The energy conundrum
South Africa, Africa’s most industrialised country, is grappling with a serious energy shortfall. Complicating the energy issue further are political and environmental concerns about possible solutions – coal and nuclear – against the backdrop of the country’s high levels of greenhouse gas emissions. Stephen Williams unravels the complex picture from the 7th African Energy Indaba in Johannesburg.
The annual African Energy Indaba attracts delegates from across the continent. Held every February, with over 100 expert speakers, it bills itself as Africa’s premier energy event. But while the conference certainly has a pan-African flavour, much of the discussion revolves around the host country South Africa’s troubled energy landscape.
South Africa’s citizens and businesses have been warned by the electricity parastatal, Eskom, to expect further rolling blackouts and this month an 18% hike in tariffs – even as government provides $2bn in taxpayer’s money to bail out the utility company.
The Indaba took place a few days after President Zuma’s State of the Nation Address, which detailed some of the country’s energy woes. He said, “The country is currently experiencing serious energy constraints, which are an impediment to economic growth and are a major inconvenience to everyone in the country.”
South Africa has about 43,000MW of installed electricity-generating capacity but only about 30,000MW is available at any one time because of the backlog in power station maintenance, which is said to be between 20 and 30 months in arrears, and an ageing grid infrastructure.
Zuma’s government is looking to renewable energy to help bridge the gap. The government had already procured almost 4,000MW of renewable energy, through the Renewable Energy Independent Power Producer Procurement Programme (REIPPP), from independent power producers who have pledged to invest R140bn ($11.6bn). Of this new energy, 1,500MW comes from 32 projects that are already connected to the grid, with the remaining 2,400MW sourced but not yet completed.
Blessed with excellent solar and wind potential, South Africa is in the top 10 countries in the world for renewable energy investments. The World Bank reported in 2014: “In less than three years, South Africa has signed up more investment for more independent [renewable] power generation than has been achieved across the entire African continent in 20 years.”
Indeed, Bloomberg’s Climatescope 2014 report says that South Africa accounts for 90% of clean energy investments in sub-Saharan Africa. This is a remarkable statistic given the ambitious programmes taking place across the continent, such as the Cabeolica wind farm in Cape Verde, which meets around a fifth of the country’s electricity demand, or Ghana’s Nzema solar panel plant, a $400m project that will generate 155MW.
South Africa’s policy environment has helped fuel renewables success. REIPPP has received praise from many quarters, including the World Bank. One investor at the Indaba characterised REIPPP as “the most successful public-private partnership in Africa in the last 20 years.” In addition, the government is introducing a new carbon tax next year. It looks likely that the policy will drive investment towards renewables.
However, relations between the municipalities and Eskom act as a brake on small-scale generation. Electricity sales are a crucial revenue source for often cash-strapped municipalities, which buy energy in bulk from Eskom and sell on to the consumer. As such, local government regulation often acts as a block on rooftop solar panel installations.
Even so, the momentum appears to be behind renewables. Prices have dropped over the last two-and-a-half years, with average solar tariffs decreasing by 68% and wind dropping by 42%, in nominal terms. And a report from South Africa’s Council of Scientific and Industrial Research, Financial Benefits of Renewables in South Africa in 2014, stated that wind and solar projects last year delivered R800m ($65m) more in financial benefits for the country than what they cost. This figure is likely to be an underestimate, as the Council’s methodology did not include value addition in job creation. The development of the renewable sector has positive knock-on effects for manufacturing in South Africa. Local content for renewable systems components has risen to 53% of total costs.
Partly on this basis, investments are coming thick and fast. South Africa currently has five wind farms in full operation but a further 22 large-scale ones under construction. On completion, the country’s wind capacity will be 2700MW. A further 700MW has either been awarded or is expected to be awarded imminently. The Eskom-built and mainly World Bank and African Development Bank funded, 100MW, 46-turbine Sere Wind Farm in the Western Cape province is currently the country’s “jewel in the crown”. Built ahead of time and on budget, since October it has been supplying the national grid.
In addition to Sere, Eskom is also developing a 100MW Concentrated Solar Plant (CSP) project near Upington in the Northern Cape. Similar to the Sere Wind Farm, CSP is a part of the scaling-up of renewable energy supported by development finance institutions along with climate investment funds. The project is currently at the procurement stage.
But already nearing completion, and set to become operational in the next few months, is the Khi Solar One, near Upington in Northern Cape Province, Africa’s first CSP.
The 14ha plant will produce 50MW and is being co-funded by the Spanish company Abengoa Solar (51%) and South Africa’s Industrial Development Corporation (49%).
At the heart of the plant is the 200m tall solar tower containing water pipes, using water pumped up to it from the Orange River. The solar energy that is collected and aimed at the solar tower by the surrounding mirrors, each articulated and computer controlled for optimum efficiency, causes the water to boil to create the steam that drives a turbine to produce electricity.
