October 2014

Power2the People: workshop to focus on socio-economic development alongside wind conference

A one-day workshop running alongside wind energy conference Windaba will provide a forum for idea sharing and best practice development to ensure the ZAR5 Billion to be generated for communities from wind farms is invested collaboratively and effectively.

The title of the event, which will be held on November 4 in Cape Town is ‘Power2the People’:  also the theme of this year’s conference. It is being co-ordinated by the South African Wind Energy Association’s (SAWEAs) ‘Wind for Communities’ working group. Leading the proceedings will be Peter Willis, regular facilitator of the Eskom NGO forum and the South African Corporate Leaders Group on Climate Change.  One highlight of the programme is a presentation from Kugan Thaver, Head of Strategic High Impact Projects, SIP Project office at Industrial Development Corporation (IDC) who will share the government agency view on how the wind industry is doing so far.

“The workshop is a continuation of an event we held in Johannesburg in May where we began to look at ways we could share knowledge and plans around the socio-economic and economic development initiatives (SED/ED) being implemented using funds generated from wind farms,” explains working group chair and Chairperson of SAWEA, Dipolelo Elford, who will also presenting at the workshop. “Ultimately our goal is to ensure such funds are used efficiently and effectively enabling communities to get the best possible benefit from these opportunities.”

Aimed at all those involved in the wind industry and/or SED and ED initiatives, subjects for discussion at the workshop will include: updates on what is happening at government, industry and community level; improving understanding around the principles and practices of effective and sustainable community development and forming a clearer vision for community initiatives generated by funds from wind farms in the REIPPPP programme.

The full theme for this year’s conference, which is run by SAWEA and will be held at the Cape Town International Conference Centre from 3-5 November, is ‘Power2thePeople: Changing lives through wind energy’ and other conference sessions will also highlight the significant benefits that developments will bring to neighbouring communities. A community trust ownership scheme is also part of the programme and local communities own up to five per cent of their local development in shares. How these financial benefits can be most effectively spent and distributed will form a major part of the debate at both Windaba and the workshop.

SAWEA has an impressive list of prestigious speakers confirmed and expects the number of delegates to again exceed 500. Windaba is the biggest wind conference held on the African continent. Tina Joemat-Pettersson, Energy Minister and Windaba patron and Karen Breytenbach, leader of the government’s Public Private Partnership (PPP) Unit and figurehead of the Renewable Energy Independent Power Producers Procurement Programme (REIPPPP) have both confirmed their attendance as speakers.

Energy thought leader Mike Roussow  from Eskom and his colleague Keith Bowen, the utility’s modeller of the Integrated Resource Plan (IRP) will join Cas Coovadia, acting CEO of Business Unity South Africa (BUSA) to debate in the plenary session on ‘aligning the South African wind agenda with the broader policy objectives from Government’. A number of influential international speakers will also contribute, including the Danish Minister for Trade and Development, the Secretary General of the Global Wind Energy Council (GWEC) and the Executive Secretary of REN 21.

There will be an opportunity for direct engagement on the subject of local content between original equipment manufacturers (OEMs) and representatives from the Department of Trade and Industry. The team of consultants leading the study into localisation of the wind energy sector in South Africa will also be in attendance.

Conference delegates will also contribute to a high level strategic planning session for South Africa’s International Renewable Energy Conference (SAIREC) which will be held for the first time in 2015, incorporating Windaba and that is expected to attract more than five thousand delegates from all over the globe.

For further information on Windaba and the conference programme, please visit the Windaba website at www.windaba.co.za.  


Editor’s notes:

The ‘Power2thePeople’ workshop will be held at the Cape Town International Conference Centre on November 4, 2014 in room 1.62-2.64. It is free for Windaba delegates with a day rate of ZAR 2,500 for non delegates.

WINDaba is the official wind industry event hosted by the South African Wind Energy Association (SAWEA) in partnership with GWEC. The annual conference and exhibition will take place from 3-5 November 2014, at the Cape Town International Convention Centre.

For further information please contact: admin@sawea.co.za or call +27 (0) 11 2140664

About SAWEA
SAWEA is a non-profit, industry organisation representing the wind industry in South Africa. Its members include both national and international entities active in the entire wind energy supply chain. Its aim is to promote the sustainable use of commercial wind energy in South Africa; to contribute knowledge and human resources to the streamlining of the policy and regulatory framework for wind in SA; to facilitate synergy between the growth of the industry and the achievement of the broader socio-economic aims of Government (including training, job creation and localisation); to disseminate information; to act as a focal point for discussion between members, government, the media and the public.

For more information visit: www.sawea.org.za

 

 

Wind could supply nearly 20% of global power by 2030 – report

Installed wind power capacity could swell by 530% to 2,000 gigawatts (GW) by 2030, supplying up to 19% of global electricity, a report from a trade association and Greenpeace said on Tuesday.

