As power crisis continue to haunt the Southern Region, Zimbabwe has joined other member states in an effort to generate electricity using wind by establishing a pilot project in Mamina (Mashonaland West).
Harare – The pilot project is meant to study the viability of generating electricity using wind in the country to avert power crisis.
Wind energy, which involves using air to turn turbines and generate electricity, is regarded as one of the most reliable, cheap, renewable and clean form of power that does not pollute the environment as compare to other types such as thermal. Energy and Power Development Minister Samuel Undenge said government was doing all it can to produce adequate power.
“We want to explore all avenues to produce adequate power for the country, wind energy included. We are already running a wind energy pilot project in Mamina to see how feasible it is if implemented in the country,” Undenge said. Experts contend that wind energy potential exist in most parts of Zimbabwe for wind pumping and other mechanical conversion systems, with utilizable wind speeds ranging from 2,6 metres per second(m/s) to about 4 m/s.
Generally most parts of the country have a good wind energy resource averaging 3, 2 m/s all year round, good enough for wind pumping except areas around Kariba (Mashonaland Central). Areas around Bulawayo and some selected areas in the Eastern Highlands (Manicaland) have potential for power generation application since the most prevalent wind speeds range from 4 to 6 m/s.
These wind speed ranges have a high frequency and time distributions to give satisfactory power generation resumes.
The Southern African Development Community (SADC) has set itself a target of generating 20 percent of the region’s energy needs from renewable sources by 2025. Other SADC member states currently leading the quest on how to harness the vast wind potential that lies unexploited in the region are Mozambique, Tanzania, South Africa Madagascar and Namibia.
According to the African Development Bank, Sub-Saharan Africa has the potential to provide more than 170 gigawatts (GW) of additional power using wind far more than the sub-region’s current installations
provided other forms, apart from thermal and hydro are exploited.
These are solar and wind. Wind farms are also relatively easier to construct – as it takes about twelve months to build one with a capacity to generate 100 MW.
Zimbabwe Power Company managing director Noah Gwariro said generating energy using wind was pollution free. “Wind energy is really something which SADC can turn to, South Africa and other regional countries are already doing it.
Of course in the earlier days it may distort the skyline, but people will get used to it,” Gwariro said.
Some of the current wind farms in Southern Africa include two facilities in South Africa’s Western Cape Province (Klipheuwel and Darling); various 21 kilowatts wind/solar hybrids in Malawi. A 10 MW pilot project in Chicumbane in Mozambique is also under development.
In addition, Belgian green electricity company, Electrawinds, has begun the construction of a wind turbine in the harbor of Coega, near Port Elizabeth, South Africa.
The development is the first phase of a large wind farm that, in time, will comprise 25 wind turbines.
The first large scale wind farm in South Africa became operational in 2014, and others are in planning and construction stages.
Most of these are earmarked for locations along the Eastern Cape coastline. Eskom has constructed one small scale prototype windfarm at Klipheuwel in the Western Cape and another demonstrator site is near Darling with phase 1 completed.
In terms of future capacity building, wind power is expected to play a marginally bigger role in providing energy. Of the total new generation projects that came on board in Southern Africa in 2011, wind energy comprised 1, 5 percent.
This came entirely from a 25 MW project in the Lesotho highlands. In 2012 alone, 3,6 percent of new generation projects was wind power.
These included a 100 MW project from an Independent Power Producer (IPP) in South Africa and a 40 MW IPP project in Luderitz, Namibia. In 2013, a 40 MW wind project from an IPP in South Africa’s Eastern Cape made up one percent of the entire new generation capacity that came on stream during that year.
Despite the projects that have already been announced, South Africa was promoting 2,500 MW of wind power by end of last year. According to Global Wind Energy Council (GWEC), compared to other parts of the world, wind energy generation in Southern Africa still has a long way to go.
The world’s top five wind energy producers are currently the United States (installed capacity of 35,064 MW), China (25,805 MW), Germany (25,777 MW), Spain (19,149 MW) and India (10,926MW).
Apart from generating electricity, wind energy can also be used to pump water for agricultural purposes among other uses.
Wind turbines use the wind’s kinetic energy to generate electrical energy that can be used in homes and businesses. Individual wind turbines can be used to generate electricity on a small scale – to power a single home, for example.
