Par NJ Come on
Just Energy Transition Partnerships (JETPs) have been set up in recent years to provide financial support to developing countries in their transition away from fossil fuels. In 2021, at the 26th Conference of the Parties on Climate Change (COP26), South Africa became the first nation to sign such an agreement. Senegal and the International Partners Group (IGP) signed a JETP in June 2023.
I’ve said before that the best way for Western countries, and the developed world as a whole, to help Africa transition away from fossil fuels is through investment and collaboration, not condescension. This is precisely what JETP programs seek to do: help emerging coal-dependent economies transition away from fossil fuels while providing room to address the resulting social consequences. This is an investment, a collaboration and, above all, a respect for the reality that Africa can only move forward at its own pace in this area. Arbitrarily banning us from using our natural resources will only do more harm than good.
So far, South Africa and Senegal are the only African countries to have agreed to a JETP, with South Africa agreeing a deal worth $8.5 billion, while Senegal has obtained one for an amount of 2.7 billion dollars. However, the way in which South Africa and Senegal intend to benefit from these agreements differ radically, as does their situation in terms of electricity production.
South Africa: torn between priorities
Coal continues to dominate South Africa’s energy portfolio, accounting for more than 80% of the country’s electricity generation. Due to chronic problems of load-shedding and energy shortages, the country is today torn between two priorities: ensuring energy security and adhering to its decarbonization plans. Power outages have plagued the country since 2008, but they have intensified in recent years and have effectively crippled the South African economy, which has failed to even exceed 1% annual gross domestic product (GDP) growth. over the last decade.
The country’s aging coal fleet is facing significant maintenance issues that have led to the decommissioning of several of the country’s largest coal units in 2023. That year, the country also experienced its worst load shedding in history. faced, more than twice that of 2022, leading to energy shortages for 335 days out of the year. This load shedding led to a sharp increase in demand for solar panels and batteries, but Eskom (the South African power company) had to prioritize energy security instead, extending its reliance on coal-fired power plants and slowing down their decommissioning. To their credit, Eskom has made significant improvements to the maintenance and repair of their coal plants thanks to a recovery strategy launched in early 2023, and they have not suffered another episode of load-shedding since the 26 March 2024.
However, the decision to prolong their dependence on coal is at odds with South Africa’s JETIP. It also led the South African government to seek to renegotiate financing agreements linked to its transition to cleaner energy sources, amounting to some USD 2.6 billion of the USD 8.5 billion. USD initially agreed.
Above all, South Africa needs a solution that ensures its energy security while enabling it to meet its JETIP commitments, especially as its peak demand is expected to reach 38 gigawatts (GW) of by 2030, or 6 GW more than the current peak. And even though 13.6 GW of new power plants are expected to come online by 2027, with more than half from solar PV and 25% from onshore wind, coal is still expected to meet two-thirds of daily demand. Battery storage assets awarded by the South African Independent Power Producer Purchase for Energy Storage Program (BESIPPP) will also contribute to this new capacity. Renewable energy production in South Africa is also expected to increase from almost 14.1% currently to almost 29% by 2030.
I want to be very clear on this point: The growth of renewable energy in South Africa is commendable, and Eskom’s decision to prioritize energy security via coal when an alternative solution was not immediately available was understandable and pragmatic. But the country’s renewable energy is not growing fast enough to compensate for its aging coal-fired fleet, and no emergency maintenance campaign can guarantee that similar problems won’t lead to a new load-shedding crisis. If this is not addressed, there is a risk of shortages when the coal fleet is inevitably closed at the end of its lifespan. Gas-fired power generation is therefore the most prudent option for South Africa to prioritize as it continues to work towards expanding its renewable energy sources. The flexibility offered by converting gas to electricity will help meet demand when South Africa’s coal-fired power plant fleet can no longer supply baseload electricity, leaving it with only its Koeberg nuclear power station and currently limited solar and hydropower resources to fill the gaps. Not only is natural gas a more cost-effective and efficient source of energy than coal, but it is also relatively inexpensive to retrofit an old coal-fired power station with gas turbines, allowing South Africa to phasing out coal while saving money that would otherwise be spent building entirely new infrastructure. All of this will matter greatly as South Africa projects that phasing out coal will require $99 billion between 2023 and 2027. So far it has raised half of that through its JETP deal with the IGP, USD 33 billion of private sector investments and USD 10 billion of the public sector. South Africa hopes to fill the gap by tapping domestic and international private entities in the form of grants, guarantees and soft loans.
Fewer difficulties in Senegal
Senegal, meanwhile, appears to have fewer problems, as it relies on liquid fuel sources rather than coal. The USD 2.7 billion mobilized under the JETP is expected to attract and mobilize further private and public sector investments, following the example of South Africa. However, Senegal will also receive technical assistance from its international partners to boost the integration of its renewable energy infrastructure and technology, with a focus on grid stabilization and energy storage. batteries. This approach is part of its electrification plans, which aim for renewable energies to represent 40% of its installed capacity by 2030, compared to 22% currently. Senegal also committed to developing an investment plan within 12 months to identify its needs, opportunities and allocations to achieve its objectives.
To this same end, Senegal plans to publish a revised nationally determined contribution (NDC) at COP30, which is expected to take place at the end of 2025. The current NDC provides for an unconditional target of 235 MW of solar photovoltaic, 150 MW of onshore wind and 314 MW of hydroelectricity by 2030. With international assistance, these targets should be increased to 335 MW of photovoltaic solar energy, 250 MW of onshore wind energy, 50 MW of hydroelectric energy.
250 MW of onshore wind, 50 MW of bioenergy and 50 MW of solar thermal.
Overall, South Africa and Senegal stand to gain from their JETPs, and I hope this trend continues in the future for African states. There are, of course, growing pains. JETP is still a nascent program and the first agreements were signed as political promises before the technical and coordination details could be fully worked out by all parties. The implementation process for South Africa and Senegal was therefore delayed while consultations and negotiations worked out the logistical details. Furthermore, JETPs will be far from sufficient to fully cover the financial burden of African countries’ transition away from fossil fuels, and it may prove difficult for many countries to secure the necessary private financial investments. to bridge the gap.
This is why it is essential that African states, and the world in general, closely monitor developments in South Africa and Senegal, as their efforts to address these challenges will undoubtedly serve as an example for the others.
Par NJ Come onExecutive President, African Energy Chamber.
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