It said installed wind energy capacity totalled 318 GW at the end of last year worldwide and provided around 3% of global electricity supply. Capacity is set to grow by another 45 GW to 363 GW this year.

In some parts of the world, particularly in Europe, people have objected to wind power due to government subsidies which they claim have contributed towards rising energy bills.

But Steve Sawyer, chief executive of the Global Wind Energy Council (GWEC), said: "Wind power has become the least-cost option when adding new capacity to the grid in an increasing number of markets, and prices continue to fall."

The GWEC, which represents 1,500 wind power producers, looked at the future of the wind energy industry to 2020, 2030 and 2050 under three scenarios based on existing and future emissions reduction and renewable energy policies.

Based on International Energy Agency forecasts, it said cumulative installed wind energy capacity could reach 611 GW by 2020 and 964 GW by 2030.

Under the report's "moderate" scenario, based on existing renewable energy policies and assuming that emissions reductions agreed next year in Paris under a global climate deal will be modest, installed wind capacity could reach 712 GW by 2020, nearly 1 500 GW by 2030 and around 2 670 GW by mid-century.

That means wind energy could meet 7% and 8% of global electricity demand by 2020, 13% to 15% by 2030 and 17% and 20% by 2050.

Under the "advanced" scenario, based on more ambitious growth rates and assuming that a robust global climate deal is in place, installed capacity could reach 800 GW by 2020, nearly 2 000 GW by 2030 and over 4,000 by 2050.

That means wind energy could provide 8-9% of global electricity supply by 2020, 17-19% by 2030 and 26-31% by mid-century.

"Given the urgency to cut down CO2 emissions and continued reliance on imported fossil fuels, wind power's pivotal role in the world's future energy supply is assured," Sawyer said.

The report identified Brazil, Mexico and South Africa as areas for new growth in wind energy. Brazil is set to install nearly 4 GW this year alone, while Mexico should add around 2 GW a year for the next 10 years.

Bad Policies Hinder Africa’s Renewable Energy Growth

Continuing technology advances, falling prices and new financing models means renewable energy projects have become increasingly practical in sub-Saharan Africa.

But while the sharply falling price of renewable technologies means projects are less dependent on subsidies, policy and regulatory uncertainty in some key African markets is driving a slowdown in renewable energy investment, according to a number of recent reports.

“The policies in a large portion of African countries are either non-existent or very vague,” Derek Campbell, Bloomberg New Energy Finance analyst for sub-Saharan Africa told AFKInsider.

”The trends are, if you look at the regional level, as ambiguous in Africa as they are anywhere else,” Alexander Ochs, director of the Climate and Energy Program at Worldwatch Institute told AFKInsider.

The International Energy Agency’s IEA ‘Africa Energy Outlook’ report released Oct. 13 estimates “the sub-Saharan economy quadruples in size by 2040, the population nearly doubles (to over 1.75 billion) and energy demand grows by around 80 percent. Power generation capacity also quadruples: renewables grow strongly to account for nearly 45 percent of total sub-Saharan capacity, varying in scale from large hydropower dams to smaller mini- and off-grid solutions.”

But the report warns that this growth “must be accompanied by broad governance reforms that include transparent management of energy resources and revenues if they are to put sub-Saharan Africa on a more rapid path to a modern, integrated energy system for all.”

“Governance indicators are generally weak in sub-Saharan Africa, compared with other parts of the world (although stronger in some southern parts of the region, notably Botswana, Namibia and South Africa), implying substantial risks arising from policy and regulatory uncertainty, inadequate protection of contracts and property rights, poor-quality administration and the actions of governments that are only weakly accountable to their citizens,” states the report.

More renewable-energy projects will be commissioned this year in sub-Saharan Africa than were added from 2000 through 2013, according to an August 21 report from London-based research firm Bloomberg New Energy Finance.

According to Bloomberg, renewable energy investments – not counting utility-scale hydropower – in the region is estimated to hit $5.9 billion this year and $7.7 billion in 2016. That’s compared to an average annual investment of $1 billion from 2006 through 2011.

“In Sub-Saharan Africa there are some good examples of strong policies and long-term power purchase agreements and these are the countries attracting the majority of clean energy investment,” Bloomberg’s Derek Campbell told AFKInsider.

While sub-Saharan Africa is one of the best new markets for onshore wind, small-scale and utility-scale solar, and geothermal power, the Bloomberg report noted that the investments are predominantly expected in South Africa, Kenya and Ethiopia.

