Dario Musso, co-head of infrastructure finance at Rand Merchant Bank explains why electricity generation by the private sector has never been more accessible or had lower barriers to entry than now. Significant technology advancements mean that large, costly and complex fossil fuel generation with long construction lead times no longer offer the only option to generate utility-scale electricity.
It is a fact that renewable energy from solar PV and wind is now cheaper than any other form of new build generation. In South Africa, the eagerly-expected next round of the renewable energy procurement programme is widely expected to deliver electricity prices south of 50c/kWh. Importantly, this is enough to cover the full cost of these plants, including capital expenditure, financing costs and investor returns (renewables typically don’t have fuel costs) [...]