Sunny outlook for SA’s green energy sector

SOUTH Africa’s renewable energy programme has been quietly but steadily gaining ground and, over the past year in particular, it has been contributing significantly to relieving the frustrations of load shedding.

From January to June, 15 days of load shedding were either prevented or a higher stage was avoided or delayed for several hours, according to a study by the Council for Scientific and Industrial Research (CSIR) of the impact of renewable energy. The study demonstrated not only what our fledgling renewables industry has already achieved but that its role can be sustainable and cost-effective.

The CSIR measured cost savings due to the use of renewables (solar and wind energy), instead of electricity from diesel-fired gas turbines and coal-fired power stations, as well as the amount of “unserved energy” that renewable energy avoided.

It found for the first six months of this year, wind and solar photovoltaic projects saved the power system R3.6 billion in diesel and coal costs.

More good news is as the Department of Energy’s Independent Power Producers Procurement Programme (IPPPP) gains momentum, so the tariff costs per unit decrease. Earlier this year, the programme announced the results of Bid Window 4, which will supply an additional 1 084MW of electricity to the national grid, with 92 renewable energy projects approved to date.

The CSIR study shows the average tariff paid to the Bid Window 4 IPP per unit of solar and wind energy is only R82c/kWh (solar PV) and R65c/kWh (wind), in today’s money, having dropped from R3.44/kWh (solar PV) and R1.43/kWh (wind) when Bid Window 1 was closed in November 2011.

In other words, solar and wind power in South Africa is already costcompetitive.

“At present, solar and wind power is, per energy unit, cheaper than coalgenerated power from newly built coal plants. And the renewables sector has achieved this cost competitiveness within three years. It illustrates just how valuable renewables are and shows their potential to take care of South Africa’s future energy needs, affordably and in an environmentally sustainable way,” comments Dr Tobias Bischof-Niemz, manager of the CSIR’s Energy Centre.

He says if targets are set higher than they are now (9 percent of total electricity supply from new renewables by 2030), renewables could conceivably supply a significant portion of South Africa’s electricity needs by 2050, 10 years before the Medupi power station, the new dry-cooled coal-fired power station in Limpopo, is scheduled to be decommissioned.

Another enormous benefit of the renewables industry is that the sector has been funded not by tax or ratepayers but by the private sector.

“The government gave security for the risk of investment in the form of guaranteed off-take and tariffs over the lifetime of the solar and wind plants but the IPPs have shouldered all the investment burden.

The ratepayer has spent no money on the infrastructure and technology of the country’s renewables sector.

In other words, the consumer pays only for the power that has been delivered and all the project risks are with the IPPs.

Part of the capital is raised from direct foreign investment, an additional benefit.

Aside from the state-of-the-art technology being adopted by South Africa as solar and wind parks are constructed, the socio-economic benefits from the burgeoning renewables sector are substantial.

Across all Bid Windows to date, a total of R19.1bn has been committed to socio-economic development (to be spent over the 20-year lifespan of the projects), as well as R6bn for enterprise development initiatives.

Germany is a good example of the potential of renewables to sustain a country’s energy supply. In June last year, Germany reached a national record by satisfying more than 50 percent of its electricity demand with of solar power. Last month, Germany broke another record, with almost 100 percent of its electricity demand being supplied by solar and wind power at midday on a sunny and windy Sunday.

South Africa is one of the most sunrich countries in the world and in the long term, Bischof-Niemz points out, it has the potential not only to cater for its own power needs but to export green energy to other nations, through the production of carbon-neutral liquid fuels from renewable electricity.

“The EU has recently allowed for these type of synthetic fuels to count towards the mandatory blending requirements for biofuels in the EU.

“If 1 percent of the EU’s demand for diesel, gasoline and jet fuel of 400 billion litres per year were to be the addressable market size for power-toliquid fuels, that would equate to 4 billion litres per year. In order to produce that amount of synthetic fuels from renewable electricity, one would require 60 terawatt hours per year of electricity from wind/solar. That is 25 percent of today’s electricity demand in South Africa.

“Hence, even 1 percent of the EU’s total fuel market is large enough to make a very large addressable market for these synthetic fuels.

“If South Africa gets a high percentage share of that market, which is very likely because of its advantageous cost position with respect to solar and wind electricity, combined with its firstmover advantage of having industrialised the necessary Fischer-Tropsch process in large scale, it would never have to worry again about potential ‘overbuild’ of a wind/PV fleet. Any excess wind and PV electricity can be converted into carbon-neutral liquid fuels and exported into a global market,” says Bischof-Niemz.