The future is arriving

An announcement early December last year by the South African Department of Energy (DoE) that it received 384 responses from renewable energy developers to a request for information issued at the end of September for the initial phase of the country’s renewable energy feed-in-tariff (Refit) programme, is but one tiny sign of the dramatic changes that lie ahead in South Africa and globally on the energy front.

Driven by the joint impact of climate change, environmental concerns and depleting resources of fossil fuels globally, the first rays of a new technological energy age is becoming ever brighter. Few aspects of modern life will be left untouched by it.

It will impact on the institutions like Eskom and local authorities in South Africa presently almost solely responsible for the generation and distribution of electricity, it will dramatically impact on the transport industry, new investment opportunities will open up while some technologies in common use today will become obsolete.

Impact on international relations

It will also profoundly impact on international economic and power relationships, depending on how different countries and regions respond to the challenges of the changing energy mix.

In an article published early January Phil Champain, director of programmes at International Alert, wrote: “In our industrialised world, relationships between states and the social contract within states have been partly shaped by the demand for and supply of energy and by who has access to its benefits.

“Inter-state wars have been fought over energy resources such as oil for example – and the revenues supplied to governments by this ‘black gold” along with oil pricing policy for consumers (e.g. fuel subsidies) have shaped the degree of interdependence between central governments and citizens within states.

“Indeed, over the past 100 years or so, demand for and supply of oil has come to dominate the relationship between those having energy resources and those wanting them. Oil provides warmth, electricity and fuel for transport. It is the lifeblood of the global grid system which connect us – for better or for worse.”

China ahead of the field

How the way  countries deal with the impact of the changing energy environments will influence power relations is well illustrated by the prominence China is increasingly assuming on this front.

While China last year produced about 3.2 billion metric tons of coal, up 300 million tons (or 10%) from the year before, which is about the equivalent of 15 billion barrels of oil, or half the world’s annual oil production, it is also fast becoming the world’s leader in clean, renewable energy.

A report at the end of last year by the Worldwatch Institute has shown that China’s growth in the renewable energy industry, after the global financial crisis, has been greater than most developed and developing nations. It was possible for China to move into a dominant position by “using a combination of technological advances, aggressive policies, and a strong financial position,” the report says.

“China is succeeding precisely where the United States is failing, in implementing the ambitious policies and making the sustained investment  needed to spur growth in clean energy. If China keeps on its current pace, it will be the undisputed global leader in clean energy within the next two years,” the president of Worldwatch Christopher Flavin said.

China plans to reduce its carbon emissions per unit of economic output by between 40% and 45% by 2020 with renewable representing between 16% and 20% of its total energy consumption by 2020 and growing to between 40% and 45% by 2050.

In 2009 China’s solar photovoltaic companies already held 40% of the global market, with most production being exported to Europe, while the country’s solar water heating capacity alone accounts for 80% of global installations. It is the world’s top manufacturer of solar water heaters, with domestic production capacity topping 40-million square metres.

Illustrating the importance of establishing a domestic market for new technology to create a launch pad for exports, Chinese manufacturers now account for 90% of the global market for these products.

An important part of adapting to the changing energy environment is the improvement in the efficiency of energy use. On this front China is also a world leader, having succeeded in reducing energy intensity, or energy used per unit of gross domestic product, by 15.6% between 2005 and 2009 while it was on target to take it to 20% by 2010.

South African response

In South Africa on the institutional front the most prominent change at hand is the entry of private-sector electricity producers into the market, even beyond the question of Refit for the private renewable energy sector.

In September last year public enterprises minister- Barbara Hogan said that cogeneration (between Eskom and private-sector entities) would feature prominently in the second integrated resources plan. She reiterated that cogeneration had an important role to play in diversifying the future energy mix of the country, particularly as the electricity supply situation became critical as demand increased.

At a Cogeneration World Africa 2010 conference held in September last year Tore Horvei of Norconsulting said there was no question that there was ample room and a need for independent power producers (IPPs) and cogenerators in South Africa, as the power market was too large to be served by only one player (Eskom). A country and its economy could be at risk by relying on only one large electricity supplier, he said.

On the renewable front there could be further development early this year. Reacting to the number of responses from renewable energy developers to DoE’s request for information (RFI), acting deputy director-general electricity, nuclear and clean energy, Omphi Aphane said that the responses would inform the procurement programme, documentation for which would be release to the market during the first quarter of 2011.

Altogether, the projects which emerged from the RFI process represented some 20 000 MW of renewable energy capacity, as well as 4 000 MW of cogeneration capacity. Not all, however, were yet in a sufficient state of readiness to participate in a full-blown procurement process, which would culminate in a power purchase agreement with Eskom.

Fewer than 30 of the 384 projects proposed through the RFI process had, for instance, received an indicative quote and preliminary timeframe for grid connection, which gave an indication that grid readiness was a potential barrier for deployment.

“Initial discussions with Eskom transmission planning division indicate the availability of connection capacity for Refit independent power producers is sufficient until 2016,” the department stated at the time.

It was matching the preliminary RFI findings with the existing industry conditions, including mapping of current market indications from the RFI process to existing Eskom infrastructure and future grid planning. The new information gathered from the RFI process would be factored into the second integrated resource plan (IRP), a draft of which was released earlier in 2010 and being canvassed through a public participation process.

Initially the IRP allocated about 7 200 MW of electricity generation from renewable energy sources by 2030, which is equivalent to about 16% of the projected capacity by 2030.  However, if it was proven that renewable energy could contribute more, this number could be increased going forward, the DoE said.

Information from the RFI process showed that wind power projects made up one-third of the responses and accounted for 70% of the joint capacity projected by the responses. Solar photovoltaic projects accounted for one-third of the responses and 15% of the estimated capacity, while concentrated solar power accounted for 5% of responses, and about 10% of the potential capacity. The remainder of the responses were from biomass projects, hydropower projects, landfill gas and biogas projects.

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Comments (2)

• |2011-01-19 12:01:26 Richard Worthington  - Energy Report
  Why is South Africa not embracing the transition to renewable electricity supply and seeking a role in this rapidly growing global industry? What kind of proof does the DoE require “that renewable energy could contribute more” than the 16% of installed capacity envisaged in the DRAFT IRP2?
  Last year WWF South Africa published a scenario that envisages 50% of electricity generation from renewable resources by 2030, without early retirement of any existing plant and costs no more than 10% higher than a business-as-usual scenario. While we did not do a projection of the job creation potential, it is well established internationally that this is significantly higher for renewable energy technologies than either fossil or nuclear technologies.
  On 3 February we will launch the ENERGY REPORT (commissioned from the Ecofys consultancy). The study provides: “A robust description of the radically different energy future we need” – describing a pathway and scenario detailing how the world can...
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• |2011-03-16 19:41:30 Esther Maluleke  - Recently Launched Energy Report
  How does one get hold of the Energy Report launched in February? Is it sold? If so, how much is it?
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