“The three largest markets for utility-scale renewable power over the 2014-16 period are forecast to be South Africa with 3.9 gigawatts likely to be installed, the largest part of which will be wind, followed by solar PV with a smaller amount of solar thermal; Kenya with 1.4 gigawatts, mainly geothermal and wind; and Ethiopia with nearly 570MW, largely wind with some geothermal,” states the report

The annual market rankings of the world’s 100 most attractive power markets from London-based analysis firm Precergy, shows only four sub-Saharan countries in the top 50, with even South Africa only ranking 42nd. According to the report, though sub-Saharan Africa is an increasingly attractive investment option, there are many reasons for the overall low scores, “not least the greater levels of political risk and increased difficulty in doing business.”

South Africa and Kenya also ranked high in Ernst & Young‘s Renewable Energy Country Attractiveness Index released in September.“The opening of Round 4 of South Africa’s renewable energy procurement program sees a further 1.10 gigawatts of capacity up for grabs, with preferred bidders expected to be announced in late October, notes the report. “The removal of import duties on solar PV equipment in Kenya, though sparking outrage from domestic manufacturers, is likely to improve deployment prospects by pushing down project costs and offering developers greater flexibility.”

”There are countries that have become very, very serious about sustainable energy solutions, including renewables,” Worldwatch Institute’s Ochs told AFKInsider, citing Kenya, Tanzania, South Africa and Ethiopia. ”And then you have countries where the situation is a lot more difficult like Nigeria and many other countries throughout the continent where there are no commitments in place yet, or where earlier commitments have been somewhat weakened.”

Nigeria is left out of these rankings because even though Nigeria has seen ambitious plans for large renewable power projects mooted over the years, they “have yet to put in place the stable policy regime to reassure investors,” according to Ernst & Young.

“While Nigeria has introduced an attractive feed-in tariff (FiT) and ambitious renewable energy targets in their Nigeria Renewable Energy Master Plan we feel there are still some outlying issues that need to be addressed,” Bloomberg’s Campbell told AFKInsider.

Bloomberg’s concern is the FiTs multi-year tariff order (MYTO) where it’s reviewed every five years and so will impact existing power purchasing agreements.

“The MYTO only runs till 2023 and for developers who for a utility scale project will generally seek project finance with a tenor of 15-20 years the risks are just too high and lending institutions would more than likely not borrow to developers.” Campbell told AFKInsider.

Growth Trends

Solar could be the world’s largest source of electricity by 2050, outpacing fossil fuels, wind, hydro and nuclear power, according to two International Energy Agency technology roadmaps released in September estimates that solar photovoltaic systems would account for 16 percent, while solar thermal electricity could provide an additional 11 percent.

The renewable energy industry accounted for 22 percent of total global power generation in 2013, according to the June REN21 2014 Global Status Report, with renewables accounting for 56 percent of all net additions to global capacity. According to an Oct. 2 Bloomberg New Energy Finance report, “$175 billion was spent globally on renewable energy projects during the first three quarters [of this year], up 16 percent from the same period last year.”

But while the African solar PV market has now reached 11 gigawatts, “Growth constraints for PV across Africa include weak energy infrastructure, corruption, and political and social instability,” according to a September market report from NPD Solarbuzz which tracks 29 African countries.

Policy Uncertainty

The central message of these reports is the need for clear policies which can lower risks and inspire confidence for investors. According to the International Energy Agency, where there is policy incoherence or confusion – dubbed “stop-and-go policy cycles,” investors pay more, consumers have higher energy costs, and many projects simply fail to materialize.

“Many countries have announced plans for creating feed-in tariffs or renewable energy targets, but at the moment this is not enough,” Bloomberg’s Derek Campbell told AFKInsider. “Tax-based mechanisms are the most prevalent, but these are for import duties and VAT (Value Added Tax) exemptions which any sector can apply for,” said Campbell.

But policy mechanisms did evolve a bit in 2013, according to REN21’s 2014 report, including an increasing differentiation by technology and an increase in competitive bidding. The report also notes that a growing number of countries are developing targeted strategies to transition to renewable energy. Djibouti and Ghana are targeting 100 percent electricity from renewables by 2020. For Madagascar the target is 75 percent by 2020; Gabon is 70 percent by 2020; Uganda is 61 percent by 2017; and Cape Verde targets 50 percent by 2020, according to REN21.

“We’ve looked more into the countries on the western side of the continent with a new report that we’re coming out with soon where ECOWAS (Economic Community of West African States) is now aiming at providing guidance based on a regional policy for haw national policy and implementation plans would look like,” Worldwatch Institute’s Ochs told AFKInsider.

The Oct. 13 Africa Energy Outlook report notes that three actions “could boost the sub-Saharan economy by a further 30 percent in 2040, including an additional $450 billion in power sector investment, deeper cross-border cooperation on large-scale generation and transmission projects, and more transparent policies and governance of energy projects.

