THE huge wind turbines deployed in SA’s windy regions are gracious masterpieces of engineering and aesthetics. We cannot ignore the pace at which technology development, specifically connectedness and large data use, will disrupt the utility-based electricity supply model globally.
Of the knowledge available globally, 98% has been created in the 21st century. Mohr’s law suggests that development is increasing exponentially and the cost of technology is decreasing immensely.
SA should thus make the correct choices in planning the electricity supply industry or face the challenges of having massive capital write-downs in the not too distant future.
The Energy Centre at the Council for Scientific and Industrial Research (CSIR) has done some great work to model the supply of electricity from solar photovoltaic (PV) and wind resources in SA.
Their work is based on huge amounts of data over six years, taking the country’s world-class wind and solar resource into account.
They conclude that 60% to 80% of SA’s electricity can be supplied by wind and solar with high levels of probability. The balance could be supplied by the base-load fleet or by new gas-fired power stations.
Only 0.6% of SA’s land base would be needed to power the country with wind while rooftop areas could be used for solar PV without any impact on land use.
With the cost of wind-based electricity about 65c per kWh and solar PV about 85c per kWh, the effect of these technologies on the electricity mix cannot be ignored.
IT IS a great investment on behalf of the next generation as it could become the cheapest form of electricity after the capital has been redeemed and after the 20-year power purchase agreements have come to an end.
Nuclear is a safe, proven technology and forms a critical part of base-load supply globally. SA has nuclear capabilities that should be leveraged further.
Eskom’s dismal performance with the construction of Medupi and Kusile doesn’t bode well for a nuclear build programme with the correct checks and balances. These should include full delay-liquidated damages payable by the contractor if project construction timelines are overrun.
We should only construct a maximum of 3,200MW, or two nuclear stations. This would ensure a reliable supply of base-load electricity in combination with Medupi, Kusile and the younger of the fleet of coal-fired stations, such as Matimba and Duvha.
Eskom is a monopoly and the announcement made by its CEO and chairman about not signing further power purchase agreements borders on abuse of dominance in terms of the Competition Act.
One cannot, however, blame them as they have a fiduciary duty as directors to protect Eskom.
Their challenge lies in Eskom being a vertically integrated utility that plays in the generation, transmission and distribution fields, and at the same time being the single buyer and system operator. The potential conflict of interest that arises from this is one that any director with personal liability would not want to have.
There are huge opportunities in breaking up Eskom, one of them the opportunity of bringing in private capital. Eskom should be broken up into a transmission, distribution and system operator (“Gridco”) and two or three generation companies (“Gencos”). One Genco could be responsible for nuclear stations, the other two for coal stations and Gridco should own and operate the hydro pump stations and peaking plant to ensure flexibility in operating and stabilising the power grid.
This architecture would drive efficiencies in the Gencos, independent power producers and embedded generation-optimising cost structures while allowing new technologies access to the market in a fair and transparent manner.
Gridco could focus on expanding the national grid into neighbouring countries while also attending to connecting new-generation companies and the maintenance of the distribution grid.
One of the areas for optimisation on the generation side is the fleet of coal-fired power stations in Mpumalanga that is nearing its end of life.
The strong national grid in the area, its location close to the natural gas pipeline and its logical choice of servitude if an additional pipeline is constructed to bring Mozambique’s natural gas or alternatives such as regasified liquefied natural gas to SA are opportunities.
IMPORTED gas has two major challenges: a dollar-based price and a link to the oil price.
The risk this creates is too dire to contemplate, especially with the long-term deterioration of the rand.
SA should replace some of the older coal-fired power stations in Mpumalanga with coal gasification units in which coal is gasified and the gas used to generate power. This would create flexibility in matching supply and demand with increased renewable energy capacity and would create anchor customers for future natural gas suppliers.
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The anchor customers would be price makers as the price of gasification gas would be rand-based and not linked to the oil price.
The coal gasification units could be designed to use lower-quality coal and discard coal from the region, which would stimulate further investment in the coal industry and allow for the rehabilitation of the older mines.
Biogas to electricity has a role to play in the longer-term supply of base-load electricity. SA has vast areas of land that cannot be used for commercially viable food crops but are ideal to grow biomass such as spekboom and prickly pear, which can be used to generate biogas for the generation of base-load electricity.
Biogas to electricity could become part of the solution through community-owned renewable base-load power stations on mine impacted land.
The work the CSIR’s Energy Centre is doing is world-class and provides a glimpse into the future of energy supply globally. The application of their work could lead to changing the sources of primary energy.
Electricity from fossil fuels will be with us for the foreseeable future but its cost in real terms will increase over time. But electricity from renewables — including solar, wind and biogas — will cost the same in real terms, with the upside of decreases due to technological advances.
Putting SA and its people first, we need to invest in a balanced portfolio of electricity assets across the spectrum of technologies and we need to address the challenges that a vertically integrated monopoly creates.