IISD - International Institute for Sustainable Development

06/12/2024 | Press release | Distributed by Public on 06/12/2024 08:43

How South Africa can Improve Grid Battery Deployment to Unlock Economic and Security Benefits

June 12, 2024, Cape Town-South Africa can take action to boost the deployment of grid-located batteries through better understanding of the sector, co-operative planning, increasing access to finance, and supporting localized production, new research suggests.

While South Africans are already rapidly installing consumer batteries (located at consumer premises), grid batteries (storage installed on the grid) are an under-recognised part of the solution to the country's electricity supply issues.

A report by the International Institute for Sustainable Development (IISD), based on interviews with over 70 experts in the field, identifies a broad lack of understanding of battery opportunities, disjointed planning processes and financial obstacles for energy storage projects as key areas constricting the roll out of grid batteries.

The second in a two-part series examining the role energy storage can play in resolving South Africa's energy crisis, the paper, Watts in Store Part 2: Creating an Enabling Environment for the Deployment of Grid Batteries in South Africa, recommends the core steps policy-makers and stakeholders in the energy system may take to foster grid battery deployment.

These are: to improve understanding of grid batteries at almost every level, from awareness of current battery technology to battery integration into the grid; to promote collaborative energy planning; to facilitate battery developers' access to multiple revenue streams and upfront investment; and to identify and support local value chain opportunities, such as mineral processing and battery assembly.

"South Africa's electricity crisis, exemplified by years of damaging loadshedding, means the country desperately needs a coherent electricity supply strategy that aligns with climate change goals. Batteries can play a fundamental role in this," says Richard Halsey, a policy advisor at IISD and lead author of the report.

"Political will is a crucial piece of the puzzle, while addressing issues with tariffs and revenues linked to battery projects can provide clarity for potential investors. This will help South Africa to build a dependable, forward-looking electricity supply system."

The report comes as South Africa faces political upheaval following a general election at the end of May, in which the incumbent ANC party lost its majority for the first time in 30 years. The incoming government therefore has an opportunity to recognise the value grid batteries can provide.

Meanwhile, plans for major restructuring of the state electricity utility Eskom also opens further doors to creating an enabling environment for the deployment of grid batteries.

The paper suggests successful battery deployment in regions such as South Australia and California can guide South Africa, but solutions are location specific. Replicable strategies include enabling battery operators to benefit from multiple revenue streams, clear government policy support, and specific financing mechanisms for initial battery projects to help accelerate adoption.

Growing demand for batteries is also an opportunity to boost the South African economy and job creation, due to availability of many of the critical minerals required for both the market-leading lithium-ion batteries and also the vanadium required for vanadium redox flow batteries which due to their longer-duration storage are forecast to play a growing role in the sector.

Grid batteries have only recently gained traction internationally, with most of the world's capacity installed in just the last 6 years. But growth has been fast, with annual capacity additions increasing significantly each year, with 75% more in 2022 than in 2021, the report notes.

Halsey added: "Grid batteries can bring a new era of flexibility to South Africa's creaking grid. As well as operating as stand-alone stores of power, grid batteries can also be used to great effect in conjunction with renewables, particularly solar power. With a shift underway in South Africa toward a more open electricity market with competitive trading, there will only be increasing prospects for grid batteries."

Media contacts:

Richard Halsey, Policy Advisor, Energy - [email protected]

Harry Cockburn, Communications Consultant, Energy - [email protected]