“Tackling these (governance) weaknesses will require actions across a broad front; particularly important elements from an energy perspective are investment in the skills and knowledge required for a modernizing energy economy and the transparency and consultation on energy policies that is essential to winning public consent,” notes the Africa Energy Outlook report.

”More and more countries are becoming very serious in terms of policy commitment and we’re seeing results now coming in,” Ochs told AFKInsider. “I think overall, most countries have a commitment in place, but the difference is how far a long they are in terms of redesigning the concrete policies and plans.”

“What we really need to see is policy certainty and renewable energy specific policies and not general policies,” Bloomberg’s Campbell told AFKInsider.

Eskom grid study highlights major future shifts in power-flow patterns

The transmission unit of South African electricity utility Eskom has completed a strategic grid study for the period to 2040. The study signals major shifts in future generation and demand patterns that will have implications for the domestic network and future investment decisions.

Strategic grid planning senior manager Ronald Marais says the ‘2040 Transmission Network Study’ has drawn on various scenarios to determine the grid’s development requirements, as well as to identify critical power corridors and network constraints.

The 2010 Integrated Resource Plan (IRP) provides the base case, but the draft IRP Update, together with scenarios that envisage higher levels of renewable energy (a ‘green’ scenario) and regional imports, have also been interrogated.

All show marginal implications for the transmission network for the coming 10 to 15 years. However, from 2030 onwards, major changes are expected in the provincial distribution of generation, with Mpumalanga – the current dominant source of generation – playing a relatively smaller future role.

“There is going to be a significant change in pattern,” Marais reports, adding that the ‘greater Cape area’ will become a major exporter of electricity.

Generation from the sun-drenched Northern Cape, for instance, is set to expand under all scenarios, and could be a major contributor by 2040, depending on the generation mix pursued. Likewise the wind-rich regions of the Western Cape and Eastern Cape are poised to become more significant sources of electricity supply.

Marais indicates that these shifts have implications for the direction of electricity flows, which are currently primarily from east to west, owing to the dominance of coal-fired generation in the north-eastern provinces and the dearth of generation in most other territories.

Under the ‘green’ scenario, the Northern Cape could have has much as 7 100 MW of surplus capacity by 2040, with the IRP base case suggesting a net generation surplus of nearly 2 000 MW. Similarly, the Western Cape and Eastern Cape could move from being net importers of electricity to net exporters through a combination of additional wind and new nuclear capacity.

Mpumalanga, meanwhile, which currently has a net surplus of over 22 000 MW, could see its contribution to the rest of the country decline to around 9 700 MW by 2040 as mature coal-fired stations are retired and South Africa moves to diversify its power mix.

Under all scenarios, the coal-rich Limpopo province’s power generation contribution is anticipated to grow materially, while Gauteng, KwaZulu-Natal and Free State are forecast to remain net importers.

The analysis identifies five major national corridors for future strategic development, including the western and eastern coastal corridors, a solar corridor, a central corridor and a northern import corridor, through which capacity from Mozambique, and potentially the Democratic Republic of Congo, would enter.

The direction of electricity transport will be much more varied when compared with the current patterns, with south-to-north and west-to-east flows anticipated. In addition, Eskom is planning to match generation centres to load centres using the shortest routes possible, so as to reduce the environmental footprint of the network, the investment costs and technical losses associated with moving electricity over long distances.

Marais reports that the national power corridors have been further refined and consolidated into five transmission power corridors, which are being used by the Department of Environmental Affairs for a strategic environmental assessment (SEA).

The SEA forms part of the Presidential Infrastructure Coordinating Commission’s strategic infrastructure project 10, or SIP 10, and the aim is to fast-track all the environmental approvals required for transmission infrastructure within the corridors.

Marais says corridors of 100 km in width have been identified and that the SEA will seek to identify environmentally acceptable routes over which long-term environmental impact assessment (EIA) approvals can be secured.

This is seen as important as EIA determinations, along with servitude acquisitions, are currently major impediments to the rapid deployment of grid infrastructure. On average it is taking Eskom between six and eight years to secure the servitudes and EIA records of decision and a further three years, thereafter, to construct the lines.

Marais says that, while the shifts in power flows fall outside of Eskom’s current grid-planning horizon, as outlined in the Transmission Development Plan (TDP) for 2015 to 2024, the modelling is assisting with project prioritisation.

More immediately, however, the TDP is being heavily influenced by the utility’s financial constraints, which has led to the deferment of certain projects.

The overall budget, which was estimated at R163-billion, remained more or less as it was in previous versions of the TDP, with R146-billion required for capacity expansions and the balance split between refurbishments, spares, servitude acquisitions and environmental and corporate costs.

