Summary

Affordability needs to be given priority when deciding on the policy to introduce Renewable Energy (RE) as alternative energy source. Affordability combines technology type, policy direction and investment considerations. All these aspects have a direct bearing on the price that will ultimately be paid by a consumer. As South Africa is on the verge of implementing its RE policy through the judgement to be made on the bids submitted by RE independent power producers, it will be important for decision makers to take into consideration the energy’s affordability. Without REs being affordable, their envisioned benefits to socio economic development of South Africa will be lessened. While RE is still considered to be expensive, international data reveal a declining RE cost trend. In developed countries, Germany experience stands out in the successive adoption and use of affordable renewable energy. The country started implementing its RE policy in 2000 and today it is among the world’s three major renewable energy economies and its policy serves as a model of success to other European countries. Specific to South Africa, unit production cost and subsequently unit price attached to renewable energies, in particular solar energy, is too high and unrealistic compared to international RE prices. The status quo has the potential to put the country on a sub-optimal and expensive energy mix path. It is recommended therefore that solar energy costs and prices for South Africa be re-assessed and the positioning of solar energy in the country’s long term energy mix strategy be reconsidered against the confirmed RE unit costs and its subsequent affordability.

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