Unions’ focus on coal jobs hampers plans for renewable energy future
With wind and solar costs declining, the government should retrain workers in other new job categories
If not managed properly, the vital political debate in SA over the role of solar and wind technologies in the future energy mix has the potential to be stymied by load-shedding at the behest of the National Union of Metalworkers of SA (Numsa). The lack of trust and understanding on the part of local trade unions about the government’s well-intentioned initiative to take us down the global path with respect to renewable resources is a serious challenge.
The rest of the world is fast embracing what the Bloomberg New Energy Finance Outlook 2018 calls the new mantra for decarbonising electricity generation: “50 by 50” (50% of the world’s energy to come from solar and wind energy by 2050).
This dramatic shift is being driven by cheap solar photovoltaic (PV) and wind technologies and falling battery costs. The cost of an average PV plant is expected to fall a further 70% by 2050, and the outlook predicts wind to decline another 60% by 2050. PV and wind are already cheaper than building new large-scale coal and gas plants.
Michael Bloomberg, the savvy multimillionaire and former mayor of New York who happens to be an electrical engineer, initiated the New Energy Finance Outlook 2009 and the group has established itself as a credible information source that will enable the new energy roll-out to be tracked over the next three decades
For the younger generation the “50 by 50” mantra spells out that within their lifetime there is going to be dramatic change, which will require co-operative management. This is particularly relevant to the trade unions, which have so far focused on preventing the loss of coal industry jobs. To quantify the impact of the change, achieving “50 by 50” will require a shift from twothirds fossil fuels in 2017 to two-thirds renewables by 2050.
Adopting the new model demands a mind-set change that appreciates the direction of flow of the global tide. It should be noted that Numsa general secretary Irvin Jim recently updated the union’s stance on renewables by calling for a “just transition”, with the proviso that the national grid remains publicly owned and the backbone of energy provision. While the recognition that renewables are a serious competitor to fossil fuels is to be encouraged, the way in which the industry is managed must remain up for debate.
The capital required to be invested globally in new electricity generation to 2050 is estimated to be $11.5 trillion, with as much as 75% going to solar and wind and 15% allocated to additional zerocarbon technologies. Another way of expressing the future impact of solar and wind is to take the expected global regional distribution in 2050, as calculated by the New Energy Finance Outlook. By 2050, renewables are expected to supply 87% of electricity in Europe, 55% in the US, 62% in China and 75% in India, while the percentage of coal used in electricity production is expected to be just 11%, from 38% in 2017.
An additional driver for this dramatic rise in the contribution of solar and wind is the ability to execute on delivery. While the focus on decreasing battery costs would be a natural consequence of grid storage, the outlook predicts that the concomitant rapid introduction of electric cars and their need for economic battery storage will significantly accelerate the reduction of battery costs.
Sales of electric vehicles (including light delivery vehicles and buses) are expected to rise to 55% of the annual global total by 2040 from just 1.8% at present, and account for some 9% of global electricity demand by 2050. Of course, this will vary considerably from region to region, with Germany expected to be using almost a quarter of its electricity to recharge car batteries. There are already plans to enable recharging at peak production times via a favourable tariff mechanism to assist with the variability of solar and wind power production.
The frontiers of solar and wind have already reached economic cost levels. In the latest auction in Mexico, wind reached a level of $17.70 per MWh (24 SAc per kWh) from Enel, an Italian company. Enel has entrenched itself as Mexico’s leading renewables supplier with some 700MW of existing capacity and another 600MW in the pipeline following the recent auction. One report speculates that this is just a fraction of the renewable energy capacity Enel has planned for the country.
French renewables company Neoen’s economic cost for solar power in Mexico is reported only marginally higher at about $19.70 per MWh (26 SAc per kWh). A recent auction in Chile for solar by Enel was at $21.48 (28 SAc per kWh), and the current record for a tender for some 300MW of solar is held by Abu Dhabi developer Masdar in Saudi Arabia, at $17.86 (26 SAc per kWh).
The question, then, is when can SA get into this league? A figure in the upper twenties (25+) SAc per kWh is somewhat lower than the operating cost for coal in SA of 40c per kWh, as quoted by former Eskom CEO Matshela Koko. For India specifically, onshore wind comes in at $39 per MWh (52 SAc per kWh) and solar $42 per MWh.
By comparison, new coal comes in at $68 per MWh (91 SAc per kWh). Wind plus batteries in India comes in at about $34 per MWhr and solar plus batteries at $47 per MWh, depending on project characteristics, but the mean cost is falling fast.
The question that needs to be raised in SA is why we are still up at about 80c per kWh for the latest independent power producer bids, which is equivalent to new coal (capital and operating cost). And how is it that Mexico has an Enel and SA does not? There is a history here.
For the global regional scenario to play out by 2050 there will be inevitable coal job losses worldwide. Given that renewables are considered a significant job creator in their own right, the real issue becomes the net effect on jobs. The task facing the global community is to retrain existing coal workers in other new job categories such as renewables.
This is even more important in SA given its substantial reliance on coal for electricity generation and misplaced trade union negativity towards renewables. Not only is this patently out of line with global views, but Eskom has in the past also taken a rather jaundiced view of the renewables path.
What needs to happen is for the government (in concert with the trade unions) to initiate an extensive education and retraining exercise that specifically focuses on job creation in the renewables sector.
Electricity generation in terms of capital and operating costs is one of the largest business areas globally and SA needs to get on board before the train leaves the station. Taking the destructive view and threatening mass action will not reverse the global march towards clean, renewable and ever cheaper electricity.
Wood, a former cost engineer with Mintek, silicon metal development manager at Samancor and business group member with ICI Corporate Lab in the UK, has a doctorate in physical chemistry.