Eskom CEO André de Ruyter has a philosophical – but not naive – approach to the SOE’s challenges and is seeing beyond South Africa’s coal addiction to new, appropriate technologies and smarter investment strategies

First published in the Daily Maverick 168 weekly newspaper.

André de Ruyter is the most important businessman in South Africa today. If the Eskom CEO can’t deal with its debt, its notorious inefficiency and the load shedding problems, the whole country will suffer. It wasn’t helped by an explosion in Medupi this month, which caused an estimated R2-billion in damages and will take two years to repair.

De Ruyter is planning to evolve Eskom into a modern power utility, lessening its dependence on coal and embracing cheaper technologies in renewables, while keeping an eye on the upcoming EU carbon border tax.

Faced with an enormous R400-billion debt from State Capture and 66% overstaffed, according to a 2016 World Bank policy research working paper, Eskom is in a deep financial hole – one that threatens to pull the country down with it.

De Ruyter, according to The Sunday Times, said yes to the most poisoned chalice of a job in the country – even more so than the Bafana or Springbok coach – after 27 black executives were asked to apply for the job but declined. He must have known he would be vilified and his reputation could be damaged, but he took the job anyway.

But De Ruyter is strangely optimistic about what can be achieved with Eskom.

“I think we are in a fortunate position that we are faced with an array of power stations that are rapidly approaching their end of life. They’ve had a very hard life, they’ve been run far harder than norms would dictate, and they haven’t been maintained properly,” he told me in a wide-ranging podcast about Eskom’s future.

The “incredibly expensive” estimate to bring them into full compliance from an environmental point of view is about R300-billion. “And of course, you earn no return on that money. You don’t get any new-generation capacity.”

Even more concerning, the costs of coal are now going to become more expensive because of the environmental abatement costs and increasing costs of carbon emissions. Meanwhile, competing technologies are becoming increasingly affordable.

“And if you’re a businessperson, which I think I am, you look at this, and you say: well, do we invest R300-billion in environmental compliance costs? Do we spend more time on extending the life of our existing fleet? Or do we see this as an ironic opportunity to pivot the industry away from carbon to a cleaner, greener future?

“And, by the way, in the process attracts significant concessional funding – from international lenders who are very concerned about climate change.”

Even more disastrous is that insurance firms are increasingly less willing to insure fossil fuel polluters, even if Eskom could secure funding.

Meanwhile, the cost of renewable energy and battery storage plunged 60% from 2015 to 2020 and is expected to decrease another 30% by 2025.

International funding opportunities abound. De Ruyter quotes figures of $40.5-trillion in total global so-called environmental, social and governance assets under management in 2020. This is part of Eskom’s Just Energy Transition Plans proposal presented to the Presidential Climate Commission in July.

De Ruyter may seem philosophical about Eskom’s seemingly insurmountable challenges, but he is clearly not naive.

“Great challenges in human history have often given rise to great opportunities and great developments. If you look at the Second World War, it gave rise to a whole bunch of technological innovations that we still benefit from today. The same with Covid. The same with the energy crisis in South Africa.

“If we had built the power stations that Eskom had suggested 15 years ago, we would still be bound to coal for an extended period of time, because we would probably operate those power stations until the end of their lives,” he said.

“But now, because ironically we didn’t invest, we have load shedding, and we have a shortage of generation capacity that coincides with this opportunity of ‘let’s see what we can do to turn this challenge into an opportunity’.”

He added: “And that’s the great thing about the challenge that we currently face.”

If there is one person in South Africa who should be this optimistic, it should be the CEO of Eskom.

South Africa needs the vision and commitment to move past coal and into a greener, more sustainable future. Thankfully, André de Ruyter gets it. DM168

 

Toby Shapshak is the publisher of Stuff.co.za and Scrolla.Africa

‘No choice but to ditch coal’

South Africa should freeze investment in new private coal plants, including the 3.5 gigawatt coal plant proposed for the Musina Makhado Special Economic Zone that will make it “virtually impossible” to achieve national commitments to reduce carbon emissions.

According to a new report on the coal value chain by Trade & Industrial Policy Strategies (Tips), this is a critical step the country can take to ensure a more equitable and efficient shift away from coal.

Other steps include lifting regulatory limits on investment in renewable capacity and storage and restrictions on Eskom’s investment in cleaner energy sources.

In 2019, South Africa accounted for 3.6% of global coal production compared to 0.4% of the world’s GDP and 0.8% of its population. In the 2010s, coal fuelled more than 80% of local electricity and generated 5% of its exports, while Sasol’s oil-from-coal refineries produced a fifth of the national petrol supply.

But fundamental changes in electricity technology and the risks posed by the climate emergency have disrupted the coal value chain.

From the late 2010s, “clinging to coal” contributed to escalating electricity tariffs, which more than doubled from 2008, as well as accelerated load-shedding. By last year, this had become a central constraint on growth and job creation.

At the macro-economic level, the effects emerged in falling demand for grid electricity, which contributed to stagnant domestic coal sales and, despite this, a rise in Eskom and coal mine revenues as a percentage of GDP. Last year, during the Covid-19 pandemic, the recovery in electricity generation lagged.

South Africa’s electricity crisis was ultimately shaped by the global climate emergency, with the coal value chain accounting for 60% of the country’s greenhouse gas emissions. In 2020, Eskom emitted 45%; Sasol, more than 10%; and the aluminium smelters Hillside (in Richards Bay) and Mozal (in Mozambique but fuelled by Eskom), another 5%.

Global efforts to promote cleaner energy reduced the cost and increased the flexibility of generation using renewable sources and gas. “As a result, South Africa has no real choice except to transition away from coal over the medium to long term. This shift will inevitably be disruptive,” according to the report

Eskom said the report is an important addition to the body of work on the just transition to renewable energy. “We agree with the points made in the report that the transition from coal is already underway, that the cost of renewable technologies make the case for investing in these technologies and that the artificial constraints currently placed on these technologies should be lifted.”

It said the report makes the important point that the shift needs to be efficient, sustainable and equitable. “This means a transition away from coal in a phased manner over time, to ensure there are practical implementable solutions to sustainably manage the socioeconomic impacts.”

