Africa is well positioned to improve its energy security, owing to its high solar radiation factor, highlights renewable-energy business platform Discovery Green.

The company says the continent’s solar radiation factor can be more than 120% higher than Europe and, therefore, the potential return of solar energy solutions would be much higher, as the continent would be able to generate electricity at a comparatively low cost.

Discovery Green head Andre Nepgen notes that the affordability and availability of renewable energy would mean that Africa-based minerals companies could enhance their competitiveness amid the growing number of carbon taxes.

The company is assessing the sizable financial impact that carbon taxes could have on African businesses.

However, he adds that these taxes could help to accelerate the development of renewable-energy sources, which could prove beneficial, as renewable energy can often be more cost-effective and sustainable.

Carbon taxes should also be viewed favourably, as it creates a revenue stream that governments can use for different developmental initiatives and, with the right approach and policies, the revenues could be re-allocated to assist in developing or subsidising various energy projects to help accelerate the energy transition, Nepgen explains.

“Saying that carbon taxes would be destructive to the economy is too simplistic. Instead, it would allow us to create some more investment into the country, which could stimulate GDP growth. It could make South Africa’s economy more globally competitive.”

Risks, Investment Capacity

Noting the variability and volatility associated with renewable energy, owing to its reliance on favourable weather, as well as the aggressive manner in which African businesses are investing in renewable energy, Nepgen urges businesses to view renewable energy as a means of averting a significant part of their grid-based consumption, rather than an incremental solution.

Nepgen adds that Discovery Green “has been highly active” in facilitating its investments in the country’s renewable-energy infrastructure for over five years.

At the end of 2023, the company concluded a procurement round where it awarded about 1.35 GW worth of renewable energy. However, he stresses that it is important to make the distinction that many of the company’s wind projects are not yet in construction.

“We are currently on track [to] begin the construction of roughly 450 MW in renewable- energy projects soon. This stimulates just over R8-billion in capital investment in South Africa. Some of it goes overseas for the purchase of parts and manufacturing, but a lot of it goes into labour, construction and other key parts of the energy value chain. The latest statistics received was one to 15 jobs per MW, so with 450 MW, we’re talking north of 5 000 potential jobs being generated owing to this investment,” Nepgen explains.

Despite the large capital outlay required, the company does not view this as a burden, but rather a demonstration that there are private investors that are willing to participate in constructing and fast-tracking energy projects on the continent.

Discovery Green believes that financial institutions and investors need security and a long-term commitment from African governments to release the large funding required for these projects.

Nonetheless, the company will continue to connect businesses across South Africa to affordable and renewable power.