A large number of wind turbines grouped together, sometimes known as a wind farm or wind park, can generate electricity on a much larger scale.
A wind turbine works like a high-tech version of an old-fashioned windmill.
The wind blows on the angled blades of the rotor, causing it to spin, converting some of the wind’s kinetic energy into mechanical energy. Sensors in the turbine detect how strongly the wind is blowing and from which direction.
The rotor automatically turns to face the wind, and automatically brakes in dangerously high winds to protect the turbine from damage. A shaft and gearbox connect the rotor to a generator (, so when the rotor spins, so does the generator.
The generator uses an electromagnetic field to convert this mechanical energy into electrical energy.
The electrical energy from the generator is transmitted along cables to a substation.
Here, the electrical energy generated by all the turbines in the wind farm is combined and converted to a high voltage. The national grid uses high voltages to transmit electricity efficiently through the power lines to the homes and businesses that need it.
Here, other transformers reduce the voltage back down to a usable level. Wind power converts the kinetic energy in wind to generate electricity or mechanical power.
The International Renewable Energy Agency (IRENA) said achieving a 36 per cent share of renewable energy in the global energy mix by 2030 has the potential to increase global gross domestic product (GDP) by up to 1.1 per cent, roughly USD 1.3 trillion.
“This analysis provides compelling evidence that achieving the needed energy transition would not only mitigate climate change, but also stimulate the economy, improve human welfare and boost employment worldwide,” the agency said recently.
The improvements in human welfare, IRENA noted, would go well beyond gains in GDP thanks to a range of social and environmental benefits.
The impact of renewable energy deployment on welfare is estimated to be three to four times larger than its impact on GDP, with global welfare increasing as much as 3, 7 per cent.
Employment in the renewable energy sector would also increase from 9, 2 million global jobs today, to more than 24 million by 2030.
JOHANNESBURG (miningweekly.com) – Energy utility Eskom is in the throes of reviewing various requests for proposals submitted as part of its hunt for a new coal supplier for the Arnot power station, in Mpumalanga, after the nonrenewal of its coal supply agreement with historical coal partner Exxaro. Eskom’s coal agreement with Exxaro was left to lapse at the end of December, after the parastatal cited the miner’s increasing inability to service its four-million-ton-a-year supply agreement, stating it was only able to provide the 2 100 MW power station with around one-million tons a year of coal – around 25% of its total requirement. Print Send to Friend 0 0 The remaining coal had been sourced from several other coal suppliers, Eskom spokesperson Kulu Phasiwe told Mining Weekly Online on Friday. He expected a decision on the new coal supplier to be made by the end of March, adding that it was possible that several vendors would be selected, should a diversified supplier base prove more economical.
“If more than one supplier is able to give us value for money, we will select several to fulfil Arnot’s coal needs. “While Exxaro was initially Arnot’s only coal supplier, its volumes slowly declined, while the cost of its coal increased. By the end of last year, Exxaro was charging around R900/t of coal, while the average of the other suppliers – which serviced around 80% of the station’s coal requirements – was R400/t,” he remarked. Phasiwe assured Mining Weekly Online that operations at the Arnot power station remained unaffected by the cessation of the Exxaro supply agreement, as it had been able to source adequate volumes of coal from its various suppliers.
The National Energy Regulator of South Africa (Nersa) will start its public hearings on Monday as part of Eskom’s application to recover an additional R22.8bn through an electricity tariff increase.
The Nersa public hearings will start in Cape Town and end in Midrand on 5 February.
Nersa approves electricity tariff increases for Eskom based on a number of assumptions on factors such as electricity demand and cost of primary energy. Depending on how those assumptions pan out, Eskom is either owed money or owes the public.
The methodology used to determine Eskom’s tariffs allows the utility, after the financial year-end, to submit its so-called Regulatory Clearing Account (RCA) application based on the financial statements. This is meant to reconcile the assumptions and projections used to determine the tariffs and the actual revenue costs incurred.
Eskom submitted an application for the 2013/14 financial year in November. An approval of the application could result in future tariff hikes. Eskom last week said an approval of the application would improve its ability to meet financial commitments and enhance its balance sheet.
In its application to Nersa, Eskom wants to recoup, among others, R11.7bn for a shortfall in revenue, R8bn in costs associated with the utility’s peaking open cycle gas turbine (OCGT) plants and R2.4bn for primary energy costs.
Eskom said the shortfall in revenue was primarily due to lower than anticipated electricity demand. The power utility said it had not included any revenue lost because of load shedding in 2013/14.
“Investors are seeking certainty and stability from the regulatory process,” Eskom said in a statement on Sunday. “Eskom has recently been downgraded by rating agencies and they note inadequate tariff increases as part of the reason for the downgrade.
“A favourable RCA process will improve investor confidence, which impacts our credit rating and funding security,” it said. “Funding security ensures that the build programme remains on course for completion.
“Sufficient revenue allows Eskom to continue with the generation performance improvement programme to the benefit of all customers. A financially sustainable Eskom will support our country’s broader economic objectives.
“Eskom’s 2013/14 RCA submission of R22.8bn is driven substantially by revenue under recoveries, higher expenditure on coal burn, independent power producers, open cycle gas turbines and other primary energy costs.”
EE publishers MD Chris Yelland, who was vocal at the previous public hearings in 2015, said this new application was problematic in the current economic situation.
Writing before the crisis stemming from former finance minister Nhlanhla Nene’s removal from Treasury, Yelland said: “Claw-backs via the tariffs will add significantly to the electricity price trajectory, over and above the 8% per annum granted by Nersa over the five-year MYPD3 period.
“A compounding problem arises from the elasticity of electricity demand in the face of steeply rising electricity prices significantly above the inflation rate, which further reduces electricity sales volumes and increases claw-back claims, in a vicious circle.
“With constrained supply and declining sales volumes, rising electricity prices reaching the limits of affordability, and the tipping point to grid defection in sight, Eskom’s future ability to finance its own generation, transmission and distribution activities comes into question.”
Anglo American recently announced that it would be shedding more than half of its global workforce over the next few years. South Africa, as the historic home of the mining company, is set to bear the brunt of these cuts.
At the end of 2014, Anglo American employed roughly 72,000 South Africans, which represented just under half of the miner’s global workforce. Anglo American Platinum Ltd, which is majority owned by Anglo American but listed as a separate entity in Johannesburg, accounted for 49,763 of that number.
Anglo American commented that most of the job reductions will be connected to asset sales as the group adjusts to weather the recent commodities slump. The miner is also considering selling coal-based assets.
Chief Executive Mark Cutifani recently commented that South Africa “still remains our highest returning jurisdiction across the globe. We will continue to manage those challenges going forward, but it will be a relatively lower footprint.”
Anglo American Platinum (Amplats) had already planned to sell its Union mine and is in talks to exit joint ventures that operate its Pandora and Bokoni mines. Current restructuring plans at the Bokoni facility are expected to lead to 2,500 job losses including employees and contractors.
At the end of last year, the mining sector employed about 5.5 percent of South Africa’s entire workforce; minerals make up almost 60 percent of the country’s exports.
Platinum mining in the country is facing numerous challenges wage negotiations and greatly increased energy prices as Eskom struggles to maintain capacity. The recent downturn in platinum prices has only exacerbated these issues.
“There’s no doubt that renewable energy as well as smart technology are changing the way power and water utilities operate and deal with their customers. The industry is constantly challenged and presented with new opportunities and it is therefore vital for power and water professionals to share knowledge and collaborate on a regional basis.”
This is according to Evan Schiff, who heads up the 16th African Utility Week and Clean Power Africa conference and trade exhibition that returns to Cape Town from 17-19 May 2016 – gathering some 6000 engineers, stakeholders and solution providers from around the globe.
The event will feature 250 exhibitors, 250 speakers, a six stream strategic conference, free-to-attend technical conference on the expo floor, three high-profile keynote sessions, technical site visits and the coveted industry awards gala dinner.
Evan adds, “We are very proud of our African Utility Week Advisory Board which comprises senior decision makers from utilities, large power users, IPPs, consultants and contractors from across the continent. They take a very active role in making sure our programme addresses the latest challenges, developments and opportunities in the power and water sectors: ranging from generation, T&D, metering, clean energy, finance, reliability, water supply or energy efficiency. We will once again showcase many success stories in clean energy; look at bankable power projects and energy storage will be discussed as a possible game changer for energy independence. We also have a strong focus on water for 2016, including the water-energy nexus, water efficiency and wastewater management.”
Dr Lawrence Musaba, Co-ordination Centre Manager, Southern African Power Pool (SAPP) in Zimbabwe is already confirmed as a high-level keynote speaker at this leading annual industry meeting. He says current challenges facing the energy sector include “low tariffs making it difficult to invest, power shortages leading to load shedding, poor maintenance of the electricity infrastructure and poor governance and management.”
He says “moving towards cost-reflective tariffs would be advantageous while attracting the private sector would provide the much needed investment capital.” He adds that utilities “should be operated as commercial entities.”
Dr Musaba was also the recipient of the Lifetime Achievement Award at the 2015 African Utility Week Industry Awards. Next year, the third edition of the prestigious African Utility Week Industry Awards will again celebrate the triumphs and successes of Africa’s leading power and water projects and people in twelve awards categories, including Water Utility Executive of the Year, Clean Energy Project of the Year and Outstanding Woman in Power.
CEO Forum: important platform
During African Utility Week, the Power Utility CEO Forum gathers C-level executives from Africa’s leading utilities together to discuss pressing topics within the industry and to accelerate cross-border collaboration across Africa. Utility executives from countries such as Nigeria, Uganda, Namibia, Ghana, Malawi, Zambia, Zimbabwe and South Africa are expected to return. For 2016, a new Water Utility CEO Forum will run in conjunction with the Power Utility CEO Forum.
Ayanda Nakedi, Executive Director: Renewables, Eskom in South Africa describes the CEO Forum as “an important platform where African utilities could share the challenges and learnings which are critical for survival in a dynamic changing environment. We still have a challenge of electrifying our dark continent and take advantage of our abundant resources. Africa is full of opportunities.”
Eskom is again the host utility for the event while the Department of Energy is the host ministry. Other event partners are the South African Independent Power Producers Association and the South African Electrotechnical Export Council.
Global suppliers of technology and services to the sector have already signed up as high-profile partners at African Utility Week, including Accenture, Edison Power Group, KPMG, Landis+Gyr, Rubbytad and Shell, who are all platinum sponsors.
The African Utility Week and Clean Power Africa trade exhibition will be free when registering in advance and showcase energy saving technologies and services for the industry and feature hands-on demonstrations and CPD-accredited technical workshops on the exhibition floor.
African Utility Week and Clean Power Africa are organised by Spintelligent, leading Cape Town-based trade exhibition and conference organiser, and the African office of Clarion Events Ltd, based in the UK. Other flagship events in Spintelligent’s power portfolio are East African Power Industry Convention (EAPIC), West African Power Industry Convention (WAPIC), iPAD Rwanda Power & Mining Investment Forum and iPAD Cameroon Energy & Infrastructure Forum.
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.
The geographic blindness of the current bid criteria is exacerbating current generation capacity constraints
The current bid selection criteria of the Renewable Energy Independent Power Producer Procurement (REIPPP) programme’s narrow evaluation and spatial blindness favours projects that are not necessarily the least-cost option for renewable energy at the point of consumption. This not only impacts energy costs for Eskom, and therefore for consumers, but also creates transmission congestion and delayed connections to an already constrained grid, incurring even further costs.
Most of the planned 8400 MW of IPP solar PV farms allocated under the national integrated resource plan for electricity IRP 2010-2030 have to date been placed in the “Solar Corridor” – an area in the Northern Cape where solar irradiation is optimal. Currently, some 6400 MW is allocated in the Solar Corridor, with another 2000 MW distributed elsewhere in the country.
For the procurement, the South African Department of Energy (DoE) favoured a “competitive tender” bidding approach. In the comparative evaluation of bids, the levelised cost of renewable energy (RE) supplied at the point of connection to the grid (R/kWh) and the socio-economic development objectives are the determining factors, and are weighted 70:30 respectively.
Because the lowest RE price per kWh at the point of connection to the grid is so important in the bid process, solar PV bidders generally opt for areas with the highest irradiation and thus the best energy yields – typically in the Solar Corridor. In the process, the bid criteria ignore the costs of additional grid infrastructure and upgrades, and transmission losses to the point of consumption. This results in grid congestion, time delays and importantly, additional real delivered costs when the transmission grid upgrades and transmission losses are included.
A GIZ study (German Collaboration) for the DoE and Eskom compared the current bidding criteria (and its resulting allocation of solar PV bids) with two alternative PV allocation strategies. In the GIZ study report, “Analysis of options for the future allocation of PV farms in South Africa” (published in March 2015), the authors considered the total levelised cost of electricity for the allocation of solar PV bids based on three options, namely:
Scenario A: Current allocation strategy predominantly in the Solar Corridor (maximum energy yield);
Scenario B: Allocation predominantly close to load centres (minimum grid reinforcements); and
Scenario C: Allocation predominantly within defined Renewable Energy Development Zones (REDZs).
REDZs have been identified by the CSIR and Department of Environmental Affairs (DEA) as part of the Strategic Environmental Assessment project. The project integrates environmental, economic and social factors to identify geographical areas where in the medium to long-term wind and solar PV development will have the lowest impact on the environment while yielding the highest possible social and economic benefit.
The REDZs also take into account transmission losses, municipalities with high social need and development potential, priority areas for renewable energy manufacturing and import activities, and existing transmission infrastructure. The once-off environmental pre-assessment of designated areas further help reduce the necessity to repeat the process for each individual project, and solar PV and wind developers, provincial governments, the private sector and the public were consulted in the refinement of REDZs.
In the GIZ study, the total levelised cost of RE (US$/kWh) for the current and above two alternative allocation strategies were calculated, comprising the levelised cost of RE at the point of connection, plus the required transmission grid upgrades, plus transmission system losses based on load-flow simulations.
The GIZ study concludes that the total levelised costs of RE for all three solar PV bid allocation options, when considered holistically, are very similar. The authors thus argue that the other allocation options (Scenario B and Scenario C) are not only viable, but would mean less grid congestion with timelier realisation of projects.
This means the geographic placement of solar PV for most parts of SA does not significantly or negatively impact on the total levelised cost of RE, and that other considerations such as the environmental and socio- economic aspects, can be better accommodated and taken into consideration.
While the GIZ study only considered solar PV, the same arguments can perhaps also be applied to other RE technologies, including concentrating solar power and wind power, where similar grid congestion, delays and transmission losses occur as a result of the best RE yield sites occurring in limited geographic areas far from load centres.
Both IRP 2010-2030 and its RE implementation vehicle, the REIPPP programme, are outdated and need serious rethinking. The IRP 2010-2030 and its REIPPP programme counterpart are spatially blind, and yet the implementation of RE generation is a spatially-based process – not only in the siting of RE generation plant itself, but also in the geography of the transmission grid and the location of the load centres for the electricity generated.
The geographic blindness of the current bid criteria is exacerbating current generation capacity constraints. A flawed bid evaluation process results in bidders choosing the highest-yield locations with the lowest-cost of RE at the point of connection to the grid, which is not necessarily optimal for minimising grid congestion, connection delays, transmission grid upgrades and transmission losses.
Johannesburg – State power utility Eskom has asked the national energy regulator Nersa for permission to recoup R38bn of costs incurred in its 2014 financial year through higher electricity tariffs starting April 1 next year.
“If approved, the outcome of this application is expected to impact the electricity price commencing in 2016-17,” acting chairperson Ben Ngubane said in the company’s annual report, released on Tuesday.
The regulator in June rejected a request by Eskom, which is struggling to meet demand in Africa’s most-industrialised economy, to raise prices by as much as 25% for the year to March 2016. The additional funds would have been used to buy power from independent producers and for diesel to fuel generators the utility uses to curb scheduled blackouts.
Electricity prices in South Africa have almost quadrupled since 2007, when the country first had power shortages. Scheduled supply cuts, known as load shedding, have taken place almost once every two days on average this year.
In October, the regulator gave Eskom permission to raise tariffs by an average 13% from April 1, 2015, more than the 8% initially approved, to help the utility recover R7.8bn of unbudgeted costs for the three years through March 2013. The company had applied to recover R18.4bn.
Eskom has struggled to finance new generating capacity and is battling to meet demand after delays in building new power stations and as aging plants suffer from breakdowns.
Kusile, which will have 4 800 megawatts of capacity, making it Africa’s biggest coal-fired power plant when completed, will be fully operational in 2021, while the 4 764-megawatt Medupi facility will be ready in 2019. Both were to be completed by 2018, the company said in 2012.
With the high price of electricity, the vagaries of supply and the looming carbon tax, manufacturers should be considering alternative energy sources. With me now in the News Leader studio to talk strategy and cost is Duane Newman from Cova Advisory.
