At the Shell Energy Dialogue held on October 6, chaired by Lerato Mbele, Eskom’s Wendy Poulton, WWF SA’s Richard Worthington, Stellenbosch University’s Professor Johann Görgens, Clean Energy Solutions’s Stuart Fredman and Barry Bredenkamp of the Central Energy Fund debated whether alternative energies are in the pipeline for South Africa or merely a pipe dream. Here is an edited extract of the debate
Lerato Mbele: South Africa has set itself renewable energy targets: 4% in three years’ time and more than 20% in 10 years’ time. The challenge is that Eskom continues to be the sole provider and generator of electricity and there’s a huge reliance on hydrocarbon and coal. The question tonight is alternative energy: in the pipeline, or a pipe dream? Can South Africa stick to the promises that it has made to itself and to the world?
Wendy Poulton: We are an extremely energy-intensive and carbon-intensive economy in South Africa, but alternative energies supply us with an opportunity to build our economy in a more sustainable way, to provide energy and electricity to our citizens at the same time as having a lot of developmental opportunities.
Richard Worthington: What we need to do is to roll them out. The future eventually will be entirely in renewable energy. We’re advocating the target for South Africa of 50% of our electricity supply from renewable energy by 2030. The only way we’re going to achieve a just transition to a sustainable electricity supply is to maximise the role of renewable energy. But whether there’s a pipe dream involved, I do feel that there is in the claims of the nuclear sector. It is trying to capitalise on the concept of alternative energy – in fact it wants to put itself forward as alternative and mainstream at the same time. It’s not viable; you need to make a strategic choice for renewables.
Johann Görgens: South Africa has much potential for renewable energy and there is public interest. The issue is bringing together the stakeholders who will be required to develop political will to turn it into a reality.
Stuart Fredman: The pipe must be severed and a transition from this endless debate and philosophising must be locked down and it must become a reality. If private individuals and some of the firms in this country can take action I don’t see why the mainstream can’t.
Barry Bredenkamp: One of the problems is many pipelines. We need to bring them together into one big massive critical mass to get that energy moving. This is not only about government bringing to the table renewable energy; individuals also have a role to play. There’s a lot of alternative energy that we can use in our own homes.
LM: Richard, we need to define what alternative energy is, and why it’s so important.
RW: The concept of alternatives has changed in many ways. People think, “alternatives to fossil fuels”, but one of the big challenges with nuclear is that it is as much an energy carrier as it is a source of energy. It’s been around and has received massive subsidisation for 60 years now, so to position itself as alternative is disingenuous. Nuclear is not really an alternative.
LM: Barry, can we get your views on what South Africa has set itself in terms of targets. We are talking increasingly about the integrated resource plan, but what exactly is it?
BB: I don’t think that the integrated resource plan is a great step forward; it’s creating an enabling environment for us to diversify what we’ve got. Alternative energies have been given the opportunity to go forward with the announcement of the renewable feed-in tariffs. We’ve seen an influx of developers and investors coming to the country wanting to develop alternate energy farms. The big problem is going to be who pays. The plan can tell us what to do but it does cost a lot of money. Eskom has money but Eskom’s investing in coal-fired power stations.
LM: Stuart, can South Africa realistically transform itself into a low-carbon economy?
SF: We have the natural resources that will enable significant deployment of either solar and/or wind. But can it be done? The cost is going to be slightly higher over the short term versus a Kusile or a Medupi, but over 10, 20 years, it will come down to be on parity with coal and then significantly lower.
JG: The renewable energy debate in the past five years has really picked up momentum because of global economic changes. I don’t think we should discount for a moment the effect of people feeling pressure on their pockets from the rising oil and electricity prices. Economics will always play a very strong role. South Africa has very large resources. Whether we can link the value chain from primary resource to technology to end reserve to demand side and actually implement that in a way that makes sense for all the players, that’s the challenge.
LM: Wendy. It’s been suggested that Eskom has a crucial role to play in a new low-carbon environment consisting of something like 6 000MW/h initially through renewables. But you are in the middle of a major expansion drive, building coal-fired power stations. Nothing about Eskom says you are looking at renewables.
WP: We definitely are looking at renewables. We’re involved with energy efficiency, which is being rolled out nationally. We also play quite a big role in researching ways in which to reduce the cost of renewable energy, in trying to find solutions that fit South Africa.
LM: But the system has to change. You cannot have a situation where Eskom is the monopoly player.
WP: I wouldn’t say we’ve been reluctant to share the space with independent power producers; we would welcome them in the current situation. The more megawatts on the grid, the better for South Africa.
RW: Eskom desperately needs independent power producers to come into the system because they don’t have money to pay for Kusile, which is why we are saying perhaps we should re-examine that decision and maybe realign some of that investment into renewables.
LM: Barry, your opinion on levelling the playing field?
