Green electricity won't be cheap

For decades SA has enjoyed some of the cheapest electricity prices in the world but that competitive advantage is under threat as the world pressures us to depend less on coal.

Nelisiwe Magubane, director general of the Department of Energy, told a discussion group in Johannesburg Tuesday that SA could not ignore the world’s concerns about carbon dioxide emissions.

“Remember how the World Bank objected to our coal fired stations. We are responsible global citizens. We want to leave the earth available to our grandchildren

“I was in Tesco in London the other day and I noticed even the wines had to show their carbon footprint.”

The Department has come up with three alternative scenarios in its quest for a balanced 20-year country electricity plan. It intends to hold public discussions on the matter all over the country.

These start today (Wednesday) in Upington, which could become the site of “the world’s largest solar power plant”.

Says the DoE: “The project will entail an area the size of hundreds of soccer fields that will be covered in giant mirrors and produce three times the power of the Koeberg nuclear plant.”

It adds that the 5 000MW project will generate 12 300 jobs. The Northern Cape enjoys thousands of hours of reliable sunshine a year. One drawback is that solar costs R3/kw/h, something like six times more than coal.

Magubane said the goal was to balance low cost with low carbon, low water use and security of supply.

She outlined three alternative scenarios for SA’s electricity supply in the future. The cheapest alternative is the present one, with coal providing 72% of capacity. Huge emissions and the shortage of water were the major objections to coal. DoE is willing to reconsider coal as clean coal technology evolves.

The second alternative is labelled the Low Carbon Scenario, under which, by 2023, coal has fallen to 36% of the mix, renewables, such as solar and wind, rise to 32%, baseload nuclear to 12%, pumped storage to 5% and peaking stations to 10%.

The third alternative, apparently preferred, is the “balanced scenario”, which, by 2030, would comprise 48% coal, renewable 16%, nuclear 14%, pumped storage 6% and peaking 9%.

The low-cost alternative costs R750bn and the high cost “balanced” one R860bn. Unfortunately that understates the position. The R860bn is the present value of all costs in the plan but not the cost of capital. It also excludes escalations and interest costs.

Just the 9 600MW nuclear option – five or six stations is likely to cost R1trn.

Renewables, mainly solar and wind, are expected to contributed 7 200 MW to the electricity mix.

Because some technologies are immature, the plan will be revised and updated every two years.

Because of Medupi and Kusile, water useage is expected to peak at 370 megalitres in 2021. The low cost (mainly coal) alternative will drop water consumption to 270 megalitres a year by 2030. The “balanced” portfolio will consume only 250 megalitres by then, while the low carbon alternative is the most water efficient scenario using less than 230 megalitres a year.

Government is committed to help develop the Mpanda Nkua natural gas project in Mozambique. Feasibility studies are under way to consider developing a gas infrastructure in SA as well as power generation.

Nuclear is included in the mix from 2023 but a go-ahead is some way off. Eskom’s current expansion of 12GW is endorsed. The first phase of the renewable energy feed-in tariff (Refit) could yield 1 025 MW and co-generation up to 1 500MW. The DoE’s open cycle gas turbine could contribute 1 000MW.

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Source:  Moneyweb


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Green electricity won't be cheap