The report stated that the transition imposes hard choices on policymakers, including how to value the long-term effect of the climate emergency over the immediate crises of poverty, inequality and joblessness. The future of Eskom also needs to be considered.

These choices include how fast to move into cleaner energy sources and on how much effort and resources are needed to support and empower workers and people to move out of the coal economy.

The value chain employs about 200 000 formal workers and is the main source of livelihoods in eMalahleni (Witbank), Steve Tshwete (Middelburg), Govan Mbeki (Secunda) and Msukaligwa (Ermelo) municipalities. “Without public support, most of the workers and small businesses in these towns lack the capacity and funds to find new livelihoods even though the shift to more efficient technologies should promote broader national growth and economic diversification,” according to the report.

“We have time to get this right if we start looking at this now,” said Neva Makgetla, one of the authors

The report urges the relevant government departments, Eskom and the National Energy Regulator of South Africa to “explicitly” include a just, efficient and urgent energy transition as a priority in their mandates. For the value chain, the Presidential Climate Change Coordinating Commission could provide decision support and facilitate consultation with stakeholders while National Economic Development and Labour Council, too, could facilitate engagement with economic stakeholders inside and outside the value chain.

The energy transition will take decades, the authors say. “That provides time to establish structures able to manage it effectively through a whole-of-government approach — a critical first step toward maximising the benefits while managing the risks and costs of the inevitable disruption to the coal value chain.”

Steve Nicholls, who leads the climate change, water and green economy programmes at the National Business Initiative (NBI), said the move from coal is gaining momentum. “Certainly, over the last two years, there’s been a dramatic change in will across all stakeholders … and we’re very encouraged by that. The formation of the presidential commission is a really great step forward because now we have this forum for multi-stakeholders to talk about these issues, which maybe didn’t exist before.”

Joanne Yawitch, the chief executive of the NBI agrees. “We’ve come a long way and the extent to which the president is talking about climate change sets a direction within the government … We’re at the point where our commitment and our policies and what we want to happen, where the rubber really needs to hit the road and the implementation has to scale up.”

The Musina-Makhado Special Economic Zone representative said they were not able to comment on the report.

Municipal Feed-In Tariffs on Solar Power Feedback into the grid

Certain municipalities have feed-in tariffs available. These are in essence tariffs for selling solar energy back to the municipality.

How it would work is as follows; you install a solar power system (residential or commercial) onto your roof. The energy that you produce is used first to run loads (day loads) or charge up a battery bank for later use (night loads, high consumption during the day, or loads shedding). Any additional solar power that is generated is then fed back into the grid through a bi-directional or net meter. This meter essentially measures the amount of energy you use from the grid/Eskom/Municipal connection as well as the amount of energy you feedback into the grid.

The energy you self generate and consume in essence saves you whatever you would have paid the municipality for that energy in units (R/kWh). This is usually a lot more than you would get from selling energy to the municipality. You would typically pay in the order of R2.30/kWh while you only get paid between R0.3614 to R0.7008/kWh. If you are a business that operates 5 days a week (20 days a month), and you have spare capacity left that can be fed back during the 4 weekends (8 days), it might be worth the effort to make your return on investment a bit better (have the system pay for itself faster). If you are a homeowner this is usually not as lucrative because most people actually use more energy over the weekend when everyone is at home and doing their thing.

In most cases, it makes more sense to have additional battery capacity to store the extra energy being generated and thus have spare capacity when you need it as in when load shedding happens or there are multi-day power outages. This also means you cycle your battery bank less (use less of the available capacity) which in turn gives your battery bank a longer lifetime. For example, a good quality solar lithium battery bank has 6000 cycles available @80% depth of discharge (DOD). If you only use it to 70% DOD you can get say 10% more cycles out of the battery bank thus a longer life.

Some people do feed power back into the municipal grid without a bi-directional meter. This is done when you have a mechanical (wheel type) electricity meter. It basically works on the magnetic field of the energy flow by reversing the polarity and turning the wheel back. This means that you can generate energy during the day, use some to run day loads (and possibly charge batteries). Whatever solar energy is generated additionally is then fed back into the grid and can be used at a later stage. It’s like using the grid as a battery bank. It in essence means you exchange energy units (kWh) for units at a later stage 1 for 1. Which is equal to getting R2.30/kWh rather than R0.3614 to R0.7008/kWh.

There are different bylaws etc to have a look at different municipalities and these might change in the future. What is strange is that, in the 13 years that we have been installing solar systems, no municipality could give me these laws or bylaws (except City of Capetown) or could proof that it is illegal to do this. So it is a bit of a grey area. There is of course also the factor that there are illegal connections and that some municipalities have a 25% efficiency loss. Meaning that if they send out 100 kWh to the grid, only 75 kWh reaches clients due to transformer losses, cable losses, illegal connections, overrunning transformer (putting more capacity though than they can handle and thus running hot), etc.

If you are interested in exploring your options give us a call and we will do a free energy analysis, system design and quotation.

For interest sake, here is some more info on the feed-in programs at different municipalities;

Municipal Programs[edit]

In addition to the government tax incentive for photovoltaic solar energy generation, certain municipalities have further incentives for residential and commercial customers, such as a feed-in tariff or net metering.

Incentive Programs in Metropolitan Municipalities
Name Seat Type Notes Link
City of Johannesburg Metropolitan Municipality Johannesburg Feed-In-Tariff Embedded Generation ≤1 MWResidential: R0.4279/kWh

Commercial: R0.3614/kWh

City Power
City of Cape Town Metropolitan Municipality Cape Town Feed-In-Tariff Small-scale Embedded Generation ≤1 MWResidential: R0.7008/kWh

Commercial: R0.7008/kWh

City of Cape TownTariffs 2016/2017
eThekwini Metropolitan Municipality Durban Feed-In-Tariff Residential Embedded GenerationSingle Phase: ≤2.6 kW

Three Phase: ≤13.8 kW

Residential: R0.68/kWh

Ethekwini MunicipalityTariffs 2016/2017
Ekurhuleni Metropolitan Municipality Germiston n/a City of Ekhuruleni
City of Tshwane Metropolitan Municipality Pretoria n/a City of Tshwane
Nelson Mandela Bay Metropolitan Municipality Port Elizabeth Net Metering Small-scale Embedded Generation ≤1 MWResidential: 100% of electricity cost

Minimum cost: R0.00

Up to 1 year credit when monthly generation exceeds consumption

Nelson Mandela Bay SSEG ApplicationNet Metering Information

Policy Explanation

Buffalo City Metropolitan Municipality East London n/a Buffalo City Metropolitan Municipality Tariffs
Mangaung Metropolitan Municipality Bloemfontein n/a Mangaung Metropolitan Municipality

Millions across Africa spend as much as six hours each day collecting contaminated water. The lack of access to water and hygiene puts these communities at the greatest risk, if COVID-19 reaches their informal settlements and villages.