However, the latest version also rescheduled much of the actual investment into the fourth multiyear price determination period, or MYPD4. This is partly attributed to the fact that Eskom has received lower-than-requested tariff increases from National Energy Regulator of South Africa for the MYPD3 period from 2013 to 2018, but it also takes account of delays associated with securing land, servitudes and environmental approvals.

The rephrased plan envisages the building of 13 396 km of new transmission lines and the introduction of 81 385 MVA of additional transformation capacity by 2024.

Windaba 2014 Press Release 22 Oct 2014

High-powered panel to discuss critical issues in SA electricity sector at Windaba

The electricity sector in South Africa has been the subject of intense debate in recent weeks, with the Eskom new-build projected to start delivering much needed power in 2015. Questions around where the country will find the electricity to support the ambitions in the National Development Plan until 2020 persist. A high-powered panel has been assembled to shed light on this and other related questions on November 4 2014 at the South African Wind Energy Association’s (SAWEA’s) upcoming Windaba Conference in Cape Town.

Subjects to be discussed include:

·         As the lowest cost source of bulk new electricity, what will the role of wind power be?

·         Will Eskom’s financial situation affect the roll out of wind power?        

·         When will the other five units at Medupi and all six at Kusile be commissioned?

·         How long can the country continue to spend circa ZAR 11 billion power annum on diesel due to insufficient availability of electricity?

·         How much load shedding will we see?

·         How can the renewable energy roll-out be accelerated, given that energy from waste is the only other source that can deliver additional power to the constrained grid in the next five years?

A panel of prestigious speakers will tackle these questions including Mike Roussow former chair of the Energy Intensive User’s Group, former member of NERSA and presently Energy Thought Leader at Eskom. His colleague Power Systems Analyst Keith Bowen Keith Bowen, who was the primary energy modeller for the Integrated Resource Plan, South Africa’s energy blueprint for the next twenty years will also join the debate.

On the same panel the South African Independent Power Producer Association’s (SAIPPA’s) Doug Kuni, who has intimate knowledge of Eskom’s financial and technical position will join Paolo Frankl, Head of Renewable Energy at the International Energy Agency who will give an international view of the SA industry. Cas Coovadia, acting CEO of Business Unity South Africa, who has been deeply involved in discussion between business and government on energy matters will also participate.

The session is titled ‘Aligning the South African wind energy agenda with broader government objectives’ and will be chaired by Brian Day, Managing Director of South African National Energy Association (SANEA). Participation from the floor will be welcomed. 

Other key speakers at the South African Wind Energy Association’s (SAWEA) annual event include Tina Joemat-Pettersson, Energy Minister and Windaba patron and Karen Breytenbach, leader of the government’s Public Private Partnership (PPP) Unit and figurehead of the Renewable Energy Independent Power Producers Procurement Programme (REIPPPP).

 “The calibre of this year’s speakers demonstrates how important the wind industry is for both the public and the private sector. Windaba offers a forum for key industry figures to get together in one place and debate the issues that are at the forefront of the sector,” said SAWEA CEO Johan Van den Berg.

The theme for this year’s conference, which will be held in Cape Town in November, is ‘Power2thePeople: Changing lives through wind energy’ and will highlight the significant benefits that developments will bring to neighbouring communities. More than ZAR5 billion has already been earmarked for social economic development from wind farms already in operation and those currently being built. A community trust ownership scheme is also part of the programme and local communities own up to five per cent of their local development in shares. How these financial benefits can be most effectively spent and distributed will form a major part of the debate at Windaba.

A one-day workshop running alongside the conference will focus specifically on Socio Economic Development and will be led by Peter Willis, regular facilitator of the Eskom NGO forum and the South African Corporate Leaders Group on Climate Change, among many others.

SAWEA already has an impressive list of prestigious speakers confirmed and expects the number of delegates to again exceed 500. Windaba is the biggest wind conference held on the African continent. As well as the aforementioned speakers, there will be an opportunity for direct engagement on the subject of local content between original equipment manufacturers (OEMs) and representatives from the Department of Trade and Industry. The team of consultants leading the study into localisation of the wind energy sector in South Africa will also be in attendance.

Conference delegates will also contribute to a high level strategic planning session for South Africa’s International Renewable Energy Conference (SAIREC) which will be held for the first time in 2015, incorporating Windaba and that is expected to attract more than five thousand delegates from all over the globe.

For further information on Windaba and the current programme, please visit the Windaba website at www.windaba.co.za.  Booth space and sponsorship opportunities are still available.

-Ends-

Editor’s notes:

WINDaba is the official wind industry event hosted by the South African Wind Energy Association (SAWEA) in partnership with GWEC. The annual conference and exhibition will take place from 3-5 November 2014, at the Cape Town International Convention Centre.

