To make a final assessment of South Africa’s future electricity strategy it is necessary to evaluate carefully the long term economic impact of the available alternatives sources of energy for electricity generation. This requires a realistic assessment of the current alternatives based on their full economic impact over a 30 to 40-year period rather than marginal incremental impacts. Short term assessments do not reflect their true full economic impacts. This is a major separate exercise and will become a key guideline to any strategy and plans to restructure Eskom and the energy sector.
It is only possible to summarise the likely sometimes unforeseen consequences and blatantly ignored inconvenient truths that will emerge if the current plans contained in the current IRP 2016 are followed through.
The large-scale use of renewables could lead to a significant decline in the mining sector generally and the coal sector in particular. The coal sector could shrink by 46% given the direct, indirect and induced impact reduce the Gross Domestic Product (GDP) of South Africa by over 2,5%. This will result in a loss of at least 29 000 jobs in the coal mining industry, and almost 162 000 jobs in the economy. This will detrimentally affect more than 600 000 dependents .
The most efficient usable energy and energy storage systems are natural and are today stored underground. Nuclear or uranium is the most efficient, formed by the earlier nuclear processes followed closely by fossil fuels, primarily coal, gas and oil from earlier plant growth driven by the sun. Wind and solar are nature’s least efficient, most unpredictable and most variable energy sources. It is necessary to have 100% backup power for such renewables. South Africa is well endowed with the world’s most efficient energy sources namely nuclear and coal . Wind only produces 35% of the time and solar only 26%. South Africa would become an energy importer unless significant quantities of gas are found domestically as the back-up would be gas .
The drive for renewables would deprive South African citizens of the value and added value of the countries coal and uranium reserves. The value of each of these is more than ten trillion Rand. This is many hospitals, schools and other social benefits. The countries balance of payments would be seriously detrimentally affected. Coal is the country’s largest export earning commodity earning approximately R55-billion per annum .
This would decline significantly as the sector becomes less efficient and South Africa becomes a less favoured mining destination . Calculations including the economic risk of using these sources where the risk of failure increases significantly show they are far more costly than simple Levelised Cost of Electricity (LCOE) calculations show. Studies indicate that the LCOE methodology is inappropriate when dealing with intermittent and variable and unpredictable energy sources. Studies show that the plans for massive wind are inappropriate for South Africa. The studies found they were unrealistic and unsustainable .
The inefficiency of these forms of electricity are notorious in countries ranging from Europe to South Australia. The failure of energiewende in Germany and the disastrous consequences in South Australia are well documented .
There is nothing like the test of global reality. In 2016, it the prices paid by industry in Germany were 52% higher than France (nuclear) and 86% higher than Poland (coal). There is no country in the world with high penetration renewables, where electricity prices are cheaper than coal or nuclear-powered electricity are available. This includes countries such as Denmark, Germany, Ireland, China, and states like South Australia and California. Many countries with high penetration wind are experiencing energy poverty and de-industrialisation .
A recent study in King Island in Australia have added further proof. This long-term project proved that the renewables required 100% diesel or gas back up and delivered power was extremely expensive at approximately R2,67/kWh .
Most emerging high growth countries are rapidly increasing their economic growth rates by using High Efficiency Low Emissions (HELE) or “clean coal”. This is regarded by them to be the cheapest source of efficient stable electricity available for their economic growth and industrialising needs. These countries include the ASEAN countries, China, India, Vietnam, and Poland. Clean coal is globally recognised to be one of the most cost-effective and efficient methods of reducing emissions and reducing other pollution .
Piyush Goyal, Minister of State with Independent Charge for Power, Coal, New and Renewable Energy in the Government of India has been quoted as saying “We will be expanding our coal-based thermal power. That is our baseload power. All renewables are intermittent. Renewables have not provided baseload power for anyone in the world”.
South Africa is effectively subsidising these countries’ industrialisation by exporting coal to them and turning away from efficient coal in this country. This slows down its own industrial and mining development. South Africa will become a larger importer of manufacture value added goods because it cannot compete with the manufactured imports from these countries which have cheaper electricity.
Supporting exporting coal for electricity generation elsewhere but not utilising the product to bring economic benefits to its own citizens defies environmental, economic and social logic.
Large scale windfarms and solar fields are environmentally disastrous. They are lethal to most birds and in particular to larger species such as vultures, cranes, eagles and other species. Many birds range feed and migrate over wide areas. High penetration windfarms ultimately will take up enormous areas of land. By 2050, South Africa plans 100 000 MW of windfarms covering at least 60 000 km2 .
A study in the USA found that on average 4 birds per MW were killed. This rose to 16 birds per MW in California. On this basis, the birds lost would be at least 400 000 per annum and over 8-million over the 20-year life of these windfarms. Important species would be threatened and could face extinction .
