A cleaner energy future is in sight

 

 

President Cyril Ramaphosa — who did not attend the general assembly of world leaders at the United Nations in New York because he stayed home to address the pressing issues of gender-based violence and the laggard economy — has made the clearest statement yet on a future decarbonised South Africa.

The statement, handed to UN secretary general António Guterres on Tuesday, reads: “We will be enhancing our current mitigation national development plan (NDC) by the end of 2020. Additional mitigation ambition by 2030 will require a bold programme which targets our key emissions source, the electricity sector, and goes beyond current plans to invest further in renewable energy.

“To this end, a proposed $11-billion (R160-billion) just transition transaction is being developed, consisting of a blended finance facility and would be the largest climate finance transaction to date, having a significant emissions impact.”

“Like all countries of the world, we recognise the urgency with which we must reduce our dependence on fossil fuels and move towards a carbon-neutral future,” Ramaphosa said, adding that the country’s blueprint for energy security, the integrated resource plan (IRP), will soon be finalised.

The present IRP process has come under criticism for its achingly slow pace of progress, with critics saying this flies in the face of growing international concern over the climate emergency, hamstrings fixing the Eskom fiasco and means the country is not moving fast enough to benefit from falling renewable energy prices.

Ramaphosa said in his statement: [The IRP] “calls for an energy mix that includes a significantly increased component of energy from renewable sources, as well as from traditional sources that include coal, natural gas and nuclear energy”.

The IRP is intended to direct the expansion of electricity supply over a given period by identifying investments in the electricity sector that allow the country to meet forecasted demand at minimum cost.

Matthew Parks, parliamentary officer for trade union federation Cosatu, says the National Economic Development and Labour Council (Nedlac) IRP process has been finalised and signed off. Although it does not stipulate the percentage contributions of energy inputs, it sees an increased role for more renewables, limited more coal and, subject to affordability, nuclear.

Parks says the IRP does see space for coal and for nuclear, but that in the latter case it should be at “a scale and pace that the nation can afford”.

One new coal independent power producer (IPP) is envisaged, but two already contracted, the 577-megawatt Thabametsi in Limpopo and 306-megawatt Khanyisa in Mpumalanga, are unlikely to find financing from local banks, which have developed new positions on financing fossil-based industry following activism from shareholders.

Parks says the one more coal independent power producer envisaged is “on paper”, the reality being that this IPP will need funding by the banks, which appears to be unlikely.

The Nedlac report of the energy task team — seen by the Mail & Guardian and which “concludes considerations at Nedlac on the IRP” — has business agreeing with the position taken on coal “in principle”, but saying the additional costs of clean coal needed to be taken into account.

The report says representatives of communities affected by the industry also agreed with coal in principle, but wanted the environmental impact to be considered, while labour, which likewise agreed with coal in principle, wanted a just transition and consideration of how coal would be financed.

On renewables, business agreed with the inclusion of renewable energy in the mix in principle, saying “a least cost base was needed”. The community position added the rider that an engagement on the ownership of the renewables was needed, whereas labour said there “was a need of a socially owned renewables sector, that is, state-owned, community owned, private and individually owned”.

The document has been submitted to the relevant ministers in terms of section 8 of the Nedlac Act.

Parks says whatever has been agreed in the IRP, the crisis right now calls for the “ticking time bomb” of Eskom — which three times this year has run out of money to pay its staff — to be fixed.

Ramaphosa told the UN that the R160-billion plan will focus on the next decade. It will include the process of decommissioning old coal powered plants. Eskom is already implementing a closure plan for plants over 50 years old.

Bloomberg reported earlier this month that a plan being formulated by Meridian Economics, which is under consideration by the government, envisions the establishment of a R161-billion facility backed by development finance institutions and private funders.

The new entity would lend money to Eskom at slightly below commercial rates on condition it accelerates the closure of polluting coal plants to make way for renewable energy.

Under the plan, the country would gain an additional 10 gigawatts of renewable energy capacity over a decade, reducing its potential carbon dioxide emissions by 715-million metric tons by 2050.

“This would be the largest and most significant global climate finance transaction to date,” Emily Tyler, a climate economist at Meridian, told Bloomberg. “It would propel South Africa to a cleaner and more resilient energy future.”

Ramaphosa stressed a just transition was needed. “We will need to put measures in place that plan for workforce reskilling and job absorption, social protection and livelihood creation, incentivising new green sectors, diversifying coal-dependent regional economies, and developing labour and social plans as and when ageing coal-fired power plants are decommissioned.”

He said the plan will include adding significant renewable energy capacity, the funding of large-scale regional programmes to offset adverse effects on workforces through economic development, and the financial stabilisation of our electricity sector.

“The rapid fall in prices of renewable energy technologies, coupled with our immense renewable energy resources, has created a massive opportunity for us to make this shift,” he said.

The positive potential effect of renewables was underlined this week by a study of South Africa’s electricity needs by the Lappeenranta-Lahti University of Technology (LUT) in Finland, which concluded that a fully renewable energy system will be at least 25% more cost competitive by 2050 than the generation scenario being considered by policy-makers, which still envisages investments in new coal and nuclear generation.

Engineering News reported that the study by the LUT academics “concludes that the cost of a renewables-based system could be as much as 50% cheaper once greenhouse gas emission costs are factored in. It would also consume less water and create more jobs than a fossil-dominated system.”

The authors said the best policy scenario for 2050 would be where solar photovoltaic and wind energy supply about 71% and 28% of demand respectively.

Parks says a variety of views were expressed on Koeberg, some to expand the nuclear plant and others not to expand it. The consensus position is for it to be retained at its present capacity, but for its lifespan to be extended from 2024 to 2044.

The IRP document has business agreeing with the extension of the life of the Koeberg plant, with community representatives arguing for the same, but adding that “the political and technical position needed to be aligned”, whereas labour wanted “the inclusion of nuclear in the energy mix” that it “should be considered in the same manner as other technologies in the energy mix and that a nuclear plant could be introduced by 2030”.

An industry report this week, meanwhile, said nuclear power is losing ground to renewables in terms of both cost and capacity as its reactors are seen as less economical and slower to reverse carbon emissions.

Reuters reported that, according to the annual World Nuclear Industry Status Report (WNISR), in mid-2019, new wind and solar generators competed efficiently against existing nuclear power plants in cost terms, and grew generating capacity faster than any other power type.

“Stabilising the climate is urgent, nuclear power is slow,” said Mycle Schneider, lead author of the report. “It meets no technical or operational need that low-carbon competitors cannot meet better, cheaper and faster.”

Nuclear is also much more expensive. The cost of generating solar power ranges from $36 to $44 per megawatt hour, the WNISR said, whereas onshore wind power comes in at $29 to $56 per MWh. Nuclear energy costs between $112 and $189, Reuters reported.

Kevin Davie

Kevin Davie is M&G's business editor. A journalist for more than 30 years, he has worked in senior positions at most major titles in the country. Davie is a Nieman Fellow (1995-1996) and cyberspace innovator, having co-founded SA's first online-only news portal, Woza, and the first online stockbroking operation. He is a lecturer at Wits Journalism. In his spare time he can be found riding a bicycle, usually somewhere remote.

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