NEAR a huge iron ore mine in the Northern Cape, almost 320,000 photovoltaic panels mounted to track the sun cover the rust-coloured earth. Spanish developer Acciona SA built the 94-megawatt Sishen solar project in about 16 months under some of the strongest sunshine in the country.
In SA, the fifth-biggest producer of coal — the resource that is burnt to generate most of the country’s electricity — solar and renewable power are gaining fast. The alternatives have attracted R193bn of investment since 2011, helping the government ease blackouts.
Two coal-burning power plants first approved in 2007 are over budget and more than seven years behind schedule.
The first 794MW at the Medupi plant near Lephalale only came online last week after delays owing to strikes, technical problems and cost overruns.
SA’s experience shows how renewables are spreading across the developing world, opening new markets with a reputation for convenience and plunging costs.
That’s challenging the traditional selling point for a fossil fuel that is the most widely used as well as the easiest way to boost power supplies.
“In the past we all looked at green and everybody was thinking: ‘Well, that’s great, but it’s very expensive, and it’s for the rich,’” said Karen Breytenbach, head of the Independent Power Producer office, a group established by the government to procure energy from private sources.
“We have moved the market from very expensive green power to affordable power.”
Renewables are a lone bright spot in SA’s power industry. State-owned Eskom has struggled to meet demand, cutting power on 99 days this year to protect the grid, while the shortages stunt the economy. Eskom’s older power stations are susceptible to breakdowns from lack of maintenance.
Trouble with bringing the coal plants online is emblematic of the industry’s difficulties worldwide. Coal prices have tumbled 50% since the start of 2011, tipping more than three dozen mining companies into bankruptcy. Envoys from more than 190 nations, including SA, will try to reach a historic deal in Paris in December limiting fossil-fuel emissions everywhere, suggesting more regulations against coal.
Renewable installations, meanwhile, are surging in SA and elsewhere in the developing world. In April Energy Minister Tina Joemat-Pettersson accelerated the programme, which follows the National Development Plan. Auctions first started in 2011 under a framework the government designed with developers and banks.
Starting with almost zero utility-scale photovoltaics in 2010, SA now has procured solar capacity of more than 1,000MW, a little more than what a nuclear reactor produces. Instead of offering fixed incentives in the form of feed-in tariffs, as Germany did, SA has a competitive tender process for developers to bid on renewable energy projects.
The government will procure more than 6,000MW of wind, solar and hydro plants, as part of the biggest surge in power capacity since the 1980s. SA saved R4bn in fuel costs and avoided some blackouts in the first half of this year, according to a study by the Council for Scientific and Industrial Research (CSIR) that found renewables may be the cheapest way to prevent shortages.
The auction tender was a “blessing” and “and turned what many thought would be an expensive exercise into one where solar and wind are extremely cost-competitive by global standards”, said Derek Campbell, an analyst at Bloomberg New Energy Finance.
India and Brazil are also using auctions to boost renewable capacity. By 2040, $12.2-trillion will be invested in power generation worldwide — 78% of that in emerging-market nations — and two-thirds of the total will be in renewables, according to Bloomberg New Energy Finance.
For SA, the interest in the renewables programme “was far beyond our wildest dreams”, said Ms Breytenbach at the Independent Power Producer’s office.
It pushed the costs of solar and wind power lower, allowing the government to reduce the price paid for power, through successive auctions.
The programme has been praised for its clarity and transparency, and “could be a useful model for private funding of other types of infrastructure projects”, management consultancy McKinsey said in a report on Tuesday.
Coal remains SA’s dominant power source, accounting for 88% of electricity supplied in the first half of the year, according to the CSIR.
Solar and wind were at 1.8%.
Bringing on new coal plants hasn’t been as easy as the government anticipated.
Labour disputes and construction delays hit the 4,764MW Medupi plant and the 4,800MW Kusile plant in Emalahleni — neither will be fully operational until at least 2019.
Even more baseload generation is needed for future demand, and the Independent Power Producer’s office plans to procure 2,500MW of coal stations by 2021.
On a rare, overcast day, a computer in the control room at the Sishen solar plant shows 14MW flowing from the panels supplied by JinkoSolar. Other than a squeak as the GPS adjusts their position for maximum radiation, the rows of panels are silent.
Through the competitiveness of its bidding rounds, SA has reduced tariffs for solar power to as little as R786 per megawatt/hour from R3,288, according to data compiled by Bloomberg.
The average cost of energy from independent power producers using renewables is R2,172 per megawatt/hour, which is cheaper than the R2,573 from turbines using diesel, Eskom reported this year.
Though baseload power — primarily coal — is still the cheapest at about R300.
In spite of the tariff reductions, the procurement programme is “well planned” and predictable, Rafael Mateo, CEO of Acciona’s energy unit, said during a visit to his company’s project.
He expects to bid again in successive renewable energy auctions.
“It is a good example of how to drive renewables as part of the solution to South Africa’s current energy crisis,” he said.