Renewable energy is finally a reality in South Africa’s electricity mix. The government’s renewable energy programme has procured 92 solar, wind, hydro and biomass projects. Some of these are already feeding into the national grid. Others meanwhile are in various stages of development.
Community renewables are not unique to South Africa. It is the country’s policies and frameworks that are new. Provisions in the regulatory framework direct international investment towards community development. The companies that build renewable energy power plants must invest a specific amount of the project value in nearby communities. Over the next 20 years all approved projects will have spent more than R39 billion on community benefits.
Each project must attend to the socio-economic needs of its surrounding communities. But the policy does not specify how this should be done. Companies are generally willing to comply, but this vague element means they struggle with implementation.
The key question is how to implement these regulatory requirements to produce the best possible outcome for everyone involved.
Communities must benefit
In November 2011 the South African government launched its programme to procure renewable energy. The Department of Energy invited competitive bids and the programme’s rules stipulated that bidding companies had to commit to seven economic development elements.
There are four elements in the programme that require independent power producers to direct parts of their investment towards socio-economic development in local communities. This includes:
- Investing between 1% 1.5% of the project revenue on socio-economic development.
- Spending up to 0.7% to support enterprise development.
- Giving between 2.5 and 5% of the shareholding to a legal entity representing the local community.
- Creating jobs locally.
The programme defines local communities that are within a 50km radius of the project site. At the moment individual energy companies can specify which community will benefit. Some focus on only one village or town, others try to benefit the entire population in that 50km radius. The government is now rethinking this definition for future procurement rounds.
A growing number of independent power producers across the country are close to one another, so some areas have a 50km radii overlap. The programme does not require companies to collaborate, even if they are working within the same community. In practice, they have to.
Development is a collaborative effort
Internationally, community benefits are negotiated between communities and companies. Communities in Germany and Scotland drive the development of entire projects. They own shares and govern additional community funds.
In South Africa the procurement programme’s economic development requirements provide a unifying set of rules for community benefits. It may appear to be a tick-box exercise during the bidding phase, but quickly takes shape when construction starts.
Independent power producers must do three things:
- assess and recruit local employees
- identify development actors in the surrounding communities such as local projects and organisations, and
- allocate funding to them.
Trustees are then selected for the community. Companies must report this to the national government’s independent power producers unit.
The emerging renewable industry in South Africa is learning fast. It is complying with the procurement rules and managing the expectations of communities within the 50km radius. Companies must spend a lot of time and effort to build lasting and trusted relationships with communities.
Companies have established a wide range of community relations and development practices since the start of the programme. Wind and solar energy associations have formed working groups to discuss experiences and practices. A growing number of informed and concerned organisations are working on various initiatives to support the sector.
Community involvement needs to be stronger
Renewable energy companies invite citizens to public meetings on environmental impact assessments. These allow residents to access information about projects and their suggested benefits. But very few people hear about these meetings. Even fewer attend them.
It is common for companies and service providers to assess community needs, fund interventions and monitor spending. Depending on the approach, communities participate to varying degrees in the planning and implementation of these investments.
Opportunities for strategic engagement need to be created. This allows local actors to deliberate the opportunities and risks associated with additional development funding in their area. Support is required to realise sustainable developmental impact.
Where it’s working
The Hopefield Wind Farm partners with the local community to address the community’s needs. The wind farm is located in the Western Cape and spends its community development fund on a home improvement programme. A non-profit organisation which has experience in these type of community capacity building projects helps the residents to implement the programme.
The community based company is responsible for the installation of solar water heaters, insulated ceilings, extended plumbing and safe wires in low-income houses. Unemployed local residents have received training and are doing the installations themselves.
Ensuring communities benefit
The task at hand is complex, meaningful and scary. To tackle this, a quadruple dose of Vitamin C is needed: Capacity, creativity, communication and collaboration.
Collaboration involving independent power producers, the government and communities - and, of course, the relevant citizens and community trusts.
Capacity support through training and mentoring is particularly important. An active learning process means the renewable industry has the opportunity to adopt transformative community engagement and development practices.
There must be better communication about the renewable projects, their achievements and associated community benefits.
Creativity through engaged scholarship is needed to coordinate and dedicate funding to long-term, sustainable development processes. These need to make sense to the people and organisations within the relevant 50km radii.
South Africa’s community renewables projects are a golden opportunity for poverty stricken rural economies, peri-urban communities and across highly unequal urban settings.