With cleaner energy technology rapidly advancing and industries increasingly aiming to stabilise their power supply through off-grid generation alternatives, energy solutions provider Vuselela Energy director Jacques Malan is confident that cogeneration systems can offer a valuable power generation alternative in South Africa.
Although South Africa has, historically, relied quite heavily on coal generated power, Malan believes that, at the rate at which technology is progressing, coal will be replaced globally by cleaner forms of generation in a much shorter time span than most people predict – perhaps even within the next 30 years.
He warns that South Africa should begin to prepare for this by supplementing or supplanting future coal build with the development of gas-based infrastructure while continuing to encourage independent power producer (IPP) projects.
“The ideal situation would be for IPPs to focus on power generation – using whatever competitive technology is at their disposal – while State-owned power utility Eskom focuses on transmission. The utility could consider borrowing from concepts used in the US natural gas industry, where a fixed fee is charged for transmission, which might be based on distance to offtake. Municipalities and/or private entities could then be responsible for distribution.”
Although the cogeneration market has faced many challenges in the past, he points out that demand for alternative power solutions is increasing. To date, Vuselela Energy has been instrumental in establishing three of the five existing cogeneration facilities implemented in the metallurgical industry, including two internal combustion engine- based, furnace off-gas-fuelled projects, as well as a Thermal Harvesting waste heat project operating with an organic rankine cycle.
The company is also nearing financial close on its most recent waste heat project – a 7 MW organic Rankine cycle-based Thermal Harvesting plant.
In Europe and the US, cogeneration usually refers to the simultaneous production of electricity and thermal energy in the form of steam or hot water, but in South Africa, it is also used to refer to the generation of electricity from wasted process off-gas or heat that would normally dissipate into the atmosphere, Malan explains.
He notes that under normal circumstances, there is little use for cogenerated heat in the South African climate, although it has become viable for some commercial complexes where peak power is generated using gas and waste heat is applied for heating and cooling.
“However, there is a very large market for the generation of power from waste sources in the industrial space from not only waste gas and heat but also some solid and liquid wastes.”
Malan highlights that these sources have been well known for several years, but have rarely been exploited in South Africa, as electricity has historically been cheap and abundant and it, thus, simply did not make economic sense to invest in cogeneration initiatives. It has only been since 2014, when Eskom’s lack of power generation capacity resulted in countrywide blackouts, that cogeneration became a viable option for industries.
However, while Eskom prices kept rising, the rand:dollar exchange rate kