There is a global shift towards energy efficiency, environmental sustainability and green buildings. South Africa’s recent signing of the Paris Agreements, coupled with increasing demand on the power grid is driving many businesses to invest in energy efficiency and alternative energy sources. Global interest and investments in energy efficiency and renewable energy are at an all-time high. At the same time, case studies for the ‘greening’ of existing buildings, are proving that such investments can not only save energy, but also provide an attractive financial return for building owners.
For example, in 2009, the Empire State Building in the United States embarked on a project to reduce costs, increase real estate value and protect the environment. In 2011, the building beat its first year energy-efficiency target by 5%, saving $2.4m. The following three years saw the program generate a total of approximately $7.5m in energy savings at the landmark building. The multi-million dollar investment in ‘greening’ the building is projected to save 38% in energy consumption, not only saving money for the building’s owners, but also for the building’s tenants who agreed to build out their office space to high performance standards.
On-site renewable energy generation
The next big trend in the evolution of green buildings is to use on-site renewable energy generation to deliver more energy to the electric grid than it consumes from the grid over the course of a year. These buildings, called ‘nett zero’ or ‘nett positive’, are a key global strategy for delivering on the Paris COP21 commitments.
The 2016 Johnson Controls Energy Efficiency Indicator (EEI) survey of more than 1,200 facility and energy management executives in the United States, Brazil, China, Germany and India indicates that as many as 72% of the organisations surveyed anticipate increased investments in energy efficiency and renewable energy over the next 12 months. It also pointed to lack of funding, insufficient payback, uncertain savings and a lack of technical expertise as the most significant barriers to investment.
Similarly, there is a perception in South Africa that investing in green buildings is prohibitively expensive. While it can be costly, the cost savings will usually more than make up for the expenditure over time and subsequent to the payback period, the savings add directly to the bottom line. Over and above the cost saving and contribution towards a more sustainable environment, there are multiple additional benefits to energy efficient buildings, such as the positive effect on a business’ brand and reputation with investors, customers and employees. There is a “feel-good” factor to knowing that a business is concerned for the environment.
Start with little things
There are a number of ways that companies can begin investing in energy efficiency and they don’t all involve the investment of massive amounts of money into complete building retrofits. Building owners can start with little things, like properly insulating their building to reduce the cooling load, thus reducing the size and costs of the air-conditioning system.
Using sensor technology to automatically detect people’s presence in a conference room or office and adjusting the lighting, cooling and ventilation accordingly also makes a big impact, as equipment is not in use unnecessarily. Building owners with multiple tenants can also promote energy efficiency by including energy efficiency provisions in leases to incentivise high performance. They can also educate tenants and promote healthy competition between tenants to see who can reduce energy the most over a given time period.
Businesses looking to ‘go green’ adopt a phased approach, ensuring that the right steps are taken in the right order. The iconic building in the US example shows us that having a knowledgeable team of experts on board and following a proper, well thought out master plan can ensure that benefit is maximised with minimum investment.
With such a strong business case for energy efficiency and renewable energy, South African companies should have no excuse for not investing in greener buildings. With the global trend evidencing a move towards a more sustainable future, South African companies need to act now to take full advantage of the significant financial benefits while helping to preserve the environment and drive economic growth and job creation in our communities.
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Heavily reliant on coal-fired electricity, South Africa is launching ambitious new projects aimed at diversifying its energy sources and avoiding the regular power cuts that have hobbled the economy in recent years.
Solar and wind energy plants are mushrooming across the country while the government is planning a huge — and controversial — expansion of nuclear power.
But coal is not going away anytime soon.
On the outskirts of Johannesburg and near the industrial town of Vereneeging, six large turbines spew white smoke above the desolate landscape.
Lethabo thermal power station is generating 3,600 megawatts of electricity — around 8 percent of national production.
The Lethabo plant, operated by the state-owned utility firm Eskom, is using inexpensive, poor quality coal which is found in abundance in this part of the country.
“We don’t have big resources in water, solar is still expensive to build and wind isn’t 100 percent reliable because wind can’t blow all day long,” said Thomas Conradie, the Lethabo coal power station chief.
“The most affordable option to produce the majority of our energy remains coal,” which provides 85 percent of the country’s energy, he said.
Two mega coal plants — Medupi and Kusile — are under construction and will each have the capacity to produce around 4,800 megawatts.
