Cape Town Makes Serious Strides Towards a Green Economy
The City of Cape Town has a flourishing green economy. It boasts growing renewable energy, waste, water, energy efficiency, and sustainable agriculture sectors. These dynamic sectors offer multiple investment opportunities.
The National Department of Environmental Affairs has defined the green economy as a “system of economic activities related to the production, distribution and consumption of goods and services that result in improved human well-being over the long term, while not exposing future generations to significant environmental risks or ecological scarcities”.
The City of Cape Town recognises the importance of prioritising a green economy. This is not only in light of climate change, but also in response to crises such as water and energy shortages, and to new opportunities like aquaculture and renewable energy.
A city ripe with green investment opportunities
GreenCape is a non-profit organisation that drives the adoption of economically viable green economy solutions. The organisation lists some of the reasons the Western Cape is a great green investment destination.
It has an emerging national renewable energy and cleantech hub which comprises of top companies. The province is home to various major professional series firms and financiers, as well as four universities with comprehensive research and development capabilities and committed green economy skills programmes.
The Atlantis Greentech Special Economic Zone
The Atlantis Greentech Special Economic Zone (SEZ) was launched by President Cyril Ramaphosa in December 2018. It offers a range of investment incentives and is estimated to be worth around R110.5 billion by 2035.
The Atlantis Greentech SEZ is envisioned to become a manufacturing hub of various greentech products such as wind turbines, solar panels, insulation, biofuels, electric vehicles, materials recycling and green building materials. It is based in a prime location, with modern infrastructure and access to skilled green professionals.
This hub of greentech activities offers opportunities and incentives to investors from all around the world. It is expected to attract around R3.7 billion in investment over the next two decades. Four large-scale investors that are already fully operational at the Atlantis SEZ are Gestamp Renewable Industries, Skyward Windows, Resolux Group, and Kaytech Engineered Fabrics.
Energy prospects for a green Cape Town
The energy services sector offers numerous opportunities to financial investors. The sector includes small-scale embedded generation, energy storage, and energy efficiency.
Small-scale embedded generation: There is increasing demand for embedded generation in South Africa as a whole. Embedded generation is when small scale power generators of less than 1MW can be connected to the electricity distribution network to contribute surplus power.
Investors may consider aggregating smaller rooftop solar PV projects with standardised contracting models. This will help to reduce the individual transaction costs for each power provider. It also allows for shared risk. Solar PV for energy resellers can be installed at venues with large roofs or parking areas, such as shopping malls and residential estates.
There is a strong market for operations and maintenance-only contracts for foreign engineering, procurement, and construction companies (EPCs) or investors.
Energy storage: Energy storage systems retain energy that has been generated until it is needed in the network, when it is discharged. Eight behind-the-meter battery storage applications are likely to gain traction in South Africa before 2035. These supply backup power during power outages, to allow economic activity to continue.
Energy efficiency: There is significant opportunity to grow and develop the energy services company’s market to reduce energy consumption. Retrofitting the country’s existing building with high efficiency lighting, HVAC and smart metering is likely to become the largest sector within the green building industry.
Improving Cape Town’s waste sector
The City of Cape Town generates 48% of the Western Cape’s waste, as of 2015. Up to R1,086.4 million could be added to the economy if opportunities in the organics, e-waste, plastics and builders’ rubble sectors are realised. There is a robust and growing secondary material market for these materials.
Major investment opportunities in the province’s waste sector includes municipal public private partnership projects of R1.3 billion, which are set to create 1,600 jobs over five years. Moves to ban organics from landfill will also contribute growth to this sector.
Legislation that has been passed will help unlock a potential R25.2 billion recycling market in South Africa. Meanwhile, only 12% of e-waste across the country is currently being processed. This creates a significant opening for SMMEs looking to establish businesses in the sector. E-waste businesses typically have a high employment ratio, adding a further economic benefit.
There are also significant prospects for investment in the reuse and recycling of construction and demolition waste. Builders’ rubble gets processed into material for roads opening opportunities in the crushing industry as well as the road materials industry.
Green economy water initiatives
The Western Cape was riddled by severe drought between 2015 and 2018 and limited access to water. A constrained water supply is expected to continue and measures to improve water security present a key driver for investment in the province.
Agri-processing sector: The agri-processing sector is a key part of the industrial market and an important contributor to the economy and employment. The investment potential in the agri-processing sector over the next four to six years is expected to be around R6 billion in South Africa. This will include investment opportunities in the animal slaughtering, pulp and paper, fruit and vegetable, and dairy sectors.
Currently, the Western Cape’s industrial water reuse, recycling and resource recovery market is worth R600 million.
Municipal market: The main opportunities in the municipal market relate to efficiency technologies in wastewater treatment and the potential of wastewater reuse. There are R2.6 billion worth of wastewater reuse projects planned for the Western Cape in the next 10 years.
With groundwater resources and seawater desalination being the only new water sources, reusing wastewater will be a key component to municipal-scale alternative water augmentation projects.
There is also opportunity to invest in municipal wastewater treatment plants and to increase the energy efficiency at these plants.
Find out more about Cape Town’s Green Economy initiatives through Green Cape.