 

The COVID-19 epidemic has put half of the world’s population on lockdown, but what happens when the pandemic reaches developing nations and rural African villages whose health systems and basic infrastructure are insufficient, even without a global pandemic?

How will they prevent the spread of the virus by washing their hands with clean water and soap, when they have no access to either?

Millions across Africa spend an average of six hours each day collecting contaminated water. The lack of access to clean water and basic hygiene puts these communities at the greatest risk, if COVID-19 reaches their villages.

I have been working in Africa for over 20 years and I have never felt more concerned than I feel today for the survival of millions of people across Africa. Their situation is dire. They will have no way to fight the Corona virus pandemic once it reaches their villages. This is due to the simple fact that they have no access to clean water. Not in their villages and not in their medical centers.

But the situation in Africa is not hopeless – there is plenty of clean water beneath their feet in the aquifer. All that is lacking is the energy required to pump the water up to the ground. By installing just a few solar panels, it is possible to power a solar water pump to pump clean water up and distribute it to thousands of people throughout the villages. The solution can be simple. Innovation: Africa has brought clean water and light to over 1.8 million people across 10 African countries, using Israeli solar and water technologies, but there are still over 450 million people in Africa relying on contaminated open sources of water for drinking, cooking and washing.

 

 

 

Eskom group chief executive André de Ruyter has admitted that the state-run power utility was ‘not where we want to be in terms of performance’ and that power supply shortfalls can be expected for another five years. Translation: Buy candles and kiss meaningful economic growth for the next few years goodbye.

De Ruyter made the remarks during a virtual briefing on Monday delivered by himself and other top Eskom brass. As the briefing took place, load shedding was taking place in the area around Megawatt Park.

“While there is an improvement on some aspects of the generation plant due to concerted efforts by Eskom employees, we are not where we want to be in terms of performance. The ultimate aim is to improve performance to reduce the risk of load shedding. The enormity of this task cannot be overstated,” De Ruyter said.

“Eskom has to reiterate, there will be a shortfall in supply of electricity of approximately 4,000 megawatts over the next five years as announced by President Cyril Ramaphosa,” De Ruyter said.

That is half a decade that South Africa simply cannot afford, if meaningful economic growth and development are to be achieved. It’s certainly no way to sell your economy as an investment destination.

Eskom finds itself caught in many binds. The utility has to take generation units offline for maintenance, which combined with unforeseen outages often triggers the need for load shedding. But if maintenance is not done – and done properly – things will get worse down the road. The company also has to continually beg its customers not to use too much power, in effect telling them not to buy too much of its product. That is clearly a bad business model.

“Maintenance in itself will not be the panacea to solve load shedding. What we need is additional generation capacity,” De Ruyter said.

That makes sense and it is not in Eskom’s hands – the government needs to lead that charge. There has been a lot of talk on that front from the Department of Mineral Resources and Energy, but little new generating capacity has been plugged in, to date. If bottlenecks can be reduced, the mining sector alone says it can bring two gigawatts in new renewable energy projects online. There is also a stated push announced in 2020 by the government to procure two gigawatts of additional emergency power, but with so many regulations and strings attached, one is left with the impression that there is no sense of urgency.

So for now, while it may not be a panacea, maintenance is the best option South Africa has to keep the lights on.

“The unreliability of the ageing fleet, with an uncertainty of about 6,000 megawatts of capacity at any given time, will remain until the reliability maintenance programme is able to address the historical maintenance backlog. The power system remains vulnerable and volatile with the risk of load shedding significantly reduced after the completion of the reliability maintenance by September 2021,” Eskom chief operating officer Jan Oberholzer said.

It was also revealing to note that the presentation showed that since 1 April 2020 – the start of the financial year – load shedding has been triggered on at least 43 days compared with 46 days for the financial year which ended on 31 March 2020. This is in part because of the surge in maintenance, but the backdrop was also a 51% decline in gross domestic product (GDP) in the second quarter of 2020. Things would have been worse without the effective collapse of the economy. To return to no load shedding soon would require another economic meltdown.

Then there is the small question of the climate crisis and Eskom’s contribution to it via its dependence on coal. Eskom cannot afford the mitigation measures needed to reduce the carbon footprint of its ageing fleet.

“We think there is a confluence of opportunities here for South Africa to accelerate the decarbonisation of its generation fleet by accessing green financing… as part of a just energy transition,” De Ruyter said. “Our average cost to mitigate one ton of carbon is $7. In Europe, that cost is in excess of $400. So it pays the Europeans, because carbon knows no borders, to rather approach a country like South Africa and assist us to decarbonise our economy.”

For the moment, Eskom needs coal and there is enough of that at least.

“Coal stock levels continue to improve, with average coal stock at 52 days by the end of February, excluding Medupi and Kusile. There is no power station below the Grid Code minimum requirement of 20 days,” Eskom said. BM

https://www.dailymaverick.co.za/article/2021-03-15-eskoms-de-ruyter-on-performance-we-are-not-where-we-want-to-be/

WHY

Solar Energy Life believes that economic growth must happen for Africa and its people to reach their potential of becoming a prosperous and productive continent, to do that we will needs energy, and lots of it.

This energy production does not have to be done to the detriment of nature & communities due to air, water and soil pollution caused by greenhouse gas emitting and water wasting/polluting energy sources.

The only sustainable way to do this is to generate renewable energy to drive economies and combine these with energy efficiency measures to minimize energy use. Distributed energy generation also has the benefit of being less capital intensive allowing customers to produce their own power.

This focus on clean, locally produced energy will help to drive the trend towards caring for our environment, our people, our communities and our futures. And this is the attitude we will need to grow a prosperous African continent worth living & working in.

