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South Africa: subsidy and finance office set up for renewble energy

The South African government has set up a subsidy and finance office to guide funding for renewable energy technologies, Minerals and Energy Minister Buyelwa Sonjica said on Tuesday.
Speaking at an energy summit, where industry stakeholders are deliberating possible changes to the country’s energy policy, in Johannesburg, she said that South Africa would also establish a new certification system to support the development of renewable energy projects.

The Tradable Renewable Energy Certification System would provide an additional revenue stream for the development of the projects, and would be operational by early next year.

Renewable energy technologies, such as solar power, wind power, hydroelectricity, biomass and biofuels, were set to play a key role in South Africa’s energy needs, which were currently being met by electricity generated by coal. But, the technologies were often criticised for being too costly, when compared with technologies, such as coal-fired power, and “unreliable and unsightly”.

Sonjica said, however, that the State was recognising that there were barriers to the introduction of more renewable energy in the South African industry, and cited high capital costs.

“Overcoming the initial high capital costs and increasing the commercialisation of renewable energy technologies in a market driven by [an] energy economy, will guide funding for renewable energy technologies.”

She said that South Africa had also partnered with Global Environment Facility (GEF), an international organisation helping developing countries to fund projects and programmes that protect the environment, to provide technical assistance to renewable energy project developers, and to leverage investment from the private sector.

GEF would assist the State to implement a South African wind energy programme, and renewable energy market transformation projects.

The country had, thus far, managed to kick-start the interest from investors and independent power producers to start developing local renewable energy projects, but medium- to long-term financial mechanisms would now have to be developed, Sonjica stated.

The Department of Minerals and Energy and the National Energy Regulator of South Africa had started looking at the development of medium- to long-term financial mechanisms.


Additional information: See video at Engineering News
News date: 25/09/2007

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