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It’s time to diversify energy supply – give renewables a chance

30 January 2008

An opinion piece by Gareth Morgan MP – DA Spokesperson on Environmental Affairs

Gareth Morgan MPA wise man once said: “Don’t put all your eggs in one basket”. The risk is that if something goes wrong, there will be no back up. Eskom has up to now invested practically all of South Africa’s electricity generating capacity in one basket. There may be reasons for that decision in the past, particularly the availability of cheap coal, but conditions are changing, and there are new opportunities on the horizon.

The solution to securing South Africa’s energy future lies in diversifying the country’s energy generation sources so that we stop depending almost entirely on coal. The key to diversification is renewable energy, which is quickly gaining momentum globally. Japan and Germany are the largest consumers of photovoltaic cells in the world despite their unfavourable geographic locations. In 2005, wind power generated 18.5% of electricity in Denmark. South Africa is still lagging behind these international trends and government has made very little progress in moving away from coal power.

There is no doubt that higher electricity tariffs in the above countries have made renewable energy better able to compete with generation from fossil fuels. However, with tariffs expected to be increased in South Africa over the coming years, renewable energy is likely to become more viable. Further, despite several barriers to using funding for renewable energy and energy efficiency projects under the Kyoto Protocol’s Clean Development Mechanism (CDM), it is important that all spheres of government aggressively source international funding from corporations in the developed world looking to secure carbon credits.

Wind power remains an attractive option for diversifying energy supply. Germany’s wind power programme generates 5% of that country’s electricity. If South Africa is to overcome the current electricity crisis successfully, then projects like the Klipheuwel wind power pilot project must be expanded to other suitable parts of the country. It is estimated that 10 000MW of wind power could be generated within the Western Cape alone. While not ideally suited to base load generation, the advantage of wind power is its relatively short lead time and carbon neutrality. Investment in the wind power industry will have the extra benefit of creating jobs. Spain, for example, employs 60 000 people directly, and a further 100 000 indirectly, as the sole result of wind power development.

There are similar opportunities available for solar technology, although government initiatives should focus in the short term on the roll out of solar water heaters to individual households and businesses. To its credit, government has pledged to roll out a million solar water heaters (SWHs) in the next few years, but there is significant potential to further increase this amount, perhaps even to double it. The average price of a SWH for a family of four is R12 000; however, this could be reduced to below R7 000 through a combination of economies of scale, carbon funding, and a subsidy from Eskom. Installed SWHs will reduce household electricity consumption by between 20 – 30%. The cumulative effect on demand for electricity from the national grid would be substantial.

An example of an excellent business model that involves the mass installation of SWHs is the recently established public-private partnership between CEF Sustainability, a subsidiary of the Central Energy Fund, and the Nelson Mandela Metro. The model is based on the implementing agency accepting the project risk with no extra cost to the consumer. Similar programmes must be replicated in other metros, with the Department of Minerals and Energy tasked with developing blueprints for such projects and marketing them. The fast tracking of metro by-laws that induce the need to install SWHs should be a priority for local government this year.

The current policy position reserves Eskom’s right as the sole purchaser of all electricity generated in South Africa. Therefore, while provision is made for independent power producers to generate up to 30% of South Africa’s total electricity output, the electricity generated must be sold to Eskom and not to any other users. This monopoly is one of the fundamental reasons why we are faced with such a severe shortage of electricity generating capacity. The DA intends pursuing various legislative options that result in the removal of obstacles in the way of allowing small and independent power producers to generate and sell electricity themselves. If Eskom continues to drag its heals on electricity generation from renewable sources, then the solution could be in allowing independent companies to develop renewable energy projects and to sell the electricity generated to any willing buyer(s). Impending higher tariffs, along with potential CDM funding, should make investment in this sector more attractive.

It is likely that the majority of South Africa’s electricity will be generated from coal for several decades to come, even if South Africa is eventually expected to sign up to emission reductions under a future climate change regime. However, increasing the contribution by renewable energy deserves serious consideration. The current energy crisis will hopefully spur government and Eskom into creating the climate that will allow renewable energy a foot in the door.

