Electrical Power & Protection

Stakeholder engagement mitigates renewable energy project delays

July 2022 Electrical Power & Protection

Community and stakeholder engagement is a critical factor that can make or break renewable energy projects, yet it is almost always overlooked or under-prioritised in project planning and execution. When energy producers do not follow best practices in community engagement or public consultation, the results are rarely favourable, and many projects are stopped dead in the water by local opposition.

Janine Espin.

To avoid such a situation in South Africa, and to minimise the risk of further delay in kicking off much-needed renewable energy projects, it will be critical for Independent Power Producers (IPPs) to engage with local communities before, during and after the construction and energy development process. Fair and open consultation with communities will be key to ensuring successful and fruitful energy projects that carve the way for South Africa to transition to cleaner, more responsible energy generation.

Context: South Africa’s escalating energy crisis

In February 2021, it was estimated by our national power utility, Eskom, that we would experience an electricity supply shortfall of between 4000 and 6000 megawatts over the next five years as old coal-fired power stations reach their end of life. As part of the plan to address this shortfall, President Cyril Ramaphosa issued a request for proposals for 2600 megawatts from wind and solar energy as part of a bid window, while easing licensing requirements for new embedded-generation projects to unlock up to 5000 megawatts of additional capacity and help to ease the impact of load shedding.

In amending Schedule 2 of the Electricity Regulation Act, self-generation is now permissible up to 100 MW, which means that we will see an increase in renewable energy projects, particularly PV solar plants (with battery storage options) in the future. By allowing IPPs to increase the amount of power they can generate without a licence, it will be possible to reduce generation demands on our national grid and to alleviate residential, commercial and industrial electricity supply constraints.

The CEO of Eskom announced the company’s intentions to build its own PV solar plants to sell energy to industry in order to reduce Eskom’s own carbon emissions, and for organisations to offset their carbon emissions without needing to invest in their own large and costly renewable energy plants.

Opportunity for sustainable growth

Private companies and industries now have the opportunity to develop their own generation capacity and to participate more freely in the limited transmission, distribution and sale of electricity. In resolving the country’s energy crisis, the government has shown willingness to embrace deregulation, with an increased threshold that allows new IPPs to enter the energy market, which will ultimately lower power generation costs in the medium term.

With the renewables industry poised for major growth, we will also see more large-scale industries building their own renewable energy plants, and where possible they will circulate their energy generation to other industries.

Stakeholder engagement is complicated

While the Renewable Energy Independent Power Producers Programme (REIPPP) does not make stakeholder engagement mandatory during the bidding phase, it is proposed that community baseline studies occur at this stage. This can help give companies a high-level overview of the communities and possible risks that may occur.

Discussions with local communities should start immediately after financial closing, and preceding the construction period, to ensure that communities are aware of opportunities which may exist for them to participate in the building of such renewable energy plants. Such a stakeholder engagement requirement is separate from the public participation process compliance as required during the Environmental Impact Assessment (EIA) process, but there is often overlap with the economic development compliance requirements that relate to the number of jobs to be created, community development or social impact, for example. All of which makes stakeholder engagement tricky and extremely sensitive during the bidding processes.

Who is affected?

Stakeholders in the upcoming renewable energy projects include local government, traditional leaders, community forums, local business forums and communities surrounding the planned operational sites, which will become the local labour-sending areas. Navigating and balancing these stakeholders’ interests can be an extremely delicate exercise. This is where a partner that specialises in economic development services will prove invaluable.

Consider the bigger picture

Despite tricky conditions, IPPs cannot afford to overlook stakeholder engagement. IPPs need to realise that engagement isn’t a once-off, project-based transaction, and it is necessary to carefully consider stakeholder engagement in its wider context. This context includes our transition to a low-carbon economy, and here, it is important to remember that the energy system isn’t just a technical collection of wires and power stations, but an entire, organic, socio-technical system with very complex interplays between society, infrastructure and the economy.

The challenge lies in seeing that a low-carbon transition is not about replacing one dirty fuel with another, cleaner type, but about adjusting our entire way of life around that fuel. This process is never easy, and the social ramifications are far-reaching. To be successful, such complex social implications will require much greater levels of community and stakeholder engagement. Here, IPPs must partner with an experienced and credible provider of economic development services if they are to avoid any further delays and risk of protests when addressing South Africa’s worsening energy crisis.

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