A study sponsored by the United States Trade and Development Agency (USTDA)
Distinguished guests, ladies and gentlemen, programme director, I would like to welcome you to the IDC, and I am very honoured to stand in front of you this morning as we launch one of our greatest milestones.
The global energy generation landscape is rapidly changing from a centralized generation model to a distributed energy generation model. This change poses a number of challenges however what is exciting is the significant opportunities it presents. One such opportunity relates to energy storage. Energy storage has not only become the new “buzzword”, but is already a reality. We are talking large sums investments and gigawatt hours of installed storage capacity over the next 5 to 10 years for stationary applications alone. If electric vehicles are also included, the numbers become even larger.
As such, energy storage was identified by the IDC as a potential new industry which could be established in South Africa and was prioritized for pro-active development.
Initially the aim was to develop a business case to convince the South African Department of Energy to allow a similar tariff dispensation for PV and Wind renewable energy generation in combination with storage, as is currently the case for concentrated solar power (“CSP”). It soon became clear that the value of energy storage applications is much broader than only a complementary technology to renewables energy generation sources. The scope was accordingly widened to assess storage as a fully integrated and stand-alone potential new South African industry.
Some of the outcomes that the IDC is aiming to achieve include:
The IDC through its New Industries Sector Business Unit has engaged key stakeholders from the public and private sector and led the formation of an Industry Development Steering Committee to drive the development and execution of an Energy Storage Industry Development Roadmap.
The initial focus of this initiative was to understand the market, the technology status and the “playing field” associated with energy storage. The lack of consistent and reliable information was a major challenge and to overcome this challenge, IDC on behalf of the Steering Committee approached the US Trade and Development Agency (“USTDA”) for support in conducting an extensive energy storage techno-economic study to which the USTDA agreed. USTDA appointed Parsons Consulting (USA) in collaboration with GIBB (SA) and the University of Stellenbosch as local partners for the study. Today we are able to reap the benefits of this partnership with the release of the study.
The USTDA study and further work conducted by the Steering Committee highlights that although there are instances where energy storage solutions can be implemented economically, development of a local energy storage industry currently requires a market “PUSH” approach rather than a “PULL” approach. This is because the cost of energy storage solutions is currently still too high. However, costs are coming down and this will assist in transforming the energy storage landscape. A market “PUSH” approach will require that strategic role players, such as relevant Government Departments, State Owned Entities, Development Finance Institutions (like the IDC), industry associations and key private sector players, need to play a more prominent role to ensure that a conducive market and regulatory environment is established for energy storage.
It is clear that in countries which are considered the market leaders such as the USA, Germany, India, China and Japan, Government and policy facilitated the roll-out of energy storage. In South Africa some of the first steps have been taken with the inclusion of energy storage in the latest release of the dti’s Industry Policy Action Plan and well as the acknowledgement of energy storage in the draft IRP2016. The Department of Science and Technology is also already supporting some initiatives within the energy storage space.
The multiple potential opportunities within the respective energy storage technology value chains warrants that we all collaborate as this industry has the potential to:
If South Africa wants to secure a meaningful position in the global energy storage industry, we should:
We cannot afford to only become involved when local demand really takes off on the back of lower pricing. Energy storage is already on a similar cost path as PV and Wind and some research indicates that the trajectory might be even quicker. If South Africa wants to be part of this lucrative global industry we need to act now.
I wish to thank the USDTA for their sponsorship of this study. I also wish to thank the representatives of the Steering Committee for their efforts in supporting this initiative. The work is not complete yet, but effectively only starting now. I look forward to the day when South Africa reaps the full benefits of this initiative.
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