Electricity Watch

Global pipe dream and South African question marks

Sun ‘farming’ in South Africa
Sun farming.jpg

Thanks to favourable climate conditions, South Africa cashed in successfully on dreams of a world powered by renewable energy, but SA and the world both need a reality check.

The leaders of the world’s seven strongest industrial nations, known as the G7, at their summit last week in Bonn, Germany, adopted a goal of world free of fossil fuel and a vision of “a 100% renewable energy future”.

And, in line with such ‘dreams’, South Africa has become one of the leading destinations for renewable energy investment, with an estimated R193 billion already committed.

However, in a thorough analysis of the way in which the G7 leaders are going about achieving their collective coal, Professor Paul Young, of the department of Energy Engineering at the University of Glasgow, comes to the following conclusion: “Probably where we are more realistically heading is towards a world in 2100 where we depend more heavily on coal.” (Also read Let’s Think.)

About South Africa’s renewable energy programme, launched by the government in 2011, Lucy Baker, a research fellow, International Relations at the Sussex Energy Group’s Centre for Global Political Economy at the University of Sussex, writes: “...there are question marks over how successful the programme has been in balancing the demands of financial and commercial soundness, and requirements of economic development and community co-ownership.”

The G7 dream

In an article on the Africa edition of the website The Conversation, Young argues that when people talk about “decarbonisation, they tend to make the mistake to only think about energy in terms of electricity and that solar power, wind farms and the like will wean the world of fossil fuels”.

Besides the problem of existing capacity constraints on electricity grids, to “...cover the extra requirements to make heat and domestic transport electric, (from renewables) we would need five times more.”  

Other problems/demands include:

  • Storage capability for when renewable sources (sun and wind) are not available. To store kilowatts and megawatts in the batteries of the future is imaginable, but gigawatts another matter. Engineering requirement makes it almost impossible to get the costs to a point where this is viable; and
  • The bigger demand for energy is not electricity, but rather transport, especially long haul and trans-ocean shipping, and besides for domestic cars, the “idea that anybody is going to be able to produce a battery big enough to store the electricity to power a passenger aircraft or a major container ship is laughable”;

Besides energy there are many other uses and products from fossil fuels embedded into the modern economy and lifestyle, including:

  • Modern agriculture and future food security is dependent on fertilisers coming from fossil fuel;
  • Steel is still produced to the tune of 50% of needs from ‘virgin material’ and is actually an alloy of iron and carbon and therefore it is not just a matter of the energy needed to produce it;
  • Society also depends on plastic and the same applies to materials needed to produce renewable energy like lightweight carbon-fibre wind-turbine blades and thin-films photovoltaics for which fossil fuels are needed; and
  • The same applies to products like pharmaceuticals, cement and more.

Then there is the mass consumer culture. “Realistically the only solution to our fossil-fuel dependency is an end to mass consumer culture, but that’s just not what the politicians are proposing. Instead we are just encouraging the developing countries to get addicted to the same consumer lifestyle as those in the West,” Young writes.

He concludes: “Probably where we are more realistically heading is towards a world in 2100 where we depend more heavily on coal. Unlike oil, it will still be available in large quantities. We will remove the majority of the carbon emissions by coupling carbon capture and storage technology to underground coal gasification.”

South African renewables boom

About the South African programme for renewable energy Baker writes on the same edition of The Conversation website that it got off to a good start and brought in a diversity of new players and sources of investment.

Consolidation is now taking place, with international firms playing a leading role in project development. It has seen smaller South African developers being priced out of the market by foreign companies.

By June 2015, the renewables programme had procured more than 6327 MW under four bidding rounds. Of this, 53% was for wind, 36% for solar PV and 10% for concentrated solar power. It is anticipated that a further 6300 MW will be procured. Thirty-seven projects to a total of 1827 MW have now been connected to the grid.

Unique to South Africa’s case, projects are scored 70% on tariff and 30% on economic development and community ownership criteria. Each bidding company must at a minimum be owned 40% by South Africans, of which a minimum of 12% must be black shareholders.

In addition, a minimum of 2.5% of the company must be owned by communities living within a 50 km radius of the project site.

This complexity of the programme has posed a big challenge for developers by incorporating 17 sets of minimum targets and thresholds. Some also go beyond the core competence of most developers, resulting in the contracting of socioeconomic development consultants and/or community liaison officers.

And failure to deliver on economic and community development could result in the purchase agreements being terminated.

Shareholders can sell their shares in a project three years after the commercial operation date. As project owners are responsible for the economic development criteria and community benefits, a key question is how this responsibility will be upheld when the ownership structure changes.

“Scrutiny of the renewable energy sector, as of any infrastructure development, is important. Based on economist Mariana Mazzucato’s thesis: Investment must socialise the risks as well as privatise the rewards.

“This refers to the nature of investment that seeks short-term profits backed by the state, while the longer-term costs are often paid for by the general public.

“However, there must also be scrutiny of the potential diversity of other electricity generation projects emerging in the wake of South Africa’s electricity crisis. This includes privately produced power from cogeneration, gas and baseload coal.

“It also includes a 9,600 MW government-run nuclear power programme. There is no certainty around this and little transparency around who will build it, where and at what cost.

“Furthermore, the devastating human and environmental impact of the country’s long-term coal development and related infrastructure should not be forgotten,” Baker writes.

It is clear that, be it on the global stage or at the domestic level, the transition to or the large-scale use of ‘clean energy’ is not nearly as simple or straightforward as either politicians or campaigning activists would like us to believe.

by Steve Whiteman

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