Our Mission is to accelerate the conversion to renewable energy as the main source of energy on the continent and planet.

Energy Consumption in Africa

HOW

To achieve this, we work with and employ people, partners and companies that share this vision. That is working hard in their chosen fields to make a difference, to be world class in what they do and is striving to be the best, just as we strive to do the same.

Our people take pride in providing well thought out, affordable, customer informed, engineered solutions to the basic needs of power, water and hot water. Know-how, integrity & Quality workmanship is very important to us and at the core of how we do business. It also helps to know your doing something that is good for the environment and humanity!

WHAT

We import, distribute, integrate and provide Engineered Solar Solutions, Components and products that are packaged into turnkey solutions to meet customers’ needs in terms of power, water and hot water.

The selected offerings, products and service have been chosen primarily because these will help us to achieve our vision for the continent.

SEL has 7 teams that specialize in different disciplines and have the experience and capacity to plan, co-ordinate and manage solar projects of any scale.

The company worked on over 300 projects ranging in size and scope from 3kWp basic home systems to multi megawatt solar farms.

 

Solar Power:

+ Residential Solar Power

+ Commercial Solar Power

 

Power Backup Solutions:

+  Power backup systems

+ UPS’s

 

Water Supply Solutions:

+ Solar borehole pumps

+ VSD drives

+ Conversion of AC pumps to run on solar

 

Hot Water Solutions:

+ Solar geyser

+ Conversions of geysers to solar

+ Heat collector panel geyser systems

 

In the fourth article in a series on how key emitters are responding to climate change, Carbon Brief looks at South Africa’s heavy dependence on coal and expanding effort to develop renewables.

South Africa is the world’s 14th largest emitter of greenhouse gases (GHGs). Its CO2 emissions are principally due to a heavy reliance on coal.

However, a recently released draft electricity plan proposes a significant shift away from the fuel, towards gas and renewables. While coal would continue to play a role for decades, the plan would see no new plants built after 2030 and four-fifths of capacity closed by 2050.

South Africa has pledged to peak its emissions between 2020 and 2025, allowing them to plateau for roughly a decade before they start to fall.

Politics

South Africa is one of Africa’s most industrialised countries and has the continent’s second-largest economy after Nigeria. In the decades since apartheid ended in the early 1990s, its economy has more than tripled in size but faltered in recent years. It currently ranks 32nd in the world.

President Cyril Ramaphosa, leader of the governing African National Congress (ANC) party, was elected by parliament in February 2018. President Jacob Zuma, his predecessor of the same party, had been in office for 9 years. He resigned the day before Ramaphosa’s election while facing his ninth vote of no confidence.

South Africa’s climate efforts have been criticised, particularly due to its continuing heavy reliance on coal. While Zuma vocally supported climate action, his government was accused of delaying the development of policies to cut emissions.

Deputy President Cyril Ramaphosa joined flanked by Ministers Rob Davies, Jeff Radebe, Ebrahim Patel and Melusi Gigaba addressing a media conference at the end of his engagements at the World Economic Forum 2018 Annual Meeting in Davos, Switzerland. 25/01/2018, Elmond Jiyane, GCIS

 

 

Deputy President Cyril Ramaphosa joined flanked by Ministers Rob Davies, Jeff Radebe, Ebrahim Patel and Melusi Gigaba addressing a media conference at the end of his engagements at the World Economic Forum 2018 Annual Meeting in Davos, Switzerland. 25 Jan 2018. Credit: Elmond Jiyane/GCIS.

Ramaphosa’s cabinet has recently announced plans for a major shift away from coal and expansion of renewables. He also told CNN that Cape Town’s recent drought showed climate change was a reality, adding:

“If people around the world ever thought climate change is just a fable‚ we in South Africa are now seeing the real effects of climate change. We are facing a real, total disaster in Cape Town, which is going to affect more than four million people.”

The country will return to the polls by summer 2019 to elect a new National Assembly, which will in turn determine the next president. Current polls favour the ruling ANC party, which has been in power since the end of apartheid and the election of Nelson Mandela in 1994. The centrist Democratic Alliance (DA) party – the official opposition – received 22% of votes in the last election in 2014, compared to the ANC’s 62%.

In 2011, South Africa hosted the 17th formal meeting of the UNFCCC (United Nations Framework Convention on Climate Change) in Durban. Here, countries agreed to establish a new universal and legally binding climate treaty in 2015 for the post-2020 period. This, ultimately, led to the 2015 Paris Agreement. The UNFCCC has called the Durban conference a “turning point” in international climate negotiations.

Polls show 45% of South Africans consider climate change to be a very serious problem, in the middle of the range for the world’s major economies.

 

Paris pledge

South Africa is part of four negotiating blocs at international climate negotiations. These include BASIC, a coalition of four major emerging economies (along with Brazil, India and China); the African Group; the G77 + China; and the Coalition for Rainforest Nations (CfRN).

The country’s GHG emissions in 2015 sat at 460m tonnes of CO2 equivalent (MtCO2e), according to data compiled by the Potsdam Institute for Climate Impact Research (PIK), putting it in 14th place worldwide. Emissions rose steadily for much of the past 50 years, growing from around 250MtCO2e in 1970 to a peak of 490MtCO2e in 2008. They have since declined – unevenly – as the economy faltered.

South Africa submitted its climate pledge, or “nationally determined contribution” (NDC), for the Paris climate talks on 25 September 2015. This pledges a “peak, plateau and decline” approach, whereby emissions would peak between 2020 and 2025, plateau for roughly a decade, and then start to fall. Emissions during 2020-2025 would be between 398-614MtCO2e, it says, including land use and all sectors of the economy. This “plateau” would translate to a 14-75% rise above 1990 levels.

The Minister of Environmental Affairs of South Africa Bomo Edith Edna Molewa signs the Paris Agreement on climate change at United Nations headquarters in New York. 22 April, 2016. Credit: Xinhua / Alamy Stock Photo. FY6450

The Minister of Environmental Affairs of South Africa Bomo Edith Edna Molewa signs the Paris Agreement on climate change at United Nations headquarters in New York. 22 April, 2016. Credit: Xinhua / Alamy Stock Photo.

