Portfolio components (mix)
X- Y plot results for the informal urban area community scenario
7.2.6 Implications for policy implementation and research
Analysis of the results based on the Chebychev GP and the MAVT models showed that while it is cost-optimal to pursue electrification in conjunction with other short-term augmentation solutions to meet South Africa's universal electrification targets, sustainable energy access rates among low-income households located in isolated rural areas can be achieved by increasing the share of clean energy generation technologies in the energy mix. The study challenges the South African government's unbalanced emphasis on grid-based electrification as the means to increase energy access. Instead, it calls for a portfolio-based intervention. It posits that the focus should be on off-grid, micro-grid electrification underpinned by solar, wind and gas combined with either LPG or bioethanol, depending on the conditions. Similar conclusions have been reached elsewhere (Bueno-López e al, 2019).
Results obtained from the sensitivity analysis conducted indicates that, regardless of changes to input parameters to the augmented Chebychev GP and MAVT models, renewable energy sources, in particular bioethanol and solar, can play a major role in increasing access to affordable energy services in South Africa. This finding is buttressed by the United Nations Development Programme (UNDP) which found that renewable energy sources are ‘‘highly responsive to overall energy policy guidelines and environmental, social and economic goals’’
(UNDP et al., 2000). Given this limited experience with the optimal solution discussed above,
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161 the following section examines mechanisms for making policy choices and implementing the chosen strategies.
Given the attractiveness of renewable energy sources and the lead times between planning, investing, and deployment, the study results imply a complete shift from the current focus on mega-projects and the grid-based rural electrification programme. The shift implies the following seven policy reconfigurations:
1. First, as shown by a preference for energy supply portfolios with a high share of renewable energy, it is essential to increase the share of affordable energy services. A shift from the loop-sided focus on grid-based rural electrification as the holy grail for increasing access to affordable energy among the poor. Renewable energy sources have proven to be cheaper than conventional grid-based electricity.
Prices of many renewable energy technologies are expected to continue on a downward trajectory. This is expected to make renewable energy more attractive than the conventional grid as a least-cost option.
2. Second, the results of the GP and MAVT applications indicated a preference for micro- grid-based interventions. The study, therefore, suggests improving energy governance through the replacement of the government as a major investor in energy generation infrastructure. Participation of the private sector in micro-grids, anchored on renewable energy sources as has been observed in the past decade, will go a long way in improving energy governance. The private sector has proven to be more efficient in deploying resources than the government. The Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) has successfully channelled considerable private sector investment and expertise in the renewable energy industry in South Africa (Eberhard et al., 2014).
3. Third, based on the study framework results, preference should be given to portfolios with high employment creation capacity. Thus, the study suggests a shift to policies aimed at stimulating economic development through investments in projects that have an immediate impact with high job creation potential. Therefore, emphasis should be placed on the economic value of time and interventions that result in improved employment outcomes for low-income communities. Renewable energy technologies are quick to deploy, modular and have a higher job creation potential, construction and lifetime jobs. Private sector participation in public infrastructure will also go a long way in reducing the burden on the fiscus. This policy alteration should allow the government
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162 to deploy the scarce fiscal resources to other needy and neglected interventions such as social protection, housing, water and sanitation and education.
4. Fourth, the study results showed environmental protection to be of significant impotence. As such, the study recommends the management of energy-related environmental impacts by emphasising on environmental protection on government energy policy in line with the country’s international obligations on reducing carbon emissions. Third, based on the study framework results, preference should be given to portfolios with high employment creation capacity. Thus, the study suggests a shift to policies aimed at stimulating economic development through investments in projects that have an immediate impact with high job creation potential. Therefore, emphasis should be placed on the economic value of time and interventions that result in improved employment outcomes for low-income communities.
5. Fifth, portfolio-based interventions have shown to be the optimal way to ensure energy access among the poor. Many renewable energy technologies are particularly suited to micro-off-grid applications. These technologies could improve the flexibility of the grid by distributing generation across the country, closer to loads of any magnitude.
Solar PV systems and mobile bioethanol infrastructure can be easily deployed even in informal areas where Eskom is prohibited by law from extending its grid. Policies thus need to be reconfigured to ensure the security of supply through diversity by emphasizing energy security and diversification.
6. Sixth, the study has shown that firewood's continued use, especially in informal urban areas, is set to continue unabated. As such sustainable firewood collection and use; and deforestation regulations should be enforced to curb the uncontrolled cutting down of trees for firewood, particularly near urban areas. This is also expected to enable the required shift to cleaner fuels.
7. Seventh, the study results have shown a preference for clean fuels in line with the energy ladder postulate. Therefore, interventions are needed to support research and the introduction of clean fuels in developing countries among low- income communities to accelerate the transition to clean household energy
Planners seized with formulating and implementing government policy in South Africa are encouraged to reconfigure the current energy grant and subsidies regime in favour of interventions that result in immediate impact. For instance, instead of spending billions of rand on subsidised paraffin for indigent households, the same resources can be utilised to deploy bioethanol distribution infrastructure. Bioethanol fuel is cleaner and can be produced locally implying local employment creation and import substitution. Adding solar PV to the mix will
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163 help cater to these indigent families' electricity needs. A question that arises is, “when implementing the recommended strategies discussed, how can the policy decisions be promoted and defended in practice?” The following section addresses this question.