By Mamoekeng Matlaila, Infrastructure Portfolio Manager at Sanlam Investments

South Africa is grappling with the harsh realities of climate change. The country is experiencing temperature increases at double the global average and facing more frequent extreme weather events like heat waves, longer dry spells, and severe flooding across the country’s provinces, all of which disrupt agricultural cycles and impact food security. This mirrors a broader trend highlighted in the WMO State of the Climate in Africa 2023 report, where some African nations lose up to 5% of their GDP annually and divert up to 9% of their budgets responding to extreme climate change-related events.

Recognising the urgent need for sustainable solutions, Sanlam Investments is funding the development of innovative renewable energy projects like the Oya Energy hybrid facility. By combining solar and wind power with battery storage, these projects offer a reliable and cost-effective alternative to fossil fuels, which account for 83% of the country's electricity generation. They also drive economic growth and social upliftment, offering a model that a continent requiring climate action can replicate.

Unlocking the power of hybrid renewable energy

While the potential of wind and solar energy is undeniable, unlocking the power of these resources presents unique challenges. Solar output fluctuates with the day-night cycle and cloud cover, while wind power varies according to wind speed and direction. South Africa's Just Energy Transition also highlights that a successful shift to renewable energy must be equitable and inclusive, ensuring that vulnerable communities are not left behind.

Hybrid renewable energy projects combining different renewable technologies with battery storage are emerging as a transformative solution. These projects provide a more consistent and reliable energy supply, effectively addressing the limitations of single-source renewable energy plants. They also create green jobs in construction and operations and invest in community upliftment programmes.

For example, the 128MW Oya Energy Hybrid Facility, a pioneering greenfield project under development, exemplifies this potential by integrating solar and wind energy, complemented by a battery energy storage system, as a single dispatchable renewable energy power plant. This innovative approach, financed by Sanlam Investments, will allow the power plant to produce energy continuously, mitigating the intermittency often associated with solar and wind – mirroring the characteristics of a baseload power plant.

The case for sustainable investment

Located on the border of the Northern and Western Cape provinces, a region rich in solar and wind resources, Oya Energy will be the largest hybrid energy project of its kind on the African continent. The facility will incorporate 155MW solar photovoltaic (PV) capacity, 86.4MW wind capacity, and 92MW battery storage capacity. An automated plant controller will manage distributed renewable energy source generation, storage, and consumption, allowing the plant to function as a single virtual power plant.

During the day, the solar PV component will supply the bulk of the energy, supplemented by wind energy. Excess energy generated from the solar and wind components will charge the battery storage system, releasing energy during the evenings and early mornings. This integrated system will allow the power plant to consistently dispatch clean energy to the national grid, mitigating the intermittency of renewable sources and ensuring grid stability. An offtake agreement with Eskom stipulates that Oya Energy must be available to dispatch power between 05:00 and 21:30 for a reliable energy supply to homes and businesses.

The Oya Energy project's impact extends beyond providing clean energy. It serves as a powerful catalyst for broader socioeconomic development. By prioritising local job creation, the project will generate an average of 550 jobs during its 18-month construction phase and 72 jobs throughout its 20-year operational period, significantly impacting the local economies of the Karoo Hoogland and Witzenberg municipalities, as well as having a multiplier effect across the Northern and Western Cape.

Furthermore, a substantial investment of approximately R424 million, representing 1% of the project's revenue, will be dedicated to education, healthcare, skills development, and social welfare upliftment programmes – ensuring a lasting positive impact on the community and a more inclusive, sustainable economy.

Looking ahead to a future powered by sustainable investment

This project represents just one example of how investors can contribute to a more sustainable future by investing in initiatives that support people, the planet and prosperity. By embracing hybrid renewable energy projects, South Africa can move toward a future powered by clean, reliable, and sustainable energy while driving economic growth and social progress.

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South Africa is grappling with the harsh realities of climate change. The country is experiencing temperature increases at double the global average and facing more frequent extreme weather events like heat waves, longer dry spells, and severe flooding across the country’s provinces, all of which disrupt agricultural cycles and impact food security. This mirrors a broader trend highlighted in the WMO State of the Climate in Africa 2023 report, where some African nations lose up to 5% of their GDP annually and divert up to 9% of their budgets responding to extreme climate change-related events.

Recognising the urgent need for sustainable solutions, Sanlam Investments is funding the development of innovative renewable energy projects like the Oya Energy hybrid facility. By combining solar and wind power with battery storage, these projects offer a reliable and cost-effective alternative to fossil fuels, which account for 83% of the country's electricity generation. They also drive economic growth and social upliftment, offering a model that a continent requiring climate action can replicate.

Unlocking the power of hybrid renewable energy

While the potential of wind and solar energy is undeniable, unlocking the power of these resources presents unique challenges. Solar output fluctuates with the day-night cycle and cloud cover, while wind power varies according to wind speed and direction. South Africa's Just Energy Transition also highlights that a successful shift to renewable energy must be equitable and inclusive, ensuring that vulnerable communities are not left behind.

Hybrid renewable energy projects combining different renewable technologies with battery storage are emerging as a transformative solution. These projects provide a more consistent and reliable energy supply, effectively addressing the limitations of single-source renewable energy plants. They also create green jobs in construction and operations and invest in community upliftment programmes.

For example, the 128MW Oya Energy Hybrid Facility, a pioneering greenfield project under development, exemplifies this potential by integrating solar and wind energy, complemented by a battery energy storage system, as a single dispatchable renewable energy power plant. This innovative approach, financed by Sanlam Investments, will allow the power plant to produce energy continuously, mitigating the intermittency often associated with solar and wind – mirroring the characteristics of a baseload power plant.

The case for sustainable investment

Located on the border of the Northern and Western Cape provinces, a region rich in solar and wind resources, Oya Energy will be the largest hybrid energy project of its kind on the African continent. The facility will incorporate 155MW solar photovoltaic (PV) capacity, 86.4MW wind capacity, and 92MW battery storage capacity. An automated plant controller will manage distributed renewable energy source generation, storage, and consumption, allowing the plant to function as a single virtual power plant.

During the day, the solar PV component will supply the bulk of the energy, supplemented by wind energy. Excess energy generated from the solar and wind components will charge the battery storage system, releasing energy during the evenings and early mornings. This integrated system will allow the power plant to consistently dispatch clean energy to the national grid, mitigating the intermittency of renewable sources and ensuring grid stability. An offtake agreement with Eskom stipulates that Oya Energy must be available to dispatch power between 05:00 and 21:30 for a reliable energy supply to homes and businesses.

The Oya Energy project's impact extends beyond providing clean energy. It serves as a powerful catalyst for broader socioeconomic development. By prioritising local job creation, the project will generate an average of 550 jobs during its 18-month construction phase and 72 jobs throughout its 20-year operational period, significantly impacting the local economies of the Karoo Hoogland and Witzenberg municipalities, as well as having a multiplier effect across the Northern and Western Cape.

Furthermore, a substantial investment of approximately R424 million, representing 1% of the project's revenue, will be dedicated to education, healthcare, skills development, and social welfare upliftment programmes – ensuring a lasting positive impact on the community and a more inclusive, sustainable economy.

Looking ahead to a future powered by sustainable investment

This project represents just one example of how investors can contribute to a more sustainable future by investing in initiatives that support people, the planet and prosperity. By embracing hybrid renewable energy projects, South Africa can move toward a future powered by clean, reliable, and sustainable energy while driving economic growth and social progress.