It would be nice to think of 2014 only as the year that South Africa finally felt the power of wind, in the words of Wind Energy Association chair Dipolelo Elford. At last, wind power had been deployed here commercially.
But there was a darker 2014. As the year drew to a close, you’ll recall that the lights went out. Eskom took its loadshedding scheme out of mothballs and declared a power emergency among its industrial consumers, plunging already embattled South Africans back to the dark days of 2008. The national grid was buckling under multiple attacks: a collapsed coal silo at the key Majuba generation facility, diesel shortages, soaring costs, breakdowns. And, lest we forget, interminable delays continued to bedevil the desperately needed Medupi power station.
And that was just the here and now. In our future: a R100 billionplus nuclear deal with Russia that, depending on whose interpretation you preferred, would either bankrupt the nation or save it.
At Windaba, this was all grist to their mill. Not that everyone was smug at this annual talkfest held in Cape Town under the auspices of the SA Wind Energy Association and the Global Wind Energy Council. But presenters and delegates had every reason to feel upbeat.
The initial phases of the Department of Energy’s Independent Power Producer rollout for wind was progressing nicely. Installations were in place via the DoE’s long-winded-in-name Renewable Energy Procurement Energy IPP Procurement Programme (REIPPPP). Nearly R40 billion had been invested and thousands of jobs created. Social responsibility commitments (the theme of Windaba 2014 was “Power2thePeople: Improving lives through wind energy”) were being met. Best of all, wind energy tariffs had steadily dropped to the extent that wind was the cheapest form of new generation capacity in South Africa.
So although it was most definitely a dark time, the seriousness of this country’s energy situation represents an opportunity.
Energy infrastructure specialist Professor Anton Eberhard couldn’t help but paint a gloomy picture. Eberhard, a member of the National Planning Commission who has a day job at UCT’s Graduate School of Business, didn’t mince words: “We face the worst power crisis in 40 years. We have had shortages since 2006. We are likely to have electricity shortages for the next five years at least.”
Of course, we can’t be blind to the good that has happened. Electrification since 1994 represented a remarkable accomplishment, Eberhard said. South Africans with access to electricity went from less than 40 per cent to greater than 85 per cent in 2014. Against that, although until recently we had cheap and reliable electricity, that is no longer true.
Electricity security is a key concern, he told delegates, whether it was about attracting investment or about developing a stable, affordable and environmentally sustainable supply. Eskom can’t do it alone.
“We need to see a greater role for IPPs in the energy system. Coal, gas, nuclear, renewables… complemented by demand-side management options and some restructuring of the industry.
What about nuclear? “The kind of prices we’re seeing elsewhere – UK, Hungary, Turkey… are above the thresholds that have been set. If our demand is much, much lower, we can see that we would only need that first unit much, much later, in 2037, which calls into question why all the emphasis is on nuclear procurement at this stage.” The government’s renewables programme had, by contrast, had been “enormously impressive”.
“We have seen prices come down. It’s been a world-class competitive procurement system. Really, we can build on this in terms of other IPP procurement.”
But radical reform was needed to secure a greater private participation in the system on a sustainable basis. “The heart of the system operation, the grid, the planning, the contracting, needs to be in a neutral space so that we can create a level playing fields for IPPs.”
His view was echoed by Dr Paolo Frankl, the International Energy Agency’s head of renewable energy. “In 2020, we estimate that renewables will be 26 per cent of global supply. In 2011, it was 20 per cent, including hydro. This is twice as much as nuclear worldwide.”
Regionally, African renewable growth was expected to increase by 70 per cent by 2020, with an average growth rate of 8 per cent, albeit off a low base. (Frankl pointed out that the 120 GW installed power capacity of his home country, Italy, surpassed the whole of sub-Saharan Africa, which has 90 GW.)
Wind power growth in Africa was impressive, with REIPPPP being seen as a success story, but serious questions remained about sustainability, feasibility and financing. It was critical to have an independent market and system operator to create fair competition between all types of technologies. “This is a serious barrier for renewables. That’s the major issue that is at stake.”
We shouldn’t forget other renewables, either. “Solar, for instance, is a really big thing. Just until 2012 this was mainly a European and a US story. And then since 2013 the whole market went to Asia, but now the most buoyant markets are Latin America, Africa and the Middle East.”
Thermal power was a distinct possibility because of South Africa’s large numbers of electric heaters for domestic hot water. “It is interesting to go one step beyond and think about how thermal storage can help in balancing the grid if you have a much higher share of (variable) renewables. If you think in a holistic way from the beginning, you will have the opportunity to leapfrog and not to follow the same experiences that European countries have in integrating high shares of wind and so on.”
Referring to the agency’s Africa Energy Outlook report, he said that renewables have a huge role to play on the continent. They account for nearly half the growth in the overall power supply for both centralised supply (hydro, geothermal and wind) that are connected to the grid and that are also supported by regional power pools and big energy corridors like the one in Central Africa.
So how does a country decide on its options for energy generation? Eskom’s Chief Adviser: Power System Economics, Keith Bowen, spelt out the underlying economics in minute detail.
Planning had to take into account growth, projections of power demand and emissions requirements. Put simply, faster growth might require, instead of more power generation capacity, a move away from coal into other technologies to satisfy environmental requirements. “Those two play off against each other. Demand vs our policy around emissions becomes key to what happens in the power sector in future.”
With wind particularly, although it’s variable, evidence is mounting that, the more wind farms are spread out over the country (rather than concentrated in specific areas), the fewer problems you have with wind as a variable energy technology. Initial results from the wind farms show that Cape-based sites are running at between 20 and 30 percent load factor. Although the Eastern Cape has a relatively even wind supply throughout the day, the Western Cape’s wind variability is actually something that can be turned to its advantage. Wind tends to rise in the afternoon and evening in the Western Cape – perfectly timed with the evening peak.
To some extent, the renewables are offsetting the open-cycle gas turbine generators, Bowen says. Because of ongoing power shortages the gas turbine units have been pressed into service as baseload producers, instead of peak producers as they are intended to be. “The contribution of solar is to shift out OCGTs from the middle of the day and use them more as peaking supply.”
BATTLING TO KEEP THE LIGHTS ON
It’s been suggested that the stop-start electricity situation has cost South Africans R300 billion since 2008.
By late November, we were in dire straits at Stage Two of load shedding. In addition to existing problems, now insufficient water (at peaking power stations) and diesel (to start open-cycle gas turbines) added to the headaches.
The energy shortfall was 2 000 MW. That’s huge, considering that our total installed capacity is 42 GW plus 2 GW from imports and independent producers. But it’s going to get worse. Power stations have to be taken offline for maintenance. They break down. And when the grid is under strain, everything has to work harder, sometimes outside its safe extended operating area. Open-cycle gas turbines designed as peaking power producers suddenly have to stay on longer, using more fuel, costing money that wasn’t budgeted for. So things need more maintenance. Break sooner.
And it’s not just at national scale that there are problems. Local network failures is “the other crisis that is building”.
Up the road, security of coal supply to Eskom will become an issue. Professor Anton Eberhard told Windaba that some of the local coal contracts run out soon. As many as 80 million tons per annum could be uncontracted by Eskom. “As if it doesn’t have enough problems already. But this is a serious issue on the horizon. We are not having enough investment in the coal mines to ensure continuity of supply. Current electricity use, he reminded delegates, is still way below 2007 levels. “This is unprecedented. Never before in the 90 years of Eskom have we seen electricity demand decline for such an extended period.”
The struggling economy hasn’t helped. But besides global economic problems, there has also been structural change in the economy – the growth of the tertiary sector vs primary, which is more energy-intensive.
High tariffs have helped drive down energy use to lower levels than anybody expected. “Electricity prices have trebled since 2007 in nominal terms and more than doubled in real terms.
What lies ahead? Even the new power stations such as Medupi and Kusile won’t help any time soon. “The first unit, although it (was due to synchronise) at the end of the year, only comes online midway through 2015. But look at the second unit: only two and a half years later. (He refers to a “very ambitions commissioning schedule” after that.)
“Energy availability on average used to be above 90 per cent. It stabilised around 85 per cent and you can see over the last few years it has fallen precipitously to probably below 75 per cent. Eskom has a turnaround plan… we have yet to see the details of how that is to be realised.”
Wind power is changing the lives of Jeffreys Bay townsfolk in more ways than you might expect. As part of the social responsibility commitments of the wind farm – the country’s biggest – at this Eastern Cape coastal town, a range of people from a physically handicapped to a 90-year-old are gaining a measure of independence thanks to the acquisition of wheelchairs.
KwaNomzamo Home-based Care is just one of the projects to benefit from the scheme, which has already injected about R2 million into local communities. KwaNomzamo provides care to people infected with HIV/AIDS in their homes. Care and support is also offered to Orphaned and Vulnerable Children, which includes child-headed households.
Similarly, more than R250 000 (including a vehicle) has been pledged to On Eagles Wings Multi-Purpose Centre, which offers counselling, education and life skills to women and children experiencing domestic violence and rape. The future of this Multi-Purpose Centre includes plans to establish satellite branches in three farming community areas (Patensie, Thornhill, Blomplas and surrounding farms). An even larger amount was contributed to the Mpendulo Savings Scheme to be spent primarily on financial education and enterprise development training. The funds will provide the opportunity to further develop staff skills as well as coaching and mentoring.
The commitment goes beyond just dishing out money. At Jeffreys Bay, for instance, thousands of schoolchildren have been through a renewable energy and science programme sponsored by the Wind Farm, during its construction phase.
A little further north, Kouga wind farm, about 70 km from Port Elizabeth, represents a R1,85 billion investment. It has 32 turbines each capable of generating up to 2,5 MW of power, delivering 80 MW of new grid connected capacity. These 32 turbines will generate approximately 300 million KWh per year, enough to supply approximately 50 000 average households with electricity, mitigating over 290 000 tons of greenhouse gas emissions annually.
As part of its community involvement, Kouga Wind Farm will inject more than R250 million into local upliftment projects. It has engaged with community-driven projects, undertaken in consultation and co-operation with locals, that range from a sports field upgrade, to a playpark, soup kitchen support, crèche maintenance and sports coaching. On a bigger scale, roads have been upgraded and additional facilities and services provided at clinics.