This article, written by Robert Fischer, was published in Business Day Live recently. For the full article: click here.
SOUTH Africa must fast-track its transition to a reliable, modern and affordable electricity supply for all, the Electricity Governance Initiative of South Africa says in its recent Smart Electricity Planning report.
The report recognises the need to meet the country’s electricity demand to fulfil its developmental goals despite uncertain global and local economic growth.
Traditionally, electricity planning aims to supply whatever demand arises in the cheapest possible way. Unrestricted access to cheap coal has grown the South African economy, albeit for a restricted part of the population. Such an approach is unsustainable and has a tremendous impact on our natural systems, resulting in threats such as runaway climate change.
The move to a smarter energy supply begins with recognising the boundaries of the planet. Mature economies are decoupling their development from their resource use — they do the same with less — but South Africa will have to do much more with the same to usher its society into the 21st century.
Before 2008, industries, commerce and homeowners had little appetite to reduce energy use because of low electricity tariffs. This has not been taken into account in the demand forecast assumption for the Integrated Resource Plan 2010-2030 (IRP2010), and neither has the 2005 National Energy Efficiency Strategy (which calls for a general demand reduction of 12% by 2015) or the expected response of electricity users to efforts to reduce demand through higher tariffs.
According to Eskom CEO Brian Dames, industries have reduce their demand by 10% since the rolling blackouts of 2008, and a further 25%-35% is possible.
The Smart Electricity Planning report comes to a similar conclusion. Eskom’s Integrated Demand Management programme cut demand by 2,717MW up to 2012 and is expected to contribute an additional 1,730MW in savings for the next multi-year price determination period (MYPD3). But is Eskom the right institution to effectively implement a programme of demand reduction, which would cut deeply into its revenue base?
The National Energy Regulator of South Africa sent a clear signal to enterprises with its ruling on the MYPD3 that it did not want to kill business by another doubling of tariffs yet the industry should also not expect a continuation of subsidies to improve the bottom line via energy-saving measures through Eskom’s Integrated Demand Management programme. The regulator obviously trusts that price signals through past tariff increases are sufficient to stimulate this appetite.
Energy conservation and efficiency is the game-changer for decoupling electricity demand on the short term. A shift away from mining and other energy-intensive industries towards a just and sustainable economy that depends less on unrestricted energy supply — a green economy — will need to ensure the long-term well-being of South African society.
The economically feasible potential for energy savings in commercial and residential buildings is rising with each tariff increase. The Green Building Council of South Africa regularly presents cases of energy-efficient architecture, with savings far beyond the mandatory regulations for such buildings.
The next update of the building regulations needs to transform today’s best practices into tomorrow’s standards. At the end of this development, South Africa might have a near-zero-energy building standard that follows the trend in Europe.
Attaining existing and more ambitious future energy-efficiency targets will be crucial in the move to a smart and sustainable energy supply without constraining South Africa’s economic development. Such a supply must be able to deal with high levels of uncertainty around economic development and be in balance with the planet’s boundaries. Fossil fuels and nuclear power cannot fulfil these criteria.
Eskom’s coal-fired Medupi and Kusile power stations go online before 2020, and renewable energy generation from solar and wind grows in the coming years following the IRP2010 strategy. This ensures a safe and reliable supply for at least the next decade.
Beyond that, the IRP2010 aims to lock South Africa into an inflexible and expensive nuclear power development of 9.6GW, which intends to replace parts of Eskom’s ageing infrastructure. But with a wiser — a more efficient and effective — use of resources, South Africa can reduce electricity demand or keep to current levels and still grow the economy. Retired grid capacity can be replaced entirely by renewable energy.
Efficient and low-carbon on-site co-generation of power and heat for industries and commercial buildings — based mainly on conventional natural gas and renewable sources instead of dirty and inefficient coal-generated electricity — will be an important contributor to a future electricity supply system. Storage options including hydro-pumped storage, advanced battery systems, and molten salt in concentrated solar power plants, while hydrogen or methane produced from solar and wind’s overcapacity will fill the gaps in a mainly renewables-based power supply.
South Africa’s carbon tax is intended to affect both the uptake on energy efficiency and the acceleration of renewable energy and low-carbon on-site generation, as it contributes to price signals from electricity tariffs.
The effectiveness of the tax will depend on how free industries and citizens will be in their choice of electricity supply. Equal access for independent power producers to supply to the national grid and for customers to freely choose their suppliers can be ensured by the proposed independent system and market operator, a state-owned entity.
In conclusion, mining, industry and commerce can cut 35% of their overall electricity demand and buildings can reduce two-thirds or even more — all with a reasonable return on investments and creating much-needed jobs. Beyond Medupi and Kusile, renewable energy solutions — together with an efficient use of conventional natural gas through co-generation and advanced storage systems — will ensure a sustainable and affordable electricity supply for all.
• Fischer is programme manager, policy and research, at Project 90 by 2030 — a member of the Electricity Governance Initiative of South Africa, which is a global network of civil society organisations dedicated to promoting transparent, inclusive and accountable decision-making in the electricity sector.