For further information or an interview with SAWEA CEO Johan van den Berg please contact: admin@sawea.co.za or call +27 (0) 11 214-0664

About SAWEA

SAWEA is a non-profit, industry organisation representing the wind industry in South Africa. Its members include both national and international entities active in the entire wind energy supply chain. Its aim is to promote the sustainable use of commercial wind energy in South Africa; to contribute knowledge and human resources to the streamlining of the policy and regulatory framework for wind in SA; to facilitate synergy between the growth of the industry and the achievement of the broader socio-economic aims of Government (including training, job creation and localisation); to disseminate information; to act as a focal point for discussion between members, government, the media and the public.

For more information visit: www.sawea.org.za

Contact Us

Contact Details

Tel: +27 (0) 11 214 0664

Email: admin@sawea.co.za

Office Hours: Mon-Fri, 8am to 5pm

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WINDaba 2014

As Eskom continues to declare regular ‘emergencies’ and black outs persist, renewable energy including wind, has the potential to rescue the situation over the next five years – we just need to mix small and large scale technologies, says the South African Wind Energy Association (SAWEA).

Attend WINDaba from 03 to 05 November 2014 in Cape Town and have access to a broad range of topics with the view to a robust and sustainable wind energy sector. All calculations indicate that our current electricity supply cannot provide the power we need to grow the economy to its full potential.  Projections show that the country will not have the energy required to fully realise its economic ambitions until 2020 or later, without intervention from a cost effective source.

The country’s renewable energy procurement programme (REIPPPP) has procured thousands of megawatts (MW) in the last three years at increasingly competitive rates with more in the pipeline. Many turbines are already providing power to the grid. 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, boosting the flagging economy. The obstacle to filling the energy gap with renewable energy is timing.

Frank Spencer, Chair of SAWEA’s Technical Working Group and speaker at WINDaba explains: “The disparity between the success of the REIPPPP and the energy shortage of the country relates to the time energy is generated versus the time at which it is most in need.”

“Wind plants often deliver energy during peak periods but are obviously dependent on the wind blowing. Solar photovoltaic 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.”

The solution is to maximise the energy output from renewable sources to impact the grid at peak times.  Alongside commercial-scale renewable power plants there is huge potential for small scale technologies to relieve pressure on the grid. “We have one of the best climates in the world for solar energy and the potential to install millions of solar water heaters at very affordable rates in a short period of time. Letting sun heat our water instead of diesel will drop the electricity demand curve over the entire course of the day so that we won’t need to use diesel peaking plants as often,” says Spencer.

Rooftop Solar PV can store power in batteries to feed back into the grid during peak hours at significantly less than the cost of power generated from peaking plants. “Solar water heaters and solar rooftop can address the bulk of the peaking problem and utility scale wind and solar (both PV and solar Thermal) will deliver the extra capacity required. This is how we can resolve our energy shortage while boosting local manufacturing and job creation and enabling the economic growth envisioned in the National Development Plan,” concludes Van den Berg.

WINDaba is Africa’s largest Wind Energy platform hosted by the South African Wind Energy Association (SAWEA)  in proud partnership with the Global Wind Energy Council (GWEC).

To book your delegate participation at WINDaba please visit www.windaba.co.za or contact 021 448 5226

SA’s Carbon Tax obsession – fiddling while industry is burning

I was more than a little irritated after this interview. Not because of the guests – although having a lawyer on one side and a banker on the other has its challenges. But rather, that the studio guests missed the real point. Which is why South Africa, as a developing country with under half a percentage point of global GDP, insists on trying to position itself as the world leader in reducing carbon emissions. Ah, said the hairless lawyer after the programme, but if we don’t our manufactured products won’t be able to be sold anywhere. What manufactured products is a more appropriate question.

The national de-industrialisation is gathering momentum through a combination of labour unrest, the world’s least flexible labour laws and the drained confidence that comes with communists forcing through their utopian but unworkable Developmental State. The idea of a Carbon Tax is a bit like Nero fiddling while Rome burned. South Africans need incentives to invest. Urgently and desperately. Lots of carrots, and a breaking of some of Government’s sticks., Instead industry is now threatened with another dis-incentive on top of the long list we already have. We need another tax like a hole in the head. Especially one that will be paid for in part through another electricity price increase. For once I wish we’d take a lead from the Australians and can this damn thing, at least for now. And focus our collective effort on fixing rather than fiddling. – AH 

ALEC HOGG:  The Department of Environmental Affairs and the Treasury are busy finalising an approach to carbon tax for South Africa. The idea is to reduce greenhouse emissions, as we heard earlier from Chris Yelland, some people think it is just a way of raising more revenue. Here to give us their perspectives are Andrew Gilder who’s from the South African Wind Energy Association and Marco Lotz from Nedbank Group Sustainability. He’s a Specialist on Enterprise Governance and Compliance at Nedbank. Marco – Carbon taxes: the Australians have said they’re a lot of bung. Chris Yelland has said ‘it is just a way to raise money. It won’t actually drop carbon omissions……

MARCO LOTZ: Well, for me, there are two separate issues, so one is we should definitely price in externalities, environmental externalities. We cannot continue using resources, whether it is coal or water or the way in which we are currently doing. As you also said, in between the different sessions, the young people of today will not stand for it. Completely separate to that, we’ve got to the discussion of a carbon tax and the question is, “Is that the correct mechanism to address the externalities, the use of water, and the use of coal that we should be pricing and that’s a very difficult question.

