Worthy renewables
Renewable energy bolsters economy, cuts load shedding and combats climate change
ften criticised as too expensive and ineffective, renewable energy is providing a real-time response to the sceptics. With the first 35 of 92 solar and wind projects now delivering electricity to the national grid, the Council for Scientific & Industrial Research (CSIR) Energy Centre is monitoring and quantifying renewables’ contribution.
The outcome, as reported in this edition of the Financial Mail Green Report, is that since the first solar and wind projects went online early in 2014, renewables have contributed R4,8bn more in financial benefits than Eskom paid them for their electricity by mid-2015.
The benefits lie in the savings they made by reducing the amount of coal and diesel Eskom needed to burn, and in the amount of load shedding they prevented.
However, renewables’ contribution extends far beyond this. Renewables have attracted R193bn of private sector investment, stimulated local manufacturing and created jobs. They are also contributing to social and economic development and preventing greenhouse gas emissions.
The contribution of renewables and their potential is impressive:
Capacity of 6 327 MW has been procured from 92 solar, wind, mini-hydro and biogas projects under the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), which enables successful private sector bidders to sell electricity to the national grid.
Plants with total capacity of around 1 800 MW are already supplying electricity to the national grid.
Most projects have been completed and commissioned on schedule.
Solar PV and wind developers are now selling electricity to Eskom at between R0,62
Oand R0,80/kWh. This is between 20% and 30% less than it will cost Eskom to generate a kWh from its new Medupi coal-fired power station. The difference will widen as Eskom raises its tariff year-on-year.
A further 1 800 MW of renewable energy is scheduled to be procured by year-end, and the minister of energy is seeking approval to procure another 6 300 MW.
Of the R193bn of private investment in renewables, developers are contractually bound under REIPPPP to spend R19,1bn on socioeconomic development in communities within a 50 km radius of their plants.
Virtually all projects are in poor rural areas where communities will gain increasing benefits as government procures more renewables. In this edition, we look at cooperation between Saudi solar developer ACWA Power and the !Kheis municipality as an example of the impact of socioeconomic investment in this remote part of the Northern Cape. According to the department of energy (DoE) Independent Power Producers (IPP) office, as of end-March this year:
Developers have procured 48% of their construction spend from SA suppliers, exceeding their contractual commitment of 44%;
A total of 17 079 job opportunity years were created; and
3,3 MT of carbon emissions have been avoided.
The DoE IPP office says that the REIPPPP “has placed SA among the top 10 renewable energy investing countries in 2014”. A major obstacle has been the municipalities’ reluctance to permit rooftop solar PV owners to feed into their grids because this will reduce revenue from their own electricity sales.
Government and the CSIR are working to develop a model that will provide rooftop solar PV owners a guaranteed 20-year tariff for supplying electricity to the grid and compensate municipalities or Eskom for losses in revenue from electricity sales. The University of the Western Cape Energy Storage Innovation laboratory tells the Financial Mail Green Report it is “close to commercialising” a highly durable lithium ion battery providing two-hour back-up electricity for most household lights, small appliances and electronic devices.
Jonathan Hodgson of Specialized Solar Systems, based in George, Cape Town, is developing small, decentralised solar utilities to deliver power to entire communities at significantly lower cost than Eskom. His company has already provided power to two informal settlements.
With renewables’ costs having been driven down, the major challenge now is to ensure the new industry’s sustainability. Rather than focusing on driving down prices further and jeopardising sustainability, greater emphasis should be placed on the added socioeconomic value that renewable energy can deliver, says Davin Chown, chairman of the SA Photovoltaic Industry Association.
“We can have sterile megawatts based simply on producing electricity at the lowest cost, or live, vibrant megawatts that build the local skills, expertise and experience we need in order to meet the challenges of clean industrialisation, job creation and poverty reduction,” says Chown.