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South Africa Energy Market Report - May 2018



Electricity:

Coal remains the dominant source of fuel for power generation in South Africa; accounting for about 89% of the country’s primary energy consumption. However, with significant additional generation capacity needed in the future, Government is seeking to bring in almost 20 GW from renewable sources through Independent Producers via the Integrated Resource Plan of 2010 (REIPPP). This will assist with de-monopolization of the Energy generation market as well.

A $73m investment in support of the construction, operation and maintenance of three wind farms in South Africa, namely, Noupoort, Khobab, and Loeriesfontein have begun operations adding 360 MW to the national collective generation capacity.

The wind farms diversify the country’s energy mix, and directly benefit local communities. Large power generation capacity also provides opportunities for South Africa and its neighboring countries to further realize their development potential. Noupoort began operations in 2016, while the other two windfarms (Khobab and Loeriesfontein) followed at the end of 2017. The power generated from all three farms will be purchased by Eskom via a 20-year Power Purchase Agreement (PPA) which is supported by the South African Government.

Petroleum:

The 49 cent petrol price increase in May and yet another increase at the beginning of June this year has left South African motorists reeling. With current local and international factors contributing, the main reason for the fuel price adjustments this time round is due to the Rand/US dollar exchange rate. The rand depreciated against the US dollar (from 11.85 to 11.95 rand per USD) during the month of April 2018. The average Rand/US dollar exchange rate for the period 25 April 2018 to 31 May 2018 was 12.5099 compared to 11.9797 during the previous period which led to a higher contribution to the Basic Fuel Prices on petrol, diesel and illuminating paraffin respectively.

Carbon:

The National Treasury of South Africa has urged the public to proactively determine their carbon footprint whilst implementing measures to reduce their carbon emissions before the second draft Carbon Tax Bill is released for public comment. The price of energy will rise and by introducing additional costs to budget, companies need to implement measures to mitigate the eventual effects of a carbon tax. By implementing measures to reduce carbon emissions, companies could potentially halve their carbon footprint, which in return would reduce the carbon tax bill obligations significantly, once implemented. NUS’s on-line energy data management system converts electricity, natural gas and other consumed fuels into CO2 emissions equivalent, calculating the carbon footprint for your business operations. Our solution provides benchmarking, analytical and reporting tools for Scope 1 (direct), Scope 2 (indirect) and Scope 3 emissions, facilitating compliance with Energy Star, CRC, CDP and other emission monitoring and reporting programs.

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