ALEC HOGG: Andrew, you are on the other side of the fence. You are representing the Wind Energy Association, I’m sure you would like to see benefits coming to you, via a carbon tax.

ANDREW GILDER: Well, there will be benefits to the economy. I take the point that the idea is that all Treasury is doing is trying to raise more revenue. That is one way of looking at it but the fact of the matter is that it is a component of National Climate Change Policy. It is not the only mechanism that is being proposed, it is part of what is called a mix of measures, with the unfortunate acronym of MOM, but in any event, it is part of a mix of measures that the country is proposing to the international community around the reduction of the carbon profile of our industry. If we don’t do that, we become increasingly uncompetitive in the industrial space. For example, we have a very ‘carbon emissions’ heavy baseline, in the generation of things, anything from steel to consumer goods.

ALEC HOGG: 80 percent of the carbon emissions from industry, come from Eskom and Sasol.

ANDREW GILDER: True.

ALEC HOGG: So Eskom and Sasol, how are they going to be affected if there’s a carbon tax?

ANDREW GILDER: Well, at this point, Eskom has said to us what they are going to effectively be doing is passing that carbon tax responsibility through to its consumers.

ALEC HOGG: We’ve got a 12.7 percent electricity price increase that has just been approved.

ANDREW GILDER: Correct.

ALEC HOGG: What is that going to do to the electricity prices in the future?

ANDREW GILDER: It will, potentially increase electricity prices, and so the question is then, how clever are you, as industry? Are you able to capitalise upon the ‘so-called’ allowances that have been built into the carbon tax, and work your industry, in a much more efficient emissions manner, into the future? It must be very clearly understood that Treasury has not simply said and, by the way, we are talking only about a policy document, at the moment, although we kind of have a timeline about it now. Treasury has not said, “We are simply going to slap a tax on you, relative to this amount of your emissions.” In fact, it is not to do with your emissions anyway. It’s about the intensity of your fuel input. They’ve said, “We are going to do that but, at the same time, we have a number of allowances built into the system that would allow you to operate in a much more efficient manner.”

ALEC HOGG: I get that but, surely Marco; South African taxpayers are now ‘gatvol’. We’ve had many new taxes that have been brought into the system. We’ve had very good examples of the tax Dollar/Rand being wasted. Isn’t that the danger here? Yet another tax coming in on carbon emissions, as Andrew has said, we are going to pay for it because it will go through Eskom (higher prices). Isn’t there just one more straw that is going to break this South African taxpayer’s/camel’s back?

MARCO LOTZ: I think, with that in mind we definitely need to be very sensitive, to some of the industries that cannot change or cannot change that quickly. Andrew, from the Wind Energy Association and some of those big projects, sits with their bank, that’s a fascinating place and a good market position to be in but imagine going to a warehouse or to a hardware shop and trying to find a normal, incandescent bulb today. It is very difficult, so positioning is crucial, so that companies also move their product offerings – their service offerings – as quickly as possible. If it is not for the carbon tax then it will be due to international pressures.

ALEC HOGG: I’ll tell you what I’m getting at here. Andrew, you’ve explained earlier that we want to tell the rest of the world how to handle greenhouse submissions, and South Africa has got this wonderful ability to try and be the first in the world at certain things. If we are point-three-percent or point-seven-percent of global GDP, depending on how you want to slice and dice the purchasing power parity. That’s a tiny, little fraction of the world. Who are we to be starting to impose on our citizens the responsibility for being world leaders, in a field like this?

ANDREW GILDER: It is to misunderstand that we are not world leaders. There are a number of organisations, and there are a number of initiatives across the world that are seeking to price carbon into emissions and tense baseline. For example, earlier this year under the auspicious of the World Bank was launched, the 2014, World Pricing Report, if you would like. We are one of some 39 initiatives, internationally that are looking at mechanisms that will bring carbon pricing into economies, so a much less subtle way of doing it would be simply a ‘command and control’ approach. May I point out, just for your interest, at a session run by Treasury last Thursday? There’s a very strong push from civil society that says, “We should immediately be bringing in a carbon price that is equal to the social cost of carbon in the economy.”

ALEC HOGG: Which civil society?

