An industry in disarray?



Mike Rycroft

At a recent meeting of a local well established energy association, a decline in membership prompted the question of whether there is still a place for non-partisan industry associations. The energy industry seems to have split into factions representing different technologies, each promoting its own interests.

There is a basic split between renewables, fossil fuels, and nuclear. Each division has its own subdivisions with its own associations and seems bent on grabbing the largest slice of the generation mix pie for themselves. Small wonder that there is not much support for a unified energy association.

The underlying problem could of course be the integrated resource plan (IRP), which is technology centred, and allocates a portion of the generation pie to each of the different technologies. The allocation is based on technology forcing policies, and to a certain extent follows policies which are ideology driven, but the logic behind the way in which allocation to each sector takes place is the subject of question.

Allocations based on non-technical and non-financial issues are subject to influence by interest groups and lobbying. The IRP makes provision for some nine distinct technologies, depending on how you look at the plan, and splits the total allocation between all nine.

One of the reasons given for such allocations is the need to establish new industries as well as support existing ones. Power generation is a huge industry on its own. In this aspect the IRP has not achieved much success, and the bulk of renewable energy plant is still imported.

The recent signing of PPAs for the current REIPPP programme raises the question: What next? With a current oversupply of electricity, will the government continue with the programme or decide to delay the issue of further windows until it is clear what is happening with demand?

There are quite a number of projects from previous windows that are now operational and supplying power to the grid, and it would be interesting to see how many people are employed permanently on these projects. The figures must be available from the industry and it would go a long way to clearing the misunderstandings if these were made public. Could the industry perhaps supply figures on how many people are employed on these installations? Include contacted O&M staff who may work on more than one project. It would certainly help to form a comparative figure and clear much of the hype surrounding the REIPPPP.

Past allocations have shown the IRP to be subject to influence by lobbying from certain sectors in the industry, rather than technological or financial considerations. Such lobbying is of course at the expense of other sectors, and can turn the energy sector into a battlefield. The driving policy is the white paper on energy, which specifies a move to low carbon or low fossil fuel power generation industries. Some sectors have taken this to mean a transition to a 100% renewable energy future, and excluded low carbon sources such as nuclear and carbon neutral technologies, but the policy doesn’t say this.

One can understand the philosophy behind a diversified programme. The risks of focusing on one technology are immense, and it’s always wise to diversify. Britain for instance, which has a policy of changing from coal fired power stations to gas fired, does not have an internal supply of gas and has to import gas from other countries. According to reports the country almost ran out of out of gas during a recent cold spell and needed to keep the few remaining coal fired stations running flat out to ensure supplies of electricity. This might have been averted if the UK had gone forward with fracking, but this programme was delayed or halted by protests from environmental activists.

This would have been no news until someone allegedly discovered that anti-fracking activist groups were being funded indirectly by the same major gas supplier. Apparently a recent report delivered to Congress in America claims that anti-fracking and anti-oil activists in that country were being supported and funded indirectly by the country which supplies natural gas to Europe.

What does all this have to do with the South African REIPPPP? In addition to lobbying from industry sectors there is a considerable amount of lobbying from non-industry organisations and activist groups, some of which are alleged to receive the bulk of their funding from foreign governments, and are known to provide support to local organisations in the anti-coal and anti-nuclear movements. This would not be sinister in itself except that the country concerned is a major manufacturer of wind turbines.

Are the divisions in the industry actually serving the consumers and the country in providing a secure source of electricity and establishing industries and employment, or has the whole process been hijacked to benefit foreign manufacturers and large international corporations? Maybe a united energy sector is needed again.

Send your comments to energize@ee.co.za

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