South Africa says its pledge is an “equitable contribution” to global mitigation efforts, given its emissions to date and its national circumstances. It points to its “overriding priorities to eliminate poverty and eradicate inequality” and notes that the country is “facing acute energy challenges that hamper economic development”. Its “fairly apportioned” share of the global carbon budget would exceed the upper limit of its trajectory range, it adds.

However, Climate Action Tracker (CAT), an independent scientific analysis produced by three research organisations tracking climate action, rates South Africa’s NDC as “highly insufficient”. This means its pledge is outside a “fair share” of the emissions cuts needed to meet the goals of the Paris Agreement, and “not at all” consistent with limiting global warming to less than 2C or 1.5C. If all governments had similar targets, global temperature rise would likely reach 3-4C by 2100, says CAT.

Under its currently implemented policies and assuming continued low economic growth, South Africa will reach the upper end of its 2030 emission reduction targets in 2020 and 2025, says CAT. By 2030, emissions would breach its Paris pledge, with emissions around 27MtCO2e higher than the upper end of the 2030 target.

Overall, CAT projects that South Africa’s emissions will increase to 90% above 1990 levels by 2030, excluding land use and forestry (land use, land-use change and forestry, or “LULUCF”). Higher economic growth than anticipated could further increase this.

South Africa’s per capita emissions stood at 9.5 tonnes of CO2 equivalent (tCO2e) in 2015, around half of US per capita emissions but well above the world average of 6.8tCO2e.

Climate Transparency, a “global partnership with a shared mission to stimulate a ‘race to the top’ in G20 climate action”, rates (pdf) South Africa’s climate policies predominantly as “medium” in terms of consistency with the Paris Agreement.

 

Energy policy

South Africa has seen considerable energy sector challenges in recent years. For example, shortages mean it has had to repeatedly curb electricity supply in some areas – known as “load shedding” – to protect the power system from total blackout.

In addition, national power supplier Eskom has experienced major financial problems, which the treasury has described as the single biggest risk to the South African economy. Eskom is responsible for 95% of electricity supply, operates the country’s grid and owns most of its coal-fired power plants. Cost and time overruns at two large coal plants it is building are a major cause of its financial problems.

“Worrying” allegations of financial irregularities and governance concerns have also surfaced at Eskom, according to a paper released in February 2018 by the country’s independent National Planning Commission (NPC).

In August 2018, South Africa’s government released a long-awaited draft update to the country’s Integrated Resource Plan (2018 draft IRP). This sets out the government’s plans for electricity capacity expansion up to 2030, based on its analysis of the “least cost” option.

The current electricity plan, known as the 2010 IRP, was finalised in 2011 as part of the broader Integrated Energy Plan (IEP), which covers all energy including liquid fuels. As a “living plan”, it was supposed to be updated regularly, but the cabinet failed to adopt either of two proposed drafts in 2013 and 2016. Importantly, the plan has legislative power, meaning the government is bound by it when deciding what new power can be procured.

Until a new draft is adopted, the 2010 version remains official policy. It contains 2030 targets for all technologies, including a large expansion of nuclear and continued growth for coal. The plan also sets an overall cap on emissions from electricity generation, from 2025 onwards.

In contrast, the draft 2018 update puts the greatest emphasis on new renewables and gas in its “least-cost plan” to 2030. It considerably reduces plans for new coal and excludes new nuclear. However, it still indicates nuclear and “clean” coal could be considered in the longer term up to 2050.

The revised plan, if adopted, “would mark a major shift in energy policy…remarkable for a coal-dominated country like South Africa,” according to CAT. However, others have warned its continued reliance on a “coal-based business model” is not financially viable and will require large bailouts into the future.

Implementation of this plan could bring South Africa close to being within the emissions range of its Paris target for 2030, CAT says. However, more ambitious plans would still be needed to meet the pledge, it adds.

The draft IRP has now gone to public consultation for 60 days, ending in November. While the cabinet has not given a date for final adoption, energy minister Jeff Radebe has said he hopes it will be soon after the comment period. The update faces opposition from some unions and the nuclear industry. Unusually – and significantly – it is broadly supported by heavy industry, which favours an ambitious shift towards cleaner energy.

 

Coal

South Africa is the world’s 7th largest coal producer. Its sizeable reserves have led coal to form the backbone of its economy for well over a century. However, cheap, easily accessible coal reserves could now be nearing an end. There’s also rising awareness of the large health impacts of coal power in the country.

Coal has provided the vast majority of South Africa’s electricity for decades, as the chart below shows. In 2017, coal produced 88% of the country’s electricity.

Sources of electricity production in South Africa, 1985-2017. Source: BP Statistical Review of World Energy 2018. Chart by Carbon Brief using Highcharts.

South Africa’s reliance on coal means around 80% its emissions come from energy supply, according to the NPC.

As of July 2018, South Africa has 42GW of operating coal plants, the seventh largest fleet in the world, according to the Global Coal Plant Tracker. It also has 6GW of new coal-fired plants under construction and a further 3GW in the planning stage.

The existing coal generation fleet is ageing and has experienced a number of reliability issues. Two new large-scale coal power plants currently under construction – Medupi and Kusile – have also seen major cost and time overruns. These two coal plants are set to provide 4.8GW each, some of which is already operating.

Cost increases, energy security risks, export demand risks and low local demand growth mean the coal sector is facing significant challenges, says a 2018 report from the Energy Research Centre (ERC) at the University of Cape Town. It adds:

“These are already having profound implications for South African electricity consumers. For example, Eskom’s primary energy costs have increased by 300% in real terms over the past 20 years.”

Coal project cost increases and overruns have led to rapidly increasing electricity prices, the report adds, in turn stagnating demand for electricity. Electricity demand has been declining for years in South Africa and currently sits at 2007 levels. Significantly, this is some 30% lower than projected in the 2010 IRP.

The draft IRP update intends to decommission 12GW of old Eskom coal plants by 2030. However, the plan does not cancel the 6GW of coal power under construction and allows for a further 1GW to be built, based on two already-announced projects.

The draft assumes that no new coal power plants will be built after 2030, “unless affordable cleaner forms of coal to power are available”. This will leave South Africa with 34GW of coal capacity in 2030 – 44% of installed power capacity – down from 39GW in 2018, the plan says. (The government figure of 39GW in 2018 is lower than the Global Coal Plant Tracker’s 42GW. This lower number appears to be net of onsite consumption).