Studies of extreme events around the world ranging from hurricanes to polar bears, sea level increases to bio-diversity show that there are many incidences of misunderstanding exaggeration and misinformation being released around the world .
The land area detrimentally affected is far larger than the 60 000 km2. Many birds range or migrate more than 20 km from their nests. The damaging footprint of windfarms is substantial and such plan would damage more than 400 000 km2 of land. Much of this in environmental sensitive areas such as the coast, coastal mountain ranges, nature reserves and tourist areas .
The Musk battery in South Australia, the world’s biggest, is estimated to costing Australian $150-million (about R1,3 billion). It has a maximum power of approximately 100 MW and a storage capacity of 129 MWh. When wind fails and there is shortfall of 2000 MW, this battery will be able to provide 5% of the needed power for less than 1 hour 17 minutes. A 2000 MW battery, would cost R81-billion and would produce for approximately one hour. It then requires recharging .
The elements making up the motors involve highly toxic chemicals in mining and ultimately their disposal. 100 000 MW involves over 25 000 wind turbines with enormous concrete foundations structures and roads and transmission lines spread over more 60 000 km2 .
The pollution element of windfarms and their support back up including back has been vastly underestimated. The cost and environmental cost of both mining and ultimately burying all the toxic chemicals and mineral associated with batteries and windfarm components is enormous. In practice the costs and dangers involved would by all accounts far exceed the equivalent cost of nuclear or coal. The risk of nuclear or coal contamination are extremely confined compared to the potential damage of thousands of windfarms and their components .
An examination of Eskom’s annual results 2017 reveals that, Eskom’s revenues were R177-billion, 24% of the raw energy budget of R83-billion was paid to Independent Power Producers (IPPs). A substantial amount of that electricity was not required. This earned less than 8% of Eskom’s revenue. Approximately R20-billion was paid for electricity from IPPs. This in effect amounts to a direct subsidy for renewable energy .
It is acknowledged in the literature that comparing variable power with secure power supplied by coal gas and nuclear gives a false analysis. In effect a straight subsidy is paid by consumers to the renewable industry. The renewable industry should be forced to supply their own back up and give quotations based on a supply load factor of at least 80%, i.e. the same as coal.
Customers that have their own supply of renewable power in the form of solar for example are also subsidised. In effect when they suffer shortfalls, supply must be available on demand to fulfil their requirements. This involves excess supply on demand for such customers by the major electricity supplier in this case Eskom.
The capital cost given for various technologies is misleading. Wind has a load factor of only 35%, solar is 26%. Coal has a load factor of 80% and nuclear 90%. The important component of life of the generating assets must also be included in the calculation. Renewables have a short life of 20 years, coal approximately 30 to 40 years and nuclear greater than 50 to 60 years .
Final capital costs work out at 0,31/kWh for renewables, R0,19/kWh for coal and R0,17/kWh for nuclear. The answer is clear-cut in terms of long term capital cost, coal and nuclear are the cheapest and wind and solar are the clear laggards. Taking risk of severe outages and the additional grid costs into account put the costs of wind at R1,99/kWh, coal R1,09/kWh and nuclear R1,34/kWh .
Bjorn Lomborg President and founder of the Copenhagen Consensus Centre calculated that if every country were to make every single promised carbon cut, the Paris treaty’s 2016-2030 would reduce temperature rises by 0,207°C. Slower gross domestic product growth from higher energy costs would reach $1-trillion to $2-trillion every year from 2030 .
On the basis of South Africa’s GDP on relationship to Global and SA emissions of 1,1% of global emissions this means that firstly, Carbon tax renewables and its other efforts would cost SA between R35 billion to R 51 billion per annum and secondly South Africa’s efforts may reduce temperature increases “by less than 0.003oC by the year 2100. That is well within the error bound on the estimation of global temperatures – that is, it is immeasurable” .
The outcome of COP21 was an excellent agreement. What was important was not what was agreed but what was not agreed. The agreement gave a set of sound long term global objectives. It asked for no commitments by any country. In summary, countries were expected to do what was in their best economic interests. South Africa has no legal commitments in terms of the COP21 agreement. It must do what it perceives to be best in its own best economic and social interests .
Any major move to renewables whilst a country is rich in fossil fuels and uranium, the world’s two most efficient and cost effective natural energy storage system defies any economic, financial, mathematical, scientific, environmental or even rational human logic. This in a country like South Africa which must give economic growth precedence in order give priority to its key economic and social objectives namely reducing poverty, unemployment and inequity. The only real energy or electricity generating plan for the country must focus on developing nuclear power at the coast and developing HELE coal or clean coal electricity generating power inland. Until technologies change significantly these are the only viable major economic electricity generating sources going forward for the foreseeable future.
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 Calculated from IRP 2016.
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