/ 23 November 2023

Renewables alone cannot sustain SA’s energy needs – PwC report

Sa's Renewable Energy Sector A Beacon In Africa

A report by accounting firm PwC released this week has said that renewable energy alone cannot sustain South Africa’s energy needs, and that the country should consider gas-to-power as an alternative to coal to complement the increase of renewables. 

“Gas-to-power, if located in the right place, would allow South Africa to utilise some of the spare grid capacity as it can act as a baseload [the the minimum amount of power needed to supply the grid] and, unlike renewables, can be managed and does not pose a risk of variable heat loads and potential damage to the transmission network,” according to the Africa Energy Review 2023 report. 

South Africa and other African countries should accelerate their vast renewable energy potential to meet domestic energy market demands and deliver into international markets, it suggested.

PwC’s Africa oil and gas leader, Pedro Omontuemhen, said the solution for the power sector is not an “either/or, renewables or natural gas, proposition. It requires a multipronged approach to decarbonisation with renewables and natural gas power at its core.” 

South Africans have been subjected to 16 years of load-shedding as a result of bad planning, a lack of maintenance and wholesale looting at state-owned power utility Eskom, which has severely affected economic growth in the country. 

To mitigate the effect of the scheduled blackouts, the country has opened its energy market to enable new players to provide renewable energy through its independent power producers programme.

But concerns about insufficient baseload in renewable energy have dominated energy discussions, more specifically about what happens during peak periods when the sun isn’t shining or there isn’t wind for solar and wind energy options.

Both Eskom and the Minister of Mineral Resources and Energy, Gwede Mantashe, have previously argued that renewable energy could not be the only solution for South Africa’s needs because “it is unreliable”.

South Africa is part of the Paris Agreement that aims to limit global warming to 1.5°C. 

The PwC report said South Africa’s coal-fired power generation delivered 80.1% to system demand in 2022, down by about 5% compared with 2021, which was caused by a lower energy availability factor (EAF).

“Overall coal produced power is likely to continue to decrease from 80% to 75%

in 2025,” it said.

The report says that natural gas would be the best alternative to address concerns of baseload and also remove the country from the top 20 carbon emitters in the world.

South Africa ranks fourteenth on that list.  

The report added that clean energy, generated primarily from solar and wind, has doubled over the past 20 years. It found that additional clean energy from 2010 through wind and solar increased from 20% to 26% in 2022. 

“[2022] was the first year that a quarter of the energy was generated with clean technology in Africa. However, Africa needs to quadruple the amount of solar and wind to meet its energy transition targets,” the report said.

“Africa’s renewable, oil and gas resources offer a unique opportunity to embark on an inclusive energy transition and chart a course towards a sustainable future with inclusive growth in a measured way. The development of gas will be necessary in Africa and be part of the ecological transition.”

The report added that taking advantage of oil and gas production would be an opportunity to fill the gap created by Russia’s war in Ukraine, which has seen a limited supply flowing to Europe.

PwC energy leader in East Africa David Tarimo said gas potential could retain a critical role in power generation while waiting for hydrogen to develop. 

“While significant emphasis has been placed on developing the hydrogen economy, it takes time to develop. However, it can play a pivotal role in Africa’s energy transition,” he said.

The report urged South Africa to seize its potential to be a hub for green hydrogen. 

Sasol produced the first green hydrogen from Sasolburg in June this year with potential identified in areas including Mpumalanga and the Northern Cape.

The report found that the country and continent offered a range of energy sources and could act as a supplier and consumer while moving away from fossil fuels and increasing clean energy and electricity supply for its population, but it needed to move faster to do so.

Despite the continent’s energy potential, it faces high energy poverty levels and the challenge of balancing energy security and climate change. There is a steady call for movements away from fossil fuels using gas to stabilise energy needs in conjunction with renewable energy.

Omontuemhen said Africa’s decarbonisation is essential, but eradicating energy poverty and improving energy security must be prioritised.