But the government believes that for South Africa to cut down its excessive reliance on coal, it has to expand its nuclear power generation — despite opposition from environmentalists and fears that the huge cost could cripple the economy.
South Africa currently has the sole nuclear power plant on the continent, situated at Koeberg, north of Cape Town. The twin reactors there contribute nearly 2,000 megawatts, a little over 4 percent of the national power output.
The government wants to pump an extra 9,600 megawatts of nuclear power into the national grid by building eight new reactors at an estimated cost of some $50 billion.
China, France, Russia, South Korea and the United States are bidding to construct the plants, with the winner expected to be announced early next year.
Apart from nuclear energy, South Africa is pressing ahead with renewable energy options.
“Coal will continue to be one of the sources of electricity in South Africa for a foreseeable period of time in the future,” said Brian Mantlana, director of climate change issues at South Africa’s environment ministry.
But “what is important is how South Africa changes its energy mix going forward,” he said.
Eskom this year launched its first wind farm near Vredendal in the desert near Namibia. Forty-six wind turbines some 115 meters (380 feet) tall are generating 100 megawatts of electricity.
Further north a solar scheme is under construction that is expected to produce an additional 100 megawatts.
The outputs are small so far, but Eskom plans a huge expansion of energy from renewable sources.
“By 2030 the aim is to almost double our capacity for electricity production in the country. And we want 42 percent of this new energy to come from renewables — the equivalent of 17,800 megawatts,” said Ayanda Nakedi, director of renewable department for Eskom.
The target is “realistic,” she said, because already 3,000 megawatts of renewable energy has been commissioned from private players that have invested millions of dollars into various projects.
Her optimism was echoed by Olivier Grandvoinet, head of projects related to climate change for the French Development Agency, which helped finance the wind farm with a loan of 100 million euros.
“The policies to support renewable energy are robust” and “considered by many as an example internationally,” he said.
South Africa is also looking beyond its borders to bolster its energy security. It has pledged to buy half of the power generated from the future hydroelectric Grand Inga Dam in the Democratic Republic of Congo, but the production date is uncertain.
One of the biggest banks in the Middle East and the oil-rich Gulf countries says that fossil fuels can no longer compete with solar technologies on price, and says the vast bulk of the $US48 trillion needed to meet global power demand over the next two decades will come from renewables.
The report from the National Bank of Abu Dhabi says that while oil and gas has underpinned almost all energy investments until now, future investment will be almost entirely in renewable energy sources.
The report is important because the Gulf region will need to add another 170GW of electricity in the next decade, and the major financiers recognise that the cheapest and most effective way to go is through solar and wind. It also highlights how even the biggest financial institutions in the Gulf are thinking about how to deploy their capital in the future.
“Cost is no longer a reason not to proceed with renewables,” the 80-page NBAD report says. It says the most recent solar tender showed even at $10/barrel for oil, and $5/mmbtu for gas, solar is still a cheaper option.
It notes intermittency of wind and solar is not an issue, notes that fossil fuels resources are finite and becoming increasing hard to reach, that governments want local supplies and want to disconnect from the volatility of the oil price, and policy frameworks re seeking to decarbonise economies in response to climate and pollution concerns.
Remember, this is coming from a leading bank in the oil-rich Gulf, the most emissions-intensive countries in the world, and where energy demand is rising so quickly it risks overwhelming domestic production, turning states such as Kuwait and UAE into importers of energy rather than exporters.
But it is consistent with broader thinking within the Gulf. Last month, Saudi said that the end of the oil era was already on the horizon.
The NBAD report, prepared in conjunction with Masdar, the Abu Dhabi government’s renewable energy arm, The University of Cambridge and PwC, says the Gulf has a real opportunity to lead the world in renewables, deploying its considering financial weight, and by exporting its technology know-how.
It notes that solar PV and onshore wind power have achieved grid parity in many areas, particularly those in need of energy additions, and will be at parity in 80 per cent of world markets within two years.
In some instances, the price of renewables are remarkably low. “The latest solar PV project tendered in Dubai returned a low bid that set a new global benchmark and is competitive with oil at US$10/barrel and gas at US$5/MMBtu.”
This refers to the 200MW solar tender won by Saudi firm ACWA Power, a $23 billion energy major, which bid $US0.0584/kWh (5.84c/kwh), without subsidies, which is the lowest in the world to date.
This is already one third below the cost of gas-fired generation and ACWA believes costs will continue to fall. Much of Saudi Arabia and other Gulf states rely exclusively on oil (34 per cent) or gas generation for their electricity.
Given that the Gulf countries are expected to increase their energy demand three-fold over the next 15 years, or 170GW, the NBAD report notes:
“As Government and utilities are driven to bring new generation capacity on stream, this new reality presents a significant opportunity to make savings, reduce fuel cost risks, achieve climate ambitions and, at the same time, keep more oil and gas available for export.
“This could herald an era of increased focus on solar PV as the future generation technology of choice to tackle the challenge of how best to meet current daytime peaks in demand. Once this has been done, there is the potential for exporting this expertise to neighbouring countries and along the West-East Corridor more broadly.”
The report highlights many longer term investment opportunities, particularly storage technologies and concentrated solar power. It says these technologies are currently running behind solar PV and on-shore wind in the maturity curve but are rapidly catching up. “They can already be seen to be following a similar path towards proven deployment and operation, reliability and falling costs,” it notes.
(Indeed, ACWA Power said much the same thing in January, highlighting the fact that solar tower with storage technology was falling in price, and combined with solar PV would soon be challenging “baseload” fossil fuels on costs.
As for intermittency, the age-old argument against renewables, the report says intermittency and variability are not an issue. “There has been an historic concern that renewables are an unreliable option, because the wind blows only intermittently and the sun does not shine all the time, but that is proving to be less of an issue,” it says.
In the Gulf region, it says, demand peaks tend to occur in the middle of the day, and grids “can now easily cope” with at least 40 per cent of renewable input before requiring modifications. And gas is an ideal complement to deal with the intermittency where it occurs.
“Furthermore, developments in storage technologies are progressing rapidly, and in the next few years utility-scale solutions will be deployed that further minimise concern around what was until recently seen as a major inhibitor to the uptake of renewable generation.
Even without the remarkable price achieved at the Dubai auction by ACWA Power, the report notes that wind and solar are cheaper options in the Middle East at any oil price above $US-20 to $US30 a barrel.
Even against existing oil-fired generation that have been more than half depreciated, new solar is a cheaper option at any price above $US45/barrel. Fully depreciated oil generators can no longer compete against new solar at prices above $US60/barrel.
The report also notes that energy efficiency is becoming an increasingly obvious investment, with five-year returns in many investments.
Source: Renew Economy
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The raging debate over the suitability of nuclear energy is typical of South Africa’s flawed approach to energy policy. We are driven by desperation to consider alternatives rather than being proactive and acting strategically to optimise outcomes.
The Eskom debacle has forced the government to consider other options such as gas in addition to nuclear – just like the sale of state assets is driven by the need to bail out Eskom rather than economic policy. Invariably, we ask the wrong questions and then proceed to provide the most precise answers to them.
The strategic energy policy question is not whether nuclear energy is better than renewable energy or vice versa. The question is: what is the optimal energy mix for South Africa that will best address our economic development challenges? Any optimisation problem relies on the formulation of the objective function and the constraints imposed on it. While some are fuzzy on the objective function, they seem clear that we can either have nuclear, wind or solar, and nothing else.
My argument is that there are other alternatives to be considered in the energy mix. Firstly, the strategic envelope for the analysis of our energy policy should be the Southern African Development Community (SADC), not the Republic of South Africa, given that there are significant energy sources outside South Africa, with South Africa being a massive energy sink. The DRC has hydro energy resources, Botswana has coal resources, Mozambique and, to a lesser extent, Namibia have significant natural gas resources. It is also unclear why our own coal resources are not in the future energy mix, given our relative size to massive coal burners such as China and India.
Back to the objective function: what do we want to achieve through our energy policy? The goals of an energy policy should include competitively priced energy, energy security, supply stability, minimal environmental impact, employment creation, and positive transformative impact on the overall economy. One could use the current energy mix as a base case to compare alternative mix options, including all the energy sources mentioned above.
We have not even considered importing Liquefied Natural Gas (LNG) as an alternative or local hydraulic fracking. We could divert all our thermal energy demand to LNG and simultaneously use LNG to provide feedstock to the PetroSA GTL plant. That would reduce our electricity demand and also make sure we sweat an existing investment at the Mossgas plant.
At face value, it seems a nuclear plant investment will have less positive transformative effect on the overall economy.
We need a breath of fresh air in this energy policy debate. This is too important an issue for South Africa’s future to be driven by sector specific interests.
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