New energy mix on the cards

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South Africa’s fleet of coal-powered stations cannot meet demand: it is aging, under-maintained and over-burdened. According to the CSIR Energy Centre, load-shedding has cost the economy as much as R338-billion; in 2019 alone the country experienced 530 hours without power, at a cost of up to R120-billion. In addition, Eskom spends as much as R27 to buy one kilowatt-hour (kWh) of electricity from private diesel turbines to keep the lights on, while the average selling price is roughly R1 per kWh.

South Africa’s total domestic electricity generation capacity is just over 50 gigawatts (GW), of which more than 90% is still derived from thermal power stations; the remainder comes from other energy sources, increasingly renewables. Reliance on coal for energy means that South Africa lags significantly behind in its Minimum Emissions Standards. It is the highest emitter in Africa, and 14th in the world. According to Greenpeace, Mpumulanga is home to the world’s largest nitrogen dioxide hotspot, and prolonged exposure to NO2 can lead to a number of diseases, including respiratory ailments.

The Renewable Energy Independent Power Producers Procurement Programme (REI4P) was introduced as part of the Integrated Resource Programme 2010-30. Its object is for 17.8GW of renewable energy to be produced in South Africa before 2030, which will reduce greenhouse gas emissions, minimise the country’s reliance on non-renewable energy sources, promote local manufacturing of materials used in the renewable energy sector, and help to mitigate the energy shortage in the country.

In October 2019, the department of mineral resources and energy updated its Integrated Resource Plan up to 2030, to diversify the energy mix away from coal and address the insufficient energy capacity problem. Under IPR 2019, coal will be responsible for producing 58.8% of the country’s energy needs, while renewables will rise to 24.7%, though there will be restrictions on how much renewable energy can come online each year, to smooth out capacity allocations and provide a constant pipeline of projects to attract investors. While some have hailed the update, there will, however, be two new coal plants added. Minerals and Energy Minister Gwede Mantashe says that “coal will continue to play a significant role”, although no new plants will be built after 2030, and four-fifths of coal capacity will be closed by 2050.


Significantly, REI4P already has and will continue to yield thousands of employment opportunities. South Africa is now producing renewable energy at among the lowest tariffs in the world; over R200-billion has been attracted from the private sector; carbon emissions have been reduced by more than 30 million tonnes; and over 1 000 new small enterprises have sprung up, benefitting local communities enormously.

But, though the first three windows of the renewable-energy build went ahead quickly, Eskom saw the renewables programme as a threat, and refused to sign power-purchase agreements for the fourth bid window. The National Union of Mineworkers, the National Union of Metalworkers of South Africa and Solidarity, which represent about 85% of the Eskom workforce of over 40 000, have also been opposed to Eskom bringing on board independent power producers (IPPs) to supply renewable energy to the grid, as they fear job losses.

Energy expert Chris Yelland says other big stumbling blocks to implementing a new energy mix have been bureaucratic bungling; archaic, centralised models; and reams of red tape. The government has failed to provide clear policy positions and statements, as well as clear pricing signals to encourage market-orientated responses to generation capacity short- ages. “What is most urgently required now is the procurement of new, least-cost energy from wind and solar PV renewable energy plants, backed up by least-cost new, flexible generation capacity from gas-to-power plants and battery energy storage systems,” he says.

Additional barriers to the adoption of alternative energy sources include working out how to integrate renewable energies into the transmission grid, local governments’ acceptance problems regarding solar roof-top photovoltaic installations and a significant lack of technical skills.

It is encouraging that Mantashe has announced that the government will be gazetting a revised schedule 2 of the Electricity Regulation Act, which will enable self-generation and facilitate “distributed generation” by municipalities. President Cyril Ramaphosa’s 2020 State of the Nation Address in February 2020 was also a big step forward for REI4P, but while his speech had many good intentions, it lacked clear implementation timelines, raising concerns about whether his promises will be seen through to completion.

The good news for consumers is that, as more energy from alternative sources comes online, prices should drop. Liz McDaid, portfolio manager for energy at Outa (Organisation Undoing Tax Abuse), says: “The overall energy supply fleet will contain larger amounts of renewable energy, which is now much cheaper than coal-produced energy. IPPs (which could be structured in different ways, for example socially owned — not only as profit-generating entities) should have a business model that provides electricity at a fair price that is in line with international best practice. The only IPPS that should be discouraged are those that would try to create a non-competitive environment, and then try to sell electricity at inflated prices. A strong Nersa [National Energy Regulator of South Africa] would prevent that.”

South Africa’s current economic nosedive could have been mitigated, if bid window four of REI4P had not been delayed, as a number of wind and solar projects would have come online just as outages from the coal fleet were peaking. According to McDaid: “In the energy arena, there are vested interests, some of which were clearly linked to state capture, as has been shown in the Zondo commission. Money that was spent irregularly and wasted during the last decade, and projects like the increase in renewable energy and solar water heaters that were delayed, all have a cost to society now. For example, solar water heaters could have helped people to have hot water for hand washing, even when they couldn’t afford expensive electricity, and more renewable energy would have been able to plug more of Eskom’s gaps and meant Eskom could have been further ahead down the road in its maintenance rollout.”

Perhaps the government, in announcing its new commitment to stepping up the IPP programme, is finally seeing the light — or is it simply looking to IPPs to bail it out of the load-shedding predicament it finds itself in? Either way, Eskom’s present model is unsustainable, and big changes are on the horizon.

Bio2Watt’s Bronkhorstspruit biogas plant supplies energy to a BMW factory in Pretoria
Bio2Watt’s Bronkhorstspruit biogas plant supplies energy to a BMW factory in Pretoria

Agricultural waste keeps the lights on

Bio2Watt’s Bronkhorstspruit plant can generate 4.5MW and has been supplying green energy to BMW South Africa’s Rosslyn plant in Pretoria since 2015. The biogas process relies on organic waste, which it obtains from the food industry and a Beefcor feedlot in the vicinity. The organic waste is processed in the digesters where it produces biogas, which then feeds a gas engine to produce electricity. The company hopes to establish more biogas plants on the edges of South Africa’s cities.

Sean Thomas, Bio2Watt’s managing director, says he is “cautiously elated” by Mantashe and Ramaphosa’s announcements to open up the energy mix, “but we are waiting to see how it practically translates on the ground, with IPPs’ ability to provide power and heat to industries and municipalities in good standing”.

Regarding municipalities buying power directly from IPPs, Thomas says: “This could be a great opportunity for both municipalities in good standing and IPPs to diversify their energy mix; it will also help to decentralise power generation.”

He said biogas is effective for job creation; producing biogas, for instance, requires sorting and transporting organic waste, including manure. “Industrial scale biogas and waste to energy are particularly labour-intensive processes. Greater focus should perhaps be put on localising the supply chain for renewable energy technologies in order to position local manufacturing to supply South Africa and further up on the continent.”

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