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12 comments

  1. Hi Gareth,
    If the government is prepared to relax its 15% limit on electricity imports, then there are a few hydroelectricity options available north of our borders. Terry Bell mentioned them in an article in the Cape Times yesterday.

    Given the shift towards regional integration in a globalised world, that limit doesn’t seem appropriate, especially if Eskom or other South African companies are involved in the projects (which they undoubtedly would be).
    Regards,
    Anthony


  2. I agree. And that is why we shouldn’t have transmission, distribution and production all bundled together in one company, as we do with Eskom. They will seek to protect their own generating capacity.

    Relax the maximum import amount and the result will be a stimulation of new energy production elsewhere in the region.

    Regards
    Gareth


  3. The trouble with most renewables is two-fold a) they don’t always give power and b) they can’t compete with Eskom’s low, low prices.

    There are no real fixes to the first of these problems. Batteries work, of course, but they are fiendishly expensive and even the safest (lead-acid) has some interesting environmental overtones. By the time you start talking NiCd or similar, you have an environmental nightmare on your hands second to none. Another problem, which Germany and Denmark have had to face, is that by the time you get to >15% of your power supply from renewables, the conventional transmission and distribution system becomes unstable. The Irish have encountered this with their large wind farms. If the demand is low and the wind starts blowing, they have to turn off their windmills. The bright side is that Eskom has created some large pumped storage systems, and these can be used to store power when the demand is low.

    Electricity prices in most of Europe and North America are several times Eskom’s. Even so, renewables are not competitve without a significant subsidy. Fortunately (!?) Eskom’s prices are due to rise significantly over the next few years, so renewables will come more into play.

    Even so, more needs to happen than just pricing. Those producing power need to be able to sell it. At present, there are no feedin tariffs in SA. We need changes in the legislation urgently to create the market. Then, and only then, will it be worthwhile spending a bit of yor own capital to make your home reasonably energy-independent.


  4. I agree with the substance of the last post. I am just arguing that renewables need a foot in the door. They are not going solve our problems in the short to medium term. The feed in tariffs are indeed required. I fear that the crisis we are in will be used to argue for investment in only the good old favourites – fossil, fossil, fossil.

    Another point in the context of likely future emissions reductions….With coal power likely to be the backbone of our electricity supply for some time to come, it is important that the government and Eskom also start investing into research around carbon capture and storage. Anglo American have a carbon capture project in Western Australia at the moment. An Anglo American official told me last year that the carbon capture market requires significant investment by government in order to bring the private sector in. Most notably, government needs to fund research into suitable areas to conduct capture projects. Of course a functioning carbon market is also required.


  5. I was already 1987 involved in an investigation to make the former Ciskei independant from ESKOM. It was proposed to install a windfarm close to Hamburg. ESKOM refused this plan and pressurised us to stop this proposal immediately, otherwise they would interrupt the power supply to the Ciskei with no delay. It shows, that ESKOM already at this time refused to allow any competition. As engineer (ret) I hope that the politicians can force ESKOM to put less money in their pockets and more effort on a quick solution. Solar power for instant. Karoo and the northwest of SA are ideal for the installation of Solar power. For example, in Israel is no new Building going up without a solar heated geyser. This by law.


  6. If only all MPs would take part in this kind of knowledge and leadership exchange. I agree with your views. If nucelar energy is porposed what would be your reaction?
    In Bangladesh farmers are already using indegenous ways of using water, sun and wind power to speed up local production not only in agriculture but also in producing pottery, food and garments but they are not called alternative energy. What’s wrong in investing more on wind, sun and water energy? When one talks about biofuel one cannot help but think of the human emotions involved, of not growing enough food to eat but to make it possible for the rich people to drive in their cars. That is to me food security. Virtual farming is destroying the emotional security. Why grow more food for export while your children suffer from want of food? Ultimately food and energy needs need to be addressed the way a hungry people sees it.


  7. Hi Hasna

    Thanks for the interesting last post.
    Yes, I am growing more sceptical about biofuels by the day. The rising food prices are partly attributable to the conversion of crops for food to crops for fuel. I am happy that SA has excluded maize from its biofuel strategy. Nevertheless, the SA biofuels strategy, in my opinion, is far less about diversifying energy sources, than it is about a rural development.

    With regards to your question on nuclear….I have a nuanced view on this subject. I have now had sight of South Africa’s Long Term Mitigation Scenario for Climate Change. If we continue on our current growth path , emissions will grown by four times as much as they are today by 2050. Eskom’s shoddy planning, places us at great risk, as it is building more coal fired power stations and is not using the best technology to reduce carbon emissions, nor is it putting in the required technology that would allow us to eventually capture and sequestrate that carbon if “carbon and capture and storage” eventually becomes an option.

    My personal view is that nuclear does have a small role to play in a diversified energy mix. But with the following caveats. That it is pursued as a means to reduce carbon emissions quickly, secondly, that it is not a get rich scheme for certain well connected political elites, and thirdly, that nuclear governance issues are strengthened. If none of that is achieved we should stay clear of nuclear.

    But the medium to long term future is all about renewables.


  8. Dear all,

    thanks Gareth for allowing such a great debate. I agree with much that has been said, that now is a time to think and act. In some ways the energy crisis may be a blessing in disguise. We have to build more electricity generating capacity, and electricity prices have to go up for that. This in turn should hopefully boost energy saving measures and reduced the predicted future demand. I agree that Eskom is being incredibly unsustainable by building new coal plants (without CCS technology), and I agree that renewables must be part of the short and medium term solutions. Wind and imported hydro-power have been mentioned and solar too, though I wish to highlight concentrated solar power generation. Whereas PV is particularly useful in countries that does not have a functional national grid, we should look towards the big solar power generation options that require a distribution network. in particular I believe in solar towers, because of their reduced intermittency, as already demonstrated by plants in Spain and the US, for example, BrightSource Energy’s DPT (Dynamic Power Tower).

    My question therefore is how must the pricing regime be restructured to encourage solar tower development. At what carbon prices would the CDM market provide a positive incentive for their development, and what tariff-rise would the consumer (business and household) have to live with to redirect Eskom’s unsustainable path towards that of expointing the sun’s resource? And what is the role of the government in encouraging this shift, surely their renewable energy subsidy is way to small, and non-representative of the external costs of coal generated electricity.


  9. Could someone please help me to get a better understanding/prospectus on future energy policy guidelines for South Asia consisting of diverse countries and cultures such as India, Pakistan, Sri Lanka, Bangladesh, Maldives, Nepal and Bhutan? Since we are so energy poor and backword, we need to make the right choices and invest in future energy policy which meets the present as well as future challenges. I greatly appreciate this discussion.


  10. Everyone is talking of the comparative cost of renewables vs conventional coal.
    How can we even compare these cost when renewable is sustainable and coal is life threatening.
    THE PLANET IS UNDER THREAT AND WE DISCUSSING COSTS.
    If we don’t pay the one off price now our legacy will be the ultimate cost for future generations.


  11. I heard that it is / was once possible to turn your meter back by putting power back onto the grid? So in theory, if you installed solar power panels at your house that generated excess power, you could effectively get paid for putting it onto the grid.

    I don’t know if this is true, but it seems to me that it would be a great way of encouraging private users to go solar, thus further reducing grid (and coal) demand.

    Even if it’s not true, solar seems a useful product to incentivise, because it seems to be the one energy source that directly reduces global warming (because it’s using the sun’s energy, rather than generating energy, and therefore heat, from other sources).


    • Hi Jordan,

      It is possible, but not with the default meter box that is currently installed, which only allows for one-way traffic. However, one of the proposals in the DA’s policy on environment and energy is to make the purchase and installation of smart meters, which measure electricity coming in and leaving a premises, subject to tax relief.



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