Abengoa has set up a fabrication facility on site where they manufacture the tubes and other materials. A certain amount of skills transfer is taking place as Spanish technicians are on hand to pass on their expertise.
And Abengoa has another concentrated solar plant on the drawing board, this to be built at Pofadder and quite a bit bigger at 100MW, covering an area of 1,100ha; but Pofadder uses a slightly different technology, with the use of parabolic troughs rather than a central solar tower.
Even photovoltaic panels are now being used in utility-scale arrays. The most notable development, in the Karoo desert wilderness of the Northern Cape province, the 75MW Kalkbult plant, covers the equivalent of 140 soccer pitches. Like the Sere Wind Farm, it was built well within time, within budget and is already contributing to the national grid.
Despite these renewable successes, South Africa still relies on coal for about 70% of electricity generation. And two further monster coal-burning generation facilities, at Medupi and Kusile, are under construction.
Coal is the dirtiest of the hydrocarbon fuels. Even if, as the coal lobby claims, new technology coal plants emit almost 40% less CO2 than their predecessors, they are still significant polluters and release more greenhouse gases than natural gas turbines.
Environmentalists are also concerned that coal-fired electricity generation uses large amounts of water, and South Africa is already water stressed. On average, coal plants use 10,000 litres of fresh water a second, according to Greenpeace.
South Africa not only uses coal in power stations, but currently around 30% of the country’s gasoline and diesel fuels are produced from indigenous coal with coal-to-liquid technology – an apartheid-era technology developed as an import substitution measure. Even commercial jet aircraft are beginning to use coal-to-liquid fuels.
It would be a brave politician who would call a halt to coal mining in South Africa, given the amount of employment it provides and the substantial coal reserves the country possesses. So research and investment is focusing on making coal less environmentally damaging.
Underground coal gasification (UCG) techniques convert coal that is still in the ground to combustible gases that might be extracted and used for generation with fewer greenhouse gas emissions.
Allied to UCG is the concept of Carbon Capture and Storage (CCS). Essentially, CCS is a technique that allows for the burning of hydrocarbons, be they oil, gas or coal, stripping out some of the CO2 gases and storing those away from the atmosphere in huge underground reservoirs.
There are several other energy options than solar, wind and coal. Biomass, for one, has its supporters, who argue that biogas systems can be twinned with improving sanitation facilities.
But it’s a different kind of gas that has others excited – liquefied natural gas (LNG). Proponents of building gas power stations talk of not only neighbouring Mozambique’s newly discovered off shore gas reserves, likely to propel Mozambique into being one of the global top 10 gas producers, but
also Project Ikhwezi, spearheaded by PetroSA, which is exploring for off-shore gas for use in its onshore gas- to-liquids refinery at Mossel Bay.
Then, there’s the more controversial trio of fracking, foreign hydroelectric and nuclear. In 2012, South Africa lifted a moratorium on fracking, to the great consternation of environmental activists and the anti-fracking movement, who see the method as untested and dangerous. Companies are hoping to engage in the process in the semi-desert region of Karoo.
The DRCongo has also proposed a 48,000MW mega dam, the Grand Inga, which is held by some as a source of sustainable energy for the country and broader region. However, the scheme and hydroelectric in general are not without their detractors. The construction of major dams generally involves the resettling of indigenous people and can endanger the habitat of existing wildlife. Furthermore, when dams are built on rivers, an accumulation of silt and vegetation that arrives downstream at the dam wall produces methane, a powerful greenhouse gas.
For many South Africans, the otherwise attractive prospect of obtaining an additional 15,000MW of power is tempered by both the anticipated cost of the project and the difficult logistics and political risk of a grid connection stretching from DRCongo to South Africa.
However, the Grand Inga Dam is nowhere near as controversial as the idea that South Africa should build a fleet of nuclear power stations. Zuma has announced the prospect of a 9,300MW nuclear programme and the Energy Minister, Tina Joemat-Pettersson, has called nuclear expansion “a central feature in our future energy mix”. The cost is put at as much as a staggering R1trillion ($815 billion) in capital expenditure. But this cost analysis does not include the final bill for radioactive fuel storage, security, or decommissioning plants at the end of their working lives.
The prospect of nuclear has set off political alarm bells in South Africa. According to leaked documents reported on by the Mail and Guardian, it appears South Africa has already moved very close to agreeing a deal with Russia’s Rosatom. The deal lacks full parliamentary oversight but includes indemnity against any nuclear accident for the Russian company, special regulatory and tax breaks, and constrains skills transfer requirements.
Alarm bells notwithstanding, political sensitivity and technical hurdles are a huge challenge to solving the energy conundrum, a vital precondition for Africa’s development.