ANDREW GILDER: Well, there’s a large group of…

ALEC HOGG: Taxpayers? No, no you tell me. If you go to a taxpayer and you say ‘we are pushing up vat by one-percent because of carbon tax’.

ANDREW GILDER: Yes, sure.

ALEC HOGG: Do you think your taxpayers are going to say ‘yes, fine. We’d rather pay more VAT’?

ANDREW GILDER: But you have to take into account, Marco has already, is kind of the technical aspect. We have to take into account that we do not and have not taken into account environmental externality cost, in our production baseline to date. Do you know that it costs the State approximately R5bn that is never taken into account, in the generation of electricity, in respect of increased incidents of lung disease on the East Rand, related directly to the Eskom Power Station.

ALEC HOGG: That needs to be proven but, from your perspective, should we have a carbon tax, I think that is what we’re getting at? People like me are saying, “Hang on, one more tax, ‘eish’.”

MARCO LOTZ: Okay, for me, there’s two points. The one is we should internalise environmental externalities. What that implies is we can’t continue as we are doing now. Completely separate to that is, is the carbon tax the right implement at the right time and where will the money go to? That is what we need answer.

ALEC HOGG: I agree. Do you agree with that one, too?

ANDREW GILDER: I agree. It needs to be appropriately designed and Treasury has agreed that it needs to relook at the design.

 

Eskom warns on IPP connections as it defers some transmission capex

State-owned power utility Eskom has made significant changes to its transmission infrastructure expansion plan for the coming ten years, owing to financial constraints that made its previous plan “no longer realistic”.

Group executive for transmission Mongezi Ntsokolo reported on Friday that the latest Transmission Development Plan (TDP), covering the period from 2015 to 2024, had been revised to align with available funding.

The outcome, which would be detailed in a document to be published on Eskom’s website by the end of November, was a reprioritisation and rephrasing of a number of network strengthening and expansion projects.

Eskom also confirmed that the lack of capital posed a risk to the integration of future renewables and baseload independent power producers (IPPs), especially where such projects required “deep” grid strengthening.

However, discussions were under way with the Department of Energy (DoE), National Treasury and the National Energy Regulator of South Africa (Nersa) about alternative funding models, including self-provisioning of both dedicated and shared infrastructure by IPPs on a case-by-case basis.

Ntsokolo also confirmed that the revision would result in a delay to the migration of the network to full redundancy as stipulated by the South African Grid Code.

The compliance schedule had been shifted out from 2016 to 2022, a move that was described as regrettable, but unavoidable.

R163BN ROLL-OUT PLAN

The overall budget, which was estimated at R163-billion, remained more or less as it was in previous versions of the TDP, with R146-billion required for capacity expansions and the balance split between refurbishments, spares, servitude acquisitions and environmental and corporate costs.

However, the latest version also delayed or deferred much of the actual investment into the fourth multiyear price determination period, or MYPD4.

This was partly attributed to the fact that Eskom had received lower-than-requested tariff increases from Nersa for the MYPD3 period from 2013 to 2018 – it had sought 16%, but was granted 8%.

However, the new TDP also took account of delays associated with securing land, servitudes and environmental approvals for transmission-line and substation projects.

The rephrased plan still envisaged the building of 13 396 km of new transmission lines and the introduction of 81 385 MVA of additional transformation capacity by 2024. But over 8 100 km of new lines and 51 895 MVA of transformer capacity would now only be rolled out after 2020.

Ntsokolo said that plan was focused on ensuring that the network met minimum reliability criteria, while being robust enough to ensure the connection of new generation capacity being developed by both Eskom and IPPs.

He also said the utility was looking for opportunities to “smooth” the awarding of contracts, as it was sensitive to the fact that a “stop-start” approach was disruptive to suppliers and contractors.

Meanwhile, GM grid planning Mbulelo Kibido confirmed that it was becoming increasingly difficult and expensive to integrate IPPs, with the easy-to-connect projects having been selected during the first two bid windows under the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP).

Eskom had connected a total of 32 bid window one and two projects with a combined capacity of over 1 600 MW. However, it was concerned about finding a viable financial model to deal with the connection costs of projects arising from bid window three onwards.

The financial close for the third bid window had been delayed largely as a result of connection issues, but the DoE was still hoping that the preferred bidders would be in a position to close before the end of November.

The connection concerns were not confined to the REIPPPP programme with the DoE planning to issue tenders soon for baseload coal, gas and cogeneration IPP programmes. But there was particular concern about connection capacity in the Northern Cape, where many of the current and future REIPPPP projects were located.

Senior manager: infrastructure investment Leslie Naidoo indicated that a budget of higher than R163-billion would probably be required to deal with the integration of new IPPs.

However, he stressed that the figure was based on the best available information as to where future projects could arise and that the figure would be revised as greater certainty emerged.