Coal cranes at Lethabo Power Station, South Africa. Credit: Minden Pictures / Alamy Stock Photo. H81MDE

Coal cranes at Lethabo Power Station, South Africa. Credit: Minden Pictures / Alamy Stock Photo.

By 2050, 34GW of coal could have closed down, the plan indicates, some 83% of current current capacity. This would leave South Africa with around 12GW of coal power in 2050, less than a third of its 2018 level.

The issue of a just transition away from coal is also politically salient in South Africa and is mentioned in its NDC. Some have cautioned against the expansion of renewables due to its impact on coal-sector jobs. Employment in coal mining peaked at around 135,000 in 1981 and had fallen to 80,000 by 2015, equivalent to 0.5% of total employment in South Africa. The 2018 IRC says the government will produce a socio-economic impact analysis on the community impacts of post-2030 coal decommissioning.

South Africa is the world’s fifth largest exporter of coal, sending around 30% of its production overseas. Around half of this now goes to India, while exports to Europe are significant, but falling. Coal is an important foreign exchange earner for South Africa, accounting for around 12% of its exports. Loss of these revenues has been invoked as a risk of moving away from coal.

 

Renewables

Renewable power has risen rapidly in South Africa since 2013 and provided 3.4% of electricity in 2017, according to BP.

The cost of renewables, notably solar and wind, has fallen significantly in South Africa. Solar PV and wind costs have fallen 80% and 60%, respectively, in just four years, according to the NPC paper. New renewable capacity is now “considerably cheaper” than coal plants proposed or under construction, the ERC report says.

South Africa’s investment so far in 2018 has been the highest for five years, according to Bloomberg New Energy Finance (BNEF). Investment sat at $2.6bn in the third quarter of 2018, it says. This is a 90-fold increase compared to the same period in 2017, in part due to a $1.4bn wind project reaching financial close in August.

In 2012, South Africa replaced its feed-in-tariff scheme with a new Renewable Energy Independent Power Producer Procurement Programme (REIPPPP). This uses a bidding system to fund renewable capacity procurement, guaranteeing projects access to the grid.

The 2010 IRP included plans for 17.8GW of new renewables capacity (excluding hydro) to be installed by 2030, made up of 8.4GW of each of wind and solar PV, plus 1.2GW of concentrated solar power (CSP). This means renewables capacity in 2030 would be 18.8GW, 21% of all capacity.

The draft 2018 IRP adjusts these 2030 plans to 8.0GW solar, 11.4GW wind, and 0.6GW CSP, totalling 20GW of renewables excluding hydro. Since it also substantially reduces total capacity from all sources, this means renewables would provide 27% of installed capacity in 2030.

Piles of solar photovoltaic cells in semi-desert near Hanover, Northern Cape, South Africa

Jinko Solar photovoltaic systems by Scatec Solar, Karoo semi-desert near Hanover, Northern Cape, South Africa. Credit: imageBROKER / Alamy Stock Photo.

By the end of 2017, 8.1GW of contracts had been given to renewable energy bidders, with 3.8GW connected to the grid, according to analysis by the Council for Scientific and Industrial Research (CSIR).

In April 2018, Eskom signed off 27 agreements worth 56bn rand ($4.7bn) for a further 2.3GW of new renewable energy projects. The deal had been stalled for almost two years under Zuma. Even the signing was delayed for a month when two unions launched a legal challenge to prevent the deals from closing, citing concerns over coal jobs.

Opponents of renewable contracts have also argued that Eskom cannot afford the financial burden, even though the contracts are paid for by electricity consumers rather than Eskom itself. Doubts over Eskom’s solvency mean uncertainty and delays for new renewables are likely to continue, according to CAT.

In June, the government announced it would launch a new 1.8GW bidding round for renewables in November 2018.

The 2010 IRP and previous unpassed draft IRPs were criticised for imposing “artificial limits” on the amount of new renewables which could be built each year, even in cases where they were the cheapest option. The new 2018 draft also sets out yearly limits for renewables, arguing this “provides for smooth roll out of renewable energy” and will not impact the total amount of renewables deployed.

Hydroelectricity plays a relatively small role in South Africa’s electricity system, with only 0.7GW of installed capacity. However, it also imports 1.5GW from Cahora Bassa hydroelectric dam in Mozambique. The 2018 draft IRP includes plans for an additional 2.5GW of hydropower by 2030, which will be imported from the Democratic Republic of the Congo, meaning hydro will provide around 6% of total capacity in 2030.

 

Mining and industry

South Africa has the world’s fifth largest mining sector, which contributed 8% of its GDP in 2017. Its economy also relies significantly on heavy industry, which in turn relies largely on electricity – and, thus, coal – as an energy source. Emissions also come from industrial-process emissions, especially steel and cement production.

Policy and planning documents generally address sustainable industrial economic development, but “barely mention mitigation targets for the industry sector or concrete measures for implementation”, according to CAT.

Koeberg nuclear power station, Cape Town, South Africa

Koeberg nuclear power station, Cape Town, South Africa. Credit: Johann Van Tonder / Alamy Stock Photo

South Africa has one of the most energy-intensive economies in the world, with energy consumption per unit of GDP more than twice as high as the global average in 2012. The South African government released its first National Energy Efficiency Strategy (NEES) in 2005, which aimed to reduce energy intensity of the economy by 12% in 10 years. It is now considering a post-2015 replacement, released as a draft in late 2016. This outlines plans to make energy efficiency the “first fuel” in driving sustainable economic growth in the country. It targets a 29% reduction in the energy intensity of the economy by 2030 compared to 2015, with individual targets for each sector.

However, CAT warns its proposed measures, such as the Industrial Energy Efficiency Project (IEE), may only lead to small emissions reductions. It adds:

“There are no signs of policy-driven emissions reductions in the near future for emissions-intensive subsectors [such] as steel production and mining in [the] context of the ongoing economic stagnation in South Africa.”

Uranium also plays a significant role in the domestic mining industry. However, South Africa has only one nuclear power station, the 1.9GW Koeberg plant, which is owned and operated by Eskom and has been running since 1984. It supplied 6% of the country’s electricity in 2015.

