By Xolile White
South Africa has set a target to generate 18 GW of renewable energy by 2030 according to the Integrated Resource Plan (IRP) released by the government in 2019, which outlines the country's energy mix and goals for the next decade.
The food and beverage industry is a significant sector in South Africa, heavily reliant on energy for refrigeration and processing, and therefore, the transition to renewable energy has both challenges and opportunities for this industry.
The Renewable Energy in South Africa: Boosting Economic Growth and Enhancing Energy Security report by the World Bank Group highlights the potential economic benefits of renewable energy, including job creation and increased energy security. However, the progress has been slow, and policy certainty and regulatory reform are needed to unlock its full potential.
As such, the transition to renewable energy has important implications for this industry, both in terms of the challenges it poses and the opportunities it presents.
One of the most significant challenges facing the food and beverage industry in the context of the renewable energy transition is the potential for higher energy costs.
According to a report from PwC, "South Africa has some of the highest electricity prices in the world“. This is due in part to the country’s reliance on coal for energy production, which is both expensive and environmentally damaging. Switching to renewable energy sources could help to reduce the cost of electricity and make it more accessible to businesses and households, thus driving economic growth.
While renewable energy sources are becoming increasingly cost-competitive, they still require significant upfront investment, which may be difficult for some businesses to bear. Additionally, the intermittency of renewable energy sources can pose challenges for businesses that require consistent and reliable energy supply, particularly those that operate on a 24/7 basis.
Despite these challenges, there are also significant opportunities for businesses in the food and beverage industry to benefit from the transition to renewable energy.
Renewable energy sources such as wind and solar are becoming increasingly cost-competitive with fossil fuels, and businesses that invest in these sources of energy can potentially save money on their energy bills over time. In addition, renewable energy sources can provide businesses with greater energy independence and resilience, reducing their vulnerability to energy price shocks and supply disruptions.
Another important opportunity presented by the renewable energy transition is the potential to enhance a business's environmental credentials both to consumers as well as demonstrating their commitment to reducing their carbon footprint and contributing to a more sustainable future.
As the country moves away from fossil fuels and towards renewable energy, there is likely to be a shift in the competitive landscape, with businesses that can adapt to the new energy paradigm potentially gaining a competitive advantage.
This may lead to the emergence of new business models and partnerships, as well as opportunities for collaboration between businesses and the government in the development of renewable energy infrastructure.
There are already examples of businesses in the food and beverage industry in South Africa that are taking advantage of the opportunities presented by the renewable energy transition. For example, the Woolworths Group, a major retailer in South Africa, has invested in solar energy to power its stores and distribution centres. Similarly, South African Breweries has committed to sourcing 100% of its electricity from renewable energy sources by 2025. These businesses are demonstrating that it is possible to embrace renewable energy and benefit from the opportunities it presents, even in an industry that is heavily reliant on energy.
While there are certainly challenges associated with this energy transition, there are also significant opportunities for businesses that are willing to invest in renewable energy sources. By doing so, businesses can potentially save money, enhance their environmental credentials, and gain a competitive advantage in a changing energy landscape.
Xolile White is a technical director, Nestlé East & Southern Africa Region.
BUSINESS REPORT