Duane welcome, you were at the manufacturing Indaba in KwaZulu-Natal this week, what effect are the power shortages and the energy crisis having on manufacturers in that area?
Duane Newman: Electricity is one of the big challenges for manufacturers today, I think from two angles. One is security of supply, can you actually get power? So if you are a manufacturer you can’t manufacture half a widget, you need to manufacture a full widget. And the other one is price…so these days it’s becoming more about security of supply and less about price.
BDTV: Is there much anger against Eskom? I guess there is…
DN: Yes I think there is.
BDTV: Understandably so. Well let’s talk about both of those issues. Should they be separate or should the high cost of electricity in South Africa, and the vagaries of supply, should they be dealt with separately or is there one solution for both?
DN: Most companies need to have a coordinated strategy to deal with electricity and power at a strategic level. So from 2008 until today most guys have been focusing very much on price. The debate has moved a lot more to security of supply and saying where am I going to get my power from? So if Eskom isn’t going to be the solution for me, what is the solution? Is it renewable energy, is it self-generation of power. The reality is when you start to talk about co-generation plants and manufacturing your own power, the question is do we have the skills and ultimately do we have the money to put up our own power plant?
BDTV: Yes, so if a manufacturer had come to you today, is there a one size fits all solution?
DN: No, never okay. The reality is we’ve actually been doing quite a few projects assessing, looking at companies, saying how can they solve their electricity or energy problem? Some companies have got the money so they can fund the solution if they need a technical solution, others don’t have the money so they’re actually looking at a way of how can we actually get a project funded? And the reality is projects are always competing in a large corporate say manufacturing entity, saying okay we’ve got this project we can do, which is say a manufacturing project versus an energy project. And the question is what’s priority? What gives you the best return and can we get things like a government grant or a tax incentive to help us?
BDTV: Yes…so a manufacturer comes to you and says I don’t have much money but I want to save costs on my Eskom bill and I want security of supply, what do you say to them? There’s no money…
DN: So then you’ve got other solutions…you look at them and say fine okay, can we partner you with what we call an energy services company? What will the energy services company do, it will sit with you and say fine, what do you need? They will incur the cost, and what they’ll do is, they’ll then take a percentage of the savings of whatever they’ve saved you, so that there’s a more efficient energy…
BDTV: So there’s no outright cost?
DN: So there’s no initial outright cost, they will then take a percentage of the savings, whatever they save you on that new installation of a, say, co-generation plant or whatever.
BDTV: Are there any government tax subsidies?
DN: Interesting question…government I suppose puts things in two big boxes, a cash grant where they’ll potentially give you some kind of reimbursement, so if you spend R100 they’ll give you R30 back. There’s a programme called a Manufacturing Competitiveness Enhancement programme, it’s been around for two or three years now, and they will help you…give you some sort of cost sharing grant for those costs. The other one is a programme called an Energy Efficiency Tax Incentive called Section 12L that’s contained in the Income Tax Act and that’s an energy efficiency incentive. So if you’re going to be doing anything in your production facility to actually use less power, they’ll give you 95c per kilowatt hour saved. So it could be quite a lucrative…
BDTV: So it’s obviously something which you should look at.
BDTV: What about a manufacturer who has a bit of money, is the answer solar?
DN: It depends on what he is manufacturing…say for a mining company as an example, solar, the sun shines when? During the day…so it might be useful if he’s got a plant that operates during the day, but at night?
BDTV: He could use a Tesla storage facility?
DN: Yes maybe okay, but there’s still a lot of challenges these days around storage. I think that technology is still catching up …the panel technology.
BDTV: Yes. So any company nowadays has to deal with sustainability issues such as electricity, power, looming carbon tax and water, are companies now…are Chief Executives of manufacturing companies more open to getting somebody like yourself in to give specialist advice or is sustainability still a bit of a dirty green word?
DN: Yes…if you use the word sustainability or climate change I still think it’s very much a dirty word…
BDTV: It’s a turn off?
DN: Yes I think it is, but these issues are becoming real business issues now so CEOs are realising it’s not really about saving the planet, it’s really about the survival of their company. It’s also things like…look about the carbon tax. Carbon tax is coming and the reality is, can the country afford… can a manufacturer today who’s got increasing electricity prices afford a carbon tax? Our view is not.