Unlike previous drafts, the 2018 electricity plan does not outline any new nuclear capacity up to 2030, although it does not exclude it from future planning. The Koeberg plant will reach the end of its life in the mid 2040s.

 

Oil and gas

South Africa has no crude oil reserves and imports 80% of its fuel. It also uses coal-to-liquid (CTL) and gas-to-liquid (GTL) technologies to produce significant amounts of synthetic fuel for the transport sector.

These expensive and energy-intensive processes are a legacy of the apartheid era, when sanctions prevented fuel imports. Last year, Johannesburg-based firm Sasol – which owns the world’s largest CTL plant – said it was turning away from the process due to low financial returns and high CO2 emissions.

Transport accounted for around 11% of South Africa’s GHG emissions in 2015, up from 9% a decade earlier. Several attempts have been made to introduce policies to reduce transport emissions, including a 2017 draft Green Transport Strategy up to 2050. While this warns the country’s transport emissions are set to roughly triple by 2050, it does not set any reduction targets.

The 2007 Biofuels Industrial Strategy, meanwhile, mandated the blending of biofuels into diesel and petrol, in theory applied from 2015. However, it has not yet been enforced, largely due to concerns over the impact of large-scale biofuels production on food security, according to CAT. The government now hopes to finalise a new biofuels regulatory framework by March 2019.

An electric vehicle (EV) roadmap was also released in 2013, but so far there are fewer than 500 EVs on the country’s roads. Efforts to introduce Bus Rapid Transit Systems to boost affordable public transport have also seen mixed success.

Gas currently plays a small role in South Africa’s energy mix, providing just 3% of total supplies in 2016. There is a small amount of domestic offshore production, with most gas imported via a pipeline from Mozambique. The 2018 IRP draft foresees an increasing share of gas power generation to complement renewables, as South Africa’s coal fleet is slowly decommissioned.

Dustbin art in the South African Karoo town of Prince Albert. Credit: jackie ellis / Alamy Stock Photo

In 2017, the government gave its support to shale gas exploration and extraction in the semi-arid Karoo region, citing efforts to reduce the country’s carbon footprint. In September 2018, energy minister Radebe called for all impediments to shale gas exploration to be removed as part of the government’s response to record-high fuel prices.

Analysis last year by geologists put the estimated shale-gas resource at 13tn cubic feet (tcf), equal to around 80 years worth of South Africa’s current gas consumption and around a tenth of global annual consumption. This would put South Africa 34th out of 46 nations in US Energy and Information Administration (EIAestimates of shale resource – some 30 times less than previous estimates. It also remains unclear whether any shale resource would be economically and technically viable.

Opponents of shale gas development in the region say it will threaten its famed rugged scenery and rare wildlife, such as the mountain zebra, as well as water resources.

 

Climate laws

In 2011, the South African government approved its National Climate Change Response white paper (pdf), which aims to “effectively manage inevitable climate change impacts” and “make a fair contribution to the global effort to stabilise GHG concentrations in the atmosphere”.

However, factors such as lack of institutional capacity have restricted implementation of the white paper. A government Socio-Economic Impact Assessment System (pdf) report, published in 2017, found that the lack of legally enforceable regulations represented “a fatal risk” to achieving the aims of the white paper.

In June 2018, South Africa published a draft of a new National Climate Change Bill. Its purpose is to “build an effective climate change response and ensure the long-term, just transition to a climate resilient and lower carbon economy and society”.

The bill acknowledges that human-caused climate change “represents an urgent threat to human societies” and sets out targets for reducing emissions and the need to adapt to climate impacts.

It mandates that the government must, within two years of the bill becoming law, “establish a national environmentally sustainable development framework” to achieve the act’s objectives. It also requires the establishment of a ministerial committee on climate change with responsibility “for the coordination of climate change responses”, and a committee on climate change for each province.

Kinros power station near Bethal South Africa. Credit: Images of Africa Photobank / Alamy Stock Photo

Kinros power station near Bethal South Africa. Credit: Images of Africa Photobank / Alamy Stock Photo

Each provincial committee will be required “to undertake a climate change needs and response assessment” within the first year of the bill, and review it every five years. A “climate change response implementation plan” must then be completed within the following year.

The bill also sets out a requirement for emissions targets for “greenhouse gas emitting sectors and sub-sectors” every five years. The bill itself does not specify the ambition of these targets.

The draft bill has received a mixed response, being praised for providing “a clear signal that climate change is a cross-sectoral, holistic challenge”, but criticised for not including a specific reference to the Paris Agreement’s 1.5C warming ambitionCampaigners have also argued that the government’s pro-coal policies contradict the goals of the climate bill. The consultation period for the bill ended in August.

South Africa has also proposed legislation (pdf) for a carbon tax, which was originally mooted in a National Treasury discussion paper in 2010. The treasury published a second draft in December 2017, for consultation until March 2018. In a budget speech (pdf) in February 2018, the then finance minister, Malusi Gigaba (the position has since changed hands twice), announced that the government proposes to implement the tax from 1 January 2019. However, the new finance minister, Tito Mboweni, has since postponed implementation (pdf) – by six months to 1 June 2019 – after hearing “concerns of business and labour during the parliamentary hearings”.

The tax would cover emissions from fossil fuel combustion, industrial processes, product use emissions, and fugitive emissions from mining. It would potentially increase petrol and diesel prices by up to 23 and 29 cents per litre (approximately 1-2%), respectively. The tax has been criticised by the steel and mining industries as unaffordable.

The tax would be set at 120 rand (around $8) per tonne of CO2 equivalent. However, during the first phase up to 2022, a basic tax-free threshold of 60% of emissions, plus additional allowances, may mean around 95% of emissions are exempt. This would put the effective tax rate at around R6-48 ($0.4-3) per tonne.

(Update 29/3/2019: In February 2019, South Africa’s parliament approved the long-delayed carbon tax bill. The new law allows a tax rate of 120 rand ($8.48) per tonne of CO2 equivalent. It also confirms that total tax-free allowances can be as high as 95% during the first phase.)

New passenger vehicles are also subject to a carbon emissions tax, which was effective from 1 September 2010. It has a flat rate of R75 (around $7) for each gram per kilometre above 120g/km, incorporated into the price of new cars.

 

Impacts and adaptation

Average temperatures in South Africa have risen around one and a half times as quickly over the past five decades as the global average of 0.65C. Maximum and minimum daily temperatures have been increasing in almost all seasons and regions. (Search for places within South Africa in Carbon Brief’s global map of rising local temperatures.)

Changes in rainfall show weaker trends, but there is a tendency towards a decline in the number of rain days in almost all regions. In contrast, extreme rainfall events have increased in frequency, particularly in spring and summer.

The impact of climate change has been brought to the fore with the recent severe drought in the Cape Town region and the lingering threat of “Day Zero”, when taps in the city run dry and residents would be required to queue for water.

Theewaterskloof dam. Credit: Rob McSweeney

A rapid assessment attribution study found that human-caused climate change made the lack of rainfall that led to the three-year drought around three times more likely.

Agriculture in South Africa faces a variety of risks associated with climate change, such as changing rain patterns, increased evaporation rates, higher temperatures, increased pests and diseases, shifting growing regions and reduced yields.

On 31 August 2018, South Africa submitted its third National Communication report under the UNFCCC. The report highlights trends and projected changes in climate and provides an inventory on GHG emissions.

Projections for the future suggest that under an intermediate emissions scenario (RCP4.5), South Africa is likely to warm by 2-3C by mid-century, reaching 3-4C and beyond by the end of the century. Under a no mitigation, business-as-usual emissions scenario (RCP8.5), warming could exceed 4C across the whole country by the end of the century, even surpassing 6C in some western inland areas.

Rainfall projections are generally less clear-cut, but predominantly suggest a significant decrease in average rainfall towards the middle and end of the century.

According to its National Communications report, South Africa has a rich biodiversity containing almost 10% of the world’s total known bird, fish and plant species, as well as around 6% of mammal and reptile species. The habitats of these species are projected to change dramatically in a warmer, drier climate.

The South African government is currently developing a National Climate Change Adaptation Strategy, which will serve as its submission of a National Adaptation Plan to the UNFCCC. A second draft (pdf) of the strategy was issued for consultation in October 2017. A final draft is expected this year.

Its “strategic outcomes” include producing adaptation plans that cover at least 80% of the economy by 2025; implementing an adaptation, vulnerability and resilience framework across all “key adaptation sectors” by 2020; and defining and legislating for adaptation governance through the new National Climate Change Bill.

Credit:

 

South Africans can expect to be hit hard by load-shedding before the end of June 2020, according to energy expert Ted Blom.

Blom told MyBroadband that as demand increases due to heavy industry, such as mining and smelting coming back online, Eskom could face problems from as soon as next week.

By the end of June, increased demand due to the winter season paired with a lack of new maintenance and problems associated with reactivating disabled power units will result in heavy load-shedding, Blom said.

“The moment that the full demand comes onto the system, you will see fireworks second to none,” Blom said. “I’m expecting transformers to blow up and boilers to malfunction.”

“I would not be surprised if we see the worst load-shedding we have ever seen by the end of June.”

Backup power UPS Solar power battery backup

Surge in demand due to mining and smelting

The national COVID-19 alert level has been reduced to level 4, which means that industries such as mining and smelting are beginning to come back online.

Blom said that as restrictions are relaxed and demand increases, Eskom will need to reactivate generation units which it has turned off due to the significant drop in electricity demand caused by the national lockdown.

“In the meantime, Eskom has not conducted extensive maintenance on its infrastructure,” he said, adding that some of the equipment, such as the large boilers in Eskom’s power stations, can take days to return to operation after a cold start.

He estimated that the national demand has fallen to around 10-12GW, primarily due to the lockdown requiring heavy industry to shut down temporarily.

Mining and smelting account for an additional 10GW of demand, and with these industries coming back online and more people returning to work across the country, he said Eskom will be hard-pressed to meet demand.

“Currently, Eskom is in the worst shape in its history,” he said.

Blom added that he expects Eskom to seek another government bailout later this year to fund its much-needed overhaul.

We are conducting maintenance – Eskom

When asked about the power utility’s ability to meet the electricity demand of the country during COVID-19 alert level 4, Eskom said it was too early to note an increase in demand.

“Businesses have only resumed operations yesterday, and many of them will be ramping up to full capacity during the course of the week,” Eskom said.

“It is too early, therefore, to say how the demand has changed, based only on yesterday.”

The power utility added that it has continued to conduct maintenance since the lockdown was first implemented, preparing for the increased demand after the lockdown is lifted.

“What needs to be stated clearly is that Eskom is able to meet demand, and as we have been communicating since the lockdown was implemented, we have ramped up maintenance in order to better meet demand post the lockdown,” Eskom said.

Blom disputed that Eskom would be able to supply enough power to meet electricity demand after the lockdown, however, stating that the maintenance conducted on the power utility’s infrastructure did not approach the amount required to significantly improve its generation capacity.

“They have just continued with normal maintenance,” he said. “They have not started on the ‘new philosophy’ maintenance.”

This “philosophy maintenance” model was announced by Eskom CEO Andre De Ruyter at the beginning of 2020 and refers to a plan to improve the long-term performance of the company’s power fleet at the expense of a higher risk of load-shedding in the near-term.

De Ruyter stated this process should take around 18 months, but Blom argued that the Eskom executive has drastically misconstrued the scope of the problem – and that it would take longer than five years to resolve Eskom’s reliability issues.

 

Source

Brace for another hike in electricity tariffs

Consumers can brace themselves for another hike in electricity tariffs.

Eskom announced in a statement on Saturday that the National Energy Regulator of SA (Nersa) had approved tariff increases.

“On 9 March 2020, Nersa approved Eskom’s allowable revenue from standard tariff customers to be 8.76% which will be implemented on 1 April 2020 for Eskom direct customers and 6.90% for municipalities which will be implemented on 1 July 2020,” the electricity provider said.

Eskom had submitted a revised tariff hike request to Nersa in February.

The power utility said recently that though the low electricity demand during the lockdown gives it an opportunity to maintain its power stations, the lower usage also has negative financial implications.

“While this gives Eskom a much-needed break to carry out much-needed and long overdue maintenance on power stations, it obviously has big financial implications for Eskom and consequences for the consumers of electricity,” Eskom spokesperson Sikonathi Mantshantsha said.

11 April 2020 – 13:53BY TIMESLIVE