Source: Business Day

Western Cape launches fund to support municipalities’ renewable energy projects

Fund is the next step in the province’s first phase of the Municipal Energy Resilience initiative


The Western Cape provincial government has launched a fund amounting to almost R13m to support municipalities in the region to prepare for renewable energy projects.

Western Cape finance and economic opportunities MEC David Maynier said on Tuesday the fund is the next critical step in the province’s first phase of the Municipal Energy Resilience initiative that aims to help municipalities to take advantage of the new energy regulations, which could allow them to purchase energy directly from Independent Power Producers (IPPs).

Amended regulations on new generation capacity, which were gazetted by mineral resources & energy minister Gwede Mantashe late in 2020, enable SA municipalities in good standing to develop their own power generation projects. The state has been under pressure to open up the energy sector to allow more players in the market to boost power supply, which is desperately needed to fire up the economy.

However, the liberalisation of the electricity sector has been controversial for the ANC and its allies, many of whom consider it as a form of privatisation. 

Maynier said the provincial government’s fund, which amounts to R12.85m, will support qualifying municipalities in their research and planning initiatives to determine the requirements and potential costs of the renewable energy projects.  The research initiatives would be crucial for building energy security and buffer households and businesses from load-shedding in the Western Cape, the MEC said.

“[This] will  help municipalities to assess aspects such as grid availability, infrastructure needs and costs so that they can develop thorough plans for financially sustainable renewable energy projects,” Maynier said.

Applications for funding opened on August 27.

The launch of the fund follows a Request for Information that solicited information for more than 100 potential energy generation projects from 82 submissions from private sector developers and owners, and a further 15 submissions from Western Cape municipalities. 

“Although subject to final review, initial results [based on the submissions] are promising,” said Maynier.

From the 82 private project submissions, 62 representing a combined nominal generation capacity of more than 4,800MW have been deemed to be potentially viable and relevant. Of these, 12% (590MW) of projects appear capable of reaching commercial operation within 12 months, while 75% (nearly 3,600MW) of projects indicated commercialisation within two years from signing a power purchase agreement, said Maynier.

Submissions included a range of individual generation technology projects from below 1MW to above 100MW. Of the renewable energy generation technologies proposed, solar PV is the largest generation technology group, followed by onshore wind.  

Respondents ranged from large, established project developers and owners to smaller emerging project developers. Maynier said several submissions were also received from outside the province.