BB: We’ve had cheap electricity for a very long time, so competing has been an unlevel playing field. And we’ve had cheap electricity for good reason: we would never have been able to electrify the country or attract the investment to the extent that we have if we didn’t have cheap electricity. But that time is gone: fossil fuel will come to an end. We need now to move towards a renewable energy utility.
LM: Professor Görgens. In South Africa you have grave disparities and a government with a deficit; the moral case seems to wane a little because government has to consider renewables versus social priorities. How can we settle that?
JG: In December 2007 South Africa established an international biofuels strategy that said the feedstock for bio-fuels production should come from community-based projects. The social agenda was very strong in that strategy. But the demand side and the opportunities for the private investor were not sufficiently addressed so there’s a chasm between the opportunity for social development and putting the pipeline together. The same will be true for other types of alternative energies, where a strong dimension of new rural economic development can go together with energy production. Do you pitch renewable energy only in terms of what makes basic economic sense, or do you have a sustainable development agenda coupled to that renewable energy production?
LM: Stuart, the government is hoping to create about two million jobs in the next 10 years, seeing renewables as a significant component of that. What sort of job quality are we talking about?
SF: Jobs are in two areas, manufacturing and construction, and operation. The opportunities are in beneficiation of materials, manufacturing and added value, deployment of skills. But two million jobs is a bit of a pipe dream. We pay 2c a kilowatt hour for some form of carbon tax and that’s been sitting in the treasury and at the moment has a quantum value of about R8-billion. The money is there to start a reasonably large rollout of renewables. Second, there’s no shortage of appetite for investors and developers. All they’re waiting for is a green signal to start the engines. I don’t think the government has to get too involved in manning and determining policy; there will be a renewable energy industry without interference.
LM: Richard, can the state take a back seat?
RW: We don’t need massive state intervention, but if you’re going to tap into the opportunities for international support to grow your renewable factor as rapidly as we need to, then it would be helpful. But the renewable energy industries are not totally dependent on state support.
JG: The state has a role in terms of sustainable development and social agenda. One should not forget that the reason for strong economic growth in the world in the past 150 years was cheap energy sources. Renewable energy starts with a backlog of being less economically competitive than the traditional fossil fuels and certainly the state has a role to play in addressing that shortfall.
LM: Barry, in comparison to some of the innovations that have taken place in Kenya, some would argue South Africa is still lagging behind.
BB: Kenya doesn’t have the backup of the huge base load of coal-fired power stations. Money becomes available when you’re forced into that situation. South Africa is one component of a large globe out there and most countries are accelerating their update of alternative energy. These technologies have to be manufactured, and the longer we wait the longer we get in the queue. We might end up with a situation where we just can’t get the equipment.
LM: Stuart, how can South Africa develop a competitive edge?
SF: There’s no question about our industrial prowess. What we don’t have is a decent target, so the international vendors could have a technology transfer and localise manufacturing.
LM: Wendy. If the economy picks up there’s going to be tremendous demand for electricity. Eskom has unequivocally said it can’t guarantee electricity supply beyond 2013. And yet Eskom has the audacity to charge us higher tariffs.
WP: We’re not just about the cost; we have to put it in place, we know we have to go to the reserve margins. We have a very energy-intensive economy. We not only have to change our carbon systems, we also need to look at the energy beyond our economy and become more energy efficient.
LM: If you look at the total generation capacity in South Africa, 25% of that can come from wind. What are we still waiting for? What we call cheap energy today is going to be more expensive than the wind energy we’re talking about.
SF: Assumptions about the wind-energy profile for South Africa are a little overstated; we need a reality check. Roll out wind as fast as possible. It is price competitive, but it has a finite capacity base.
LM: We are seeing opportunities to potentially double the efficiency of solar in the next five to 10 years. Based on that, and also that we have R8-billion, why don’t we just put up a big concentrated solar power plant?
SF: Industry is ready to roll out. There are certain constraints. Who is the developer going to sell that electrical energy to? There are practical issues in terms of transmitting energy on to the grid.
LM: We have to distinguish between grid energy and non-grid areas. We have 12-million people in South Africa, roughly 30%, who are non-grid and will not have electricity in the future.
SF: The off-grid scenario is a large chunk of our community that is desperately short of any form of energy. There should be a portion of the renewable energy feed-in tarrif (refit) that is allocated to small solar home systems; that automatically gives social upliftment. It should have been incorporated. But funds are going to be allocated to solar parks, not to small rural developments.
LM: We’ve got the plans in the pipeline; what’s the next step?
WP: We need an integrated product. We need cooperation on research and on coordination of our supply chains.
RW: We should be setting a long-term, ambitious target, such as 50% of energy supply by renewables by 20 30.
SF: It’s simple. We have an environment and we have defined a refit. We have targets but we cannot sell energy or put energy on to the national grid. Give us access as developers to the national grid and we’ll achieve those targets and bring the cost of energy down in the next 10 years.