“There are various reasons why investing in solar, particularly in South Africa and especially in the long run, is more attractive than coal,” says Edwin Coot, CEO of SolarPlaza. “First of all, the prices of solar have dropped by 70% over the past half a decade, and we predict they will continue to decrease in the years to come. As solar becomes cheaper, demand will continue to grow. This is good news for investors.”
Vishal Shah, managing director for the US-based alternative energy division of Deutsche Bank, shares Koot’s opinion: “We believe solar is already very competitive with retail electricity, especially in high solar radiation regions of the world like South Africa”.
Secondly, the prices of solar energy are much more reliable and stable than the price of electricity generated from coal, which as a commodity is vulnerable to market fluctuations. This makes investing in solar less risky.
“While solar prices are stable and on the decline, you don’t know what is going to happen with coal,” Koot explains. “Higher coal prices will translate into higher electricity prices. As coal deposits on the surface are slowly being depleted, it will become more expensive to mine the coal in the future. You therefore can expect the price of coal to go up at some point.”
Thirdly, the sun is more reliable than coal in terms of volume, he adds. South Africa is rated as the world’s best solar locations after the Sahara and Australia, and has 2,500 solar hours per year.
“This country will not run out of sun, making it a very stable, reliable resource,” he points out, referring to media reports highlighting South Africa’s dwindling coal reserves.
In November 2010, the media quoted Deputy Minister for Mineral Resources, Godfrey Oliphant, stating the quality and quantity of South African coal, responsible for 90% of our electricity, is on the decline.
Shah adds: “Solar offers enormous potential for South Africa to reduce its carbon footprint while extending the lifespan of its current coal reserves and reducing the dependence on fluctuating coal prices”.
The financial viability and investment potential of solar energy in South Africa will be one of the topics of discussion during SolarPlaza’s Solar Future South Africa conference, scheduled for 25 January 2012.
Among the speakers will be Koot, Shah, Karen Breytenbach (Senior Project Advisor within National Treasury’s Public Private Partnership Unit), Omar Vajeth (Head of the Power and Energy division at ABSA Capital), and Ayanda Nakedi (Senior General Manager at Eskom Renewables).
For additional information:
