Renewable Energy

Over the past 2 years, a group of energy experts have been engaged in putting together a book which examines the energy situation in South Africa. This book will be published later this year. The title of the book is Electric Capitalism: Recolonizing Africa on the Power Grid, edited by David A McDonald, HSRC press (Cape Town) and Earthscan (London), in press.

One of the chapters focuses on renewable energy, authored by Liziwe McDaid.

The following extracts give one food for thought.
…. There are many different technical solutions to meet short and long term storage needs. Solar thermal plants use the sun’s energy to convert heat into electricity. In California, there are plants with a capacity of 350MW which have operated for more than 10 years. The technology is therefore established, and solar thermal plants can be built on a large scale to meet industrial needs. Solar thermal plants can have storage through storage systems such as molten salt which would allow such plants to run 24 hours per day. Excess energy from the solar thermal plant is stored in the salt during the day and released to produce electricity during the night (Agama Energy 2003, 35)….

….While wind and solar technologies are established throughout the globe, the pebble bed technology is a new technology still in the developmental phase. The cost of the pebble bed demonstration plant “has increased by a factor of five and completion of the Demonstration Plant, expected in 1999 to be in 2003, is now still six years off.” (Thomas 2005, 30). These figures also fail to reflect costs such as fuel production, as well as the nuclear regulatory regime required to ensure public safety……
…….If we use solar photovoltaics as an example, The costs of PV are almost all up front costs. There are almost no operating costs and no fuel costs.. ……

….However, these large initial investments are viewed as a hurdle and identified in the DME White Paper as the main barrier to implementation on a large scale. According to Awerbuch (2000, 4) this shows a lack of understanding of renewable energy technologies. In a gas turbine, for example, less cash flow is tied up in the loan because there is more outlay needed for operational expenses. In the case of PV, there is very little needed for operational expenses. Awerbuch argues that low risk investments can take on bigger loans, and higher loan repayments and that this is accepted practice elsewhere….

….Awerbuch (2000, 16,17) argues that the relative costs of RETs to fossil fuels can change over time due to uncertainties such as the increasing price of oil, the decreasing costs associated with improved efficiencies of evolving newer RETs, and the increasing cost of meeting constantly improving environmental standards…..

….The implications of Awerbuch’s conclusions are that the costs of fuels such as sun, ocean currents and the wind can be factored into the long term financial equations as a fixed cost – eg. zero – while there is huge uncertainty in the oil price which must be factored into conventional electricity generation (for example to transport nuclear fuel to the reactor and to convey waste to a dump site). To illustrate, the petrol price in South Africa has risen from R3.81 per liter in 2003 to R5.66 per litre in December 2006, an increase of almost 50% over three years….

….These risks are ignored using conventional financial models and the comparative benefits of renewables are not apparent (Awerbuch 2000, 18)…..

….A feed-in tariff would regulate the price that suppliers receive for their renewable energy, in effect guaranteeing their viability. This would enable renewable energy suppliers to prepare their business case and look for investment on the basis of a known return. It is a system which has been implemented in other parts of the world, for example in Denmark and Germany…..

….According to Lackmann (2003), Germany was able to reduce the cost of wind-generated electricity by 60% over just 12 years. They achieved this through the application of a feed-in tariff, which stimulated enormous advances in wind turbine technology. The results are startling and South Africa needs to take note. In Germany, installed wind capacity was 68MW in 1990 when the feed-in law was introduced. By 2000, installed capacity was 6095MW and by 2004 it was 15000MW (Meixner, 2003). In the South African context, the feed-in tariff is regarded as the most effective system to promote the rapid uptake of renewables (Greg Austin, Agama Energy, pers. Comm. 2006)…..

Transforming the grid:
As pointed out by the DME (2004, pg 25), a utility such as Eskom, which controls generation, transmission and distribution finds itself in a conflict of interest when facilitating access to the grid for renewable power. If the grid were “smarter”, it would be more decentralised, improving efficiencies by reducing the distances between the energy producer and the user (in South Africa presently transmission losses from Mpumalanga to Cape Town are about 10-20% (Dobson 2006)). A decentralised system would also increase the security of power supply and be less vulnerable to power disruptions. The future scenario would see a flexible, dynamic grid that can accept power as well as push it out….

…Some perspective can be gained by considering the 2006 electricity black outs in South Africa. Eskom was forced to pay customers with the ability to generate their own electricity to keep them from drawing power off the grid (Eskom generates electricity at 11c/kWh but paid out approximately R1.70 /kWh to these consumers) (Davin Chown 2006. pers comm.). It seems logical to assume, therefore, that a system which allows customers to feed back electricity into the grid, rather than paying inflated prices to keep customers off the grid, would be of benefit to all….

…International experience clearly shows that where the systems are in place, renewable energy will flourish (Guteri and Romano, Newsweek, September 13, 2004, 36-7):

In Japan, Hitoshi Iokawa, installed solar panels on his roof in 1997. It cost him the equivalent US$33,000 of which the government subsidised a third. He now generates an income of $460 a year selling electricity back to the grid – enough to offset his electricity bills. Japan started its programme of solar power in 1993. Now 170,000 homes feed into the grid

In California, Ignacio Vella , powers the fridges in his cheese factory with 234 solar panels, and is able to sell leftover energy back to PG&E, the local power company (Guteri and Romano, Newsweek, September 13, 2004, 36)

The real problem is not, therefore, the economics or technical issues around RETs, but the political will to take the lead. Tony Blair’s response to climate change (quoted by Monbiot 2006, 22) summarises the political dilemma: “There is a mismatch in timing between the environmental and electoral impact“. In effect the full horror of the harmful environmental impacts of our current dirty electricity generation path may only be felt in 25 years’ time whereas politicians only operate in five year electoral cycles.

For more information, please contact Liziwe on liziwe@mweb.co.za