Developing Plan B for energy in South Africa
Plan A is stalling and no Plan B seems readily available. All other things being roughly equal, projections are that the country will not have the energy required to fully realise its economic ambitions until about 2020, and perhaps later than that. At a minimum, about ZAR 12 billion a year is likely to be spent on power generation from diesel generators. There will be slower economic growth and a lower level of job creation than could have been the case. The ability to pay social grants will be tighter.
Against this, there is the enormous success of the country’s renewable energy procurement programme (“REIPPPP”). Thousands of MWs have been procured in three years at very competitive rates, much of it is spinning already. Local content levels have been near 50% with the result that there are huge spin-offs in the supply chain to a wide variety of large and small South African companies and also individuals.
The mismatch between the success of the REIPPPP and the energy shortage of the country lies in the time at which the energy is generated vs the time at which it is used. If this one problem can be overcome, we can resolve our energy shortage while boosting local manufacturing and job creation and enabling the economic growth envisioned in the National Development Plan.
Wind plants often deliver energy during peak periods. Solar PV plants deliver their maximum output around the middle of the day. Solar Thermal power can be stored, but the construction time for such plants is longer than for the aforementioned technologies and there is some work to do in bringing down costs.
We need the power most typically when households wake up, take a shower or a bath, put on the toaster and the television. This about two hours before work in the morning. And then again for three hours or so after work, in the evening. In summer, when Eskom is doing maintenance and has less power available, the problem might persist through the working day as businesses need power to operate. This is where our ZAR 12 billion a year goes to: to the diesel to generate power at about eight times the cost of wind power as procured recently and at costs far above that of any renewable energy.
Already, in these hours, when the wind blows and the sun shines, diesel is saved and the country saves money. Indeed, if every fifth electricity unit from renewables is generated in this peak time, the other four are supplied free of charge, due to the huge price differential.
But how to do more of this? The answer lies in the enchanting concept of the “symphony of renewables”. Combine all supply and demand options, roll them out rapidly and see the difference.
To start, the country has one of the best solar regimes in the world and has the potential to install millions of solar water heaters at very affordable rates in a short period of time. This means that the sun will heat our bath water - rather than diesel. This intervention has significant potential to drop the electricity demand curve over the entire course of the day so that the need for the diesel “peaking plants” need not arise as often.
Secondly, household and residential solar PV on rooftops is already taking off and has the potential to store power in batteries to be fed back into the grid during peak hours - at prices about midway between the cost of renewable energy and the cost of power generated from the peaker plants. If between solar water heaters and solar rooftop the bulk of the peaking problem can be addressed, utility scale wind and solar (both PV and solar Thermal) will deliver the extra capacity required.
Wind power is now almost halfway cheaper than what the new coal power from Eskom’s Medupi plant will cost (the average in Round 4 is estimated at 65c/kWh). In some places in the country, environmental approvals for truly gigantic wind farms of over 600 MW have been secured, so a lot can be done very quickly.
In OECD economies, there was always the plan to gradually green the grid with a green energy revolution a decade or more away. In South Africa we have the chance and indeed the imperative to do it the other way round: to have the green revolution right now, build all we can until the country again has sufficient energy, then reassess to see whether renewable energy for the following period needs to be supplemented by traditional sources, of what kind, and in what quantities.