  The SAG has stated that it is committed to nuclear and is 
reviewing its options, which it states will be made public toward 
the end of 2009.  The other 20 GW will comprise three or four 4.8 GW 
coal-fired plants, two of which are already under construction, a 
third is "on the drawing board", and a fourth will be considered if 
the nuclear option is further delayed. 
 
----------------------------------------- 
South Africa's Renewable Energy Potential 
----------------------------------------- 
 
 
PRETORIA 00000810  002 OF 004 
 
 
¶5. (SBU)  South Africa has significant potential for power 
generation using renewable energy sources.  These include: 
 
-- Large areas of semi-desert with relatively uninterrupted solar 
radiation during daylight hours; 
-- On- and off-shore strong wind flows along the western and eastern 
coast; 
-- Strong uninterrupted ocean currents along the east (Mozambique 
current) and west (Benguela current) coasts. 
Each of these sources has the potential to supply the country's 
total energy needs if the appropriate technologies can be scaled up 
and commercialized to be affordable. 
 
--------------------------------------------- - 
South Africa Lacks a Renewable Energy Industry 
--------------------------------------------- - 
 
¶6. (SBU)  The SAG committed to implementing 10,000 gigawatt hours 
(GWh) of renewable energy by 2013 at the World Summit on Sustainable 
Development held in Johannesburg in 2002.  This represents 3-4 
percent of the country's total annual power capacity.  (Note.  One 
wind turbine with a generation capacity of about 1.14MW, operating 
constantly for one year or 8,760 hours, would output 10 GWh of 
consumable electricity.  It would require 1,000 such turbines to 
produce the 10,000 GWh required.  End Note.)  In fact, little has 
been accomplished to date, apart from two three-turbine wind farms 
of about 5-6 MW each -- funded by the Danish government and South 
Africa's power utility Eskom, respectively -- and a few biomass and 
solar-heating installations.  Minister of Minerals and Energy 
Buyelwa Sonjica acknowledged in her opening address to the Renewable 
Energy Summit that South Africa had made little progress toward the 
goal of 10,000 GWh of renewable-energy capacity by 2013. 
 
¶7. (SBU)  The country's reliance on cheap, available coal has 
discouraged the development of renewable energy.  Renewable energy 
has been deemed to be too costly and a "rich country's option" with 
little ability to satisfy the bulk power demands from South Africa's 
high energy-intensive industries such as mining, smelters, refiners, 
and CTL conversion plants.  As a result, there has been little 
pressure on government to provide funds for research and development 
or to set meaningful targets and timetables for the development of 
renewable energy.  However, pressure has come from the Department of 
Environment and Tourism (DEAT) to mitigate CO2 emissions in the 
interests of retarding climate change.  After years of vacillating, 
the SAG and the DME appear to be finally responding. 
 
---------------------- 
The Minister's Address 
---------------------- 
 
¶8. (SBU)  The Minister of Minerals and Energy admitted in her 
opening address at the summit that the country had only managed to 
achieve three percent of its target of 10,000 GWh (by 2013) in the 
five years since the White Paper on Renewable Energy was approved in 
¶2003.  Some delegates disagreed and gave their own estimate as 0.6 
percent of the target achieved.  The minister said a number of 
Qpercent of the target achieved.  The minister said a number of 
constraints related to policy and capacity, such as a proper 
legislative framework and regulatory policies, had prevented 
government from making progress in fostering renewables.  There was 
also a lack of funding and manufacturing capacity.  She said South 
Africa's low electricity tariffs had played a major role in 
restricting investment and lack of intra-government department 
coordination had retarded growth of a renewable energy industry. 
DME Director General Sandile Nogxina said the challenges were not 
insurmountable, but acknowledged that dedicated programs were needed 
to support the industry.  He said a designated national authority 
would be created, which would also include a financing subsidiary to 
assist investors.  Nogxina said the government would now focus on 
the implementation of programs and plans to increase activity in the 
sector. 
 
-------------------------------------- 
 
PRETORIA 00000810  003 OF 004 
 
 
Attempts to Kick-Start the RE Industry 
-------------------------------------- 
 
¶9. (SBU)  Currently the major initiatives to expand use of renewable 
resources include: 
 
-- expansion of test wind farm capacity to 50-100 MW; 
-- a program to subsidize the installation of 925,000 solar water 
heaters, which would save some 580 MW of power; and 
-Qmerous small private micro-projects in solar, wind, ocean 
current, tidal, and wave power generation. 
 
Solar water heating has the most immediate potential for grid power 
savings as the technology is readily available and could save an 
estimated 2 GW of power if installed country-wide.  Unfortunately, 
the systems are expensive (unaffordable to the majority) and the 
Eskom subsidy too small.  Hence only 800 units have been installed 
to date under the scheme. 
 
--------------- 
The Way Forward 
--------------- 
 
¶10. (SBU)  Delegates from the Renewable Energy sectQecognizedQat coal (and perhaps nuclear) would remain the dominant energy 
sources for the medium future (25-35 years) and beyond.  They also 
acknowledged that renewable energy technology would take 50-years 
and more to mature to deliver base-load power reliably and 
sustainably.  Delegates proposed: 
 
-- Renewable technology implementation needs to "start small" and 
provide niche and distributed power as opportunities arise.  These 
included replacement of electric geysers (as they failed and in new 
buildings and homes) with solar water heaters, solar power for 
traffic lights, wind power for off-grid and rural communities, and 
others; 
-- Government needs to take a bold, enabling approach to setting 
meaningful targets and timelines for implementation of renewable 
energy and to monitor progress; 
-- Government and industry need to cooperate in establishing and 
funding facilities for skills training and research to bring new and 
innovative renewable energy technologies to the market at an 
affordable price; 
-- The energy regulator needs to establish the feed-in price for 
renewable electricity into the national grid and to set the 
electricity price to consumers to reflect this.  The National Energy 
Regulator of South Africa (NERSA) is currently evaluating two 
options, one based on tenders, which would eliminate the highest 
cost producers, and the other based on a set price that would allow 
all producers of renewable energy to participate, the so-call REFIT 
or renewable energy feed-in tariff.  Delegates believe the wind 
REFIT may be adequate for investors, but the solar REFIT may end up 
too low.  (Note:  NERSA at the end of March approved the wind REFIT 
at R1.25 per kWh ($0.14) and the concentrated solar REFIT at R2.10 
per kWh ($0.23).  Eskom's current tariff rate for coal-generated 
electricity ranges from about R0.10 or $0.01 (low demand) to R0.80 
or $0.09 (peak demand) per kWh.  End Note.) 
 
----------------------------------------- 
Comment - An Opportunity for U.S. Support 
----------------------------------------- 
Q----------------------------------------- 
 
¶11. (SBU)  The Renewable Energy Summit was filled with 400 
passionate and knowledgeable people with practical suggestions and 
solutions.  Many fervently believe that renewable energy is the 
technology of the future that will provide the next technology wave 
(similar to computers, micro-chips, mobile phones, and the Internet) 
and a sustainable long-term energy future.  Delegates acknowledged 
that full implementation of renewable energy would take time and 
likened it to a marathon race where endurance and steady progress 
are preferable to reach the goal, rather than a fast start with the 
probability of a break down along the way.  South Africa is at the 
 
PRETORIA 00000810  004 OF 004 
 
 
beginning of its quest to increase power from renewable energy 
sources and needs assistance.  This presents a major opportunity for 
DOE and other agencies to provide assistance to the DME in areas 
such as experience, technology, and skills education and training in 
technical, regulatory, and project management. 
La Lime