BDTV: Well it is something which is happening and which tax legislation isn’t out but there are promises or threats in that line.
DN: Yes that’s right.
BDTV: But it is so important for companies to see this not as a green issue but these are key risks and key opportunities to business. Thanks so much for coming in today Duane.
Johannesburg – Recent development plans show that South Africa has no intention of scaling down on its coal dependency to provide the country with energy.
Yet South Africa will chair a critical negotiating group this year at the climate summit in Paris and be part of UN talks to try to force nations to cap their fossil fuel usage.
The governments of more than 190 nations will gather in Paris to discuss a possible new global agreement on climate change, aimed at reducing global greenhouse gas emissions to avoid the threat of climate change. South Africa will head the G77 + China group that is pushing for a strong treaty at the talks.
Ferrial Adam, a climate change analyst at environmental group 350.org, said: “South Africa says one thing on the international arena but has a whole other domestic policy.”
She said that while the departments of environmental affairs and international relations and cooperation coordinated the international talks, the department of energy was responsible for determining what kind of energy South Africa would use.
“And the departments don’t talk to each other,” she said.
Adam said policymakers in South Africa were still stuck in the country’s old ways of doing business. And that meant always going back to coal, because it was perceived to be cheap and well understood.
“While renewables have been growing in South Africa, it is still a measly amount. It simply is not good enough,” she said.
Dr Agathe Maupin, a researcher at the SA Institute of International Affairs, said South Africa’s developmental plans – without additional coal power plants – were in line with international thinking on the climate agenda.
“Of course, South Africa is not going to comply overnight,” she said.
She added that the country’s renewable energy procurement programme was helping South Africa fulfil its international environmental commitments.
Coal is South Africa’s most important mining segment. The country’s electricity supply hinges on coal, which generates 85% of its electricity. Blessed with large coal resources, coal has traditionally been a huge driver of South Africa’s economy. The coal industry has also been hugely profitable for new black-empowered mining companies.
For the moment, South Africa’s emissions have remained steady, in large part due to the Eskom crisis, the recession and a sluggish economy.
Although emission-control legislation is in place in South Africa, fitting the necessary filters is costing cash-strapped Eskom a pretty penny.
The utility has applied for postponements of the application of new minimum emissions standards for all of its power plants, except Kusile. This is because it would cost Eskom more than R200 billion over the next 10 years to comply fully “with an attendant minimal impact on ambient air quality”, Eskom said.
Medupi’s World Bank loan stipulates that the power station must be fitted with flue gas desulphurisation, a mechanism to control emissions. But until a water-augmentation scheme comes online, there is not enough water available in the water-stressed Waterberg in Limpopo for the filter. The mechanism will treble Medupi’s water usage and cannot be installed on all six of the plant’s units until additional water is available.
And even though Medupi is carbon-capture-and-storage ready, the progress around it at this stage is nothing more than pie in the sky.
Juggernauts Medupi and Kusile will be two of the largest five coal-fired power stations in the world. And more are coming.
Another sibling is planned for Medupi in the Waterberg. Eskom’s Coal Three has President Jacob Zuma’s backing, but with the power utility’s financial woes, it has been put on the back burner.
The 4 800 megawatt coal-fired station is scheduled to be built once Medupi and Kusile are completed.
A further 2 500MW of base-load generating capacity would be sourced through independent power producers.
In December, the energy department called for proposals for the supply of 1 600MW of generating capacity by 2021.
Several mining companies are planning to build coal-fired plants in South Africa, some of which want to use their mines to feed the new power stations.
Dominique Doyle, energy policy officer at Earthlife Africa Johannesburg, said: “There simply isn’t any more room in South Africa’s carbon budget for more coal-fired power stations.
“More coal will make South Africa the laughing stock of the international negotiations, because it will show the world that South Africa cannot keep its promises.”
At the climate talks in 2009 in Copenhagen, South Africa offered what many saw as an ambitious pledge to lower its carbon emissions.
The promise sees a 34% reduction in emissions relative to the country’s “business as usual” trajectory by 2020, and 42% by 2025.
But energy analysts say that if South Africa implemented the Copenhagen pledge, there would be no room for new coal power stations in South Africa after Medupi and Kusile.
But the 2009 pledge was dependent on funding and technical support from the developed world, and analysts believe this is where South Africa’s loophole lies. So far, the developed world has offered no funding.