The energy wars are over, and sustainability has won
Our uniqueness lies in how very supply-constrained our electricity sector is and will remain for five to ten years. This means that renewable energy presently displaces either load shedding at about R75/kWh or OCGT “peaking plants” at about R2,40/kWh (fuel only). A recent CSIR report reveals that renewable energy in the six months to June 2015 has generated R4-billion more in savings than it cost the country in tariffs.
Renewable energy is costing us less than nothing while creating jobs throughout the supply chain and maintaining impressive levels of local content. Moreover, it has committed more than R15-billion into enterprise development and socio-economic development close to the 92 procured projects, respectively, over the next 20 years.
This unique situation has emphatically demonstrated the value of renewable energy to South Africans. But what about the rest of the world and places which are less energy constrained?
We are only an extreme manifestation of a general trend. Our wind power can now cost as little as 56c/kWh, while Medupi power will cost about R1,05/kWh. In many countries wind is now the lowest cost, bulk electricity option available. The divergence may just be smaller, but the trend is global. Likewise, solar has decreased dramatically in cost. For the first time in the history of climate debates, it is possible to say with confidence that renewable energy is the financial answer.
What then about the technical challenges? Baseload, firm supply and all that? Here too, the answers are finally emerging. An integrated resource plan (IRP) for South Africa, if run now with the right assumptions, would tell us to build all the wind and solar we can and fill the “variability of renewables gap” firstly by managing demand to match supply and secondly by adding a low-capex option with quick ramp rates for cases where firm supply is immediately needed. This profile undoubtedly suits gas. The lowest cost electricity system for South Africa is renewables and gas.
But even this is not where it’s all going to end: energy efficiency will continue to improve dramatically, and the energy intensity of economies to decrease. Then comes the game-changer of energy storage that starts to remove the necessity of carbon-emitting gas from the energy mix and transforms renewable energy into firm supply. In a ground-breaking study authored by Siemens, Shell and 30 other large companies and utilities, and supported by the European Commission’s (“Commercialisation of energy storage in Europe”) all the storage options are investigated. These are “power to power” solutions – (e.g. pumped storage and batteries); “power to heat” solutions and “power to gas” solutions (e.g. hydrogen production for use outside the electricity sector such as transport).
The report finds that a potential exists for up to 400 GW of power to power storage in the EU by 2030. It further finds that power to liquids can absorb nearly all excess generation from renewable energy – which occurs when, for instance, there is a very windy day and a very large wind fleet that produces more than demand, which occurs sometimes in Denmark.
Experts are already pointing out that power-to-liquids using South Africa’s leading technology and expertise in the Fischer-Tropsch process holds incredible potential for the country, enabling us to use our competitive advantage of superior sun and wind to export synthetic liquid fuels to less sunny and windy places. We could also choose to replace natural gas in electricity generation with carbon-neutral hydrogen.
Other than of necessity, there is no reason whatsoever to use conventional energy which leads to climate change and other forms of pollution, diminishes local air quality and loads externalities onto the public and the natural environment: health costs and water use (to mention just two).
Furthermore these technologies typically lead to mega-projects with immense risk of cost and time over-runs to the tax payer. Indeed, as Michael Liebreich of Bloomberg New Energy Finance points out in his article “An energy sector transformed must be an energy sector reformed”, this is about the design and fabric of society:
“(it)…is in terms of the social structures in which we want to live. Fossil-based energy lends itself to scale and centralisation. Physical centralisation – huge oil, gas and coal-fields, massive power stations, a universal grid, pipelines, refineries and the like – as well as the inevitable fellow-travellers of political and economic centralisation… Clean energy is inherently more local, more distributed, more accountable” .
There has been an energy war raging, and it was increasingly the war of the empowered few who wished for the continued centralisation of the energy system so their dominance might persist, against the disempowered many who wished to claim back their autonomy. It was also the extraction and exploitation mind-set (that dumped the pollution and the dark side of their business activities on others and rationalised it away), against the many who wished for an energy system which would approach sustainability. Good and reasonable people will soon accept and embrace the new paradigm, now that it’s becoming available. The rear-guard action will be fought by those trying to protect narrow self-interest.
Renewable energy has won financially and is winning technically. It might take two decades to become clear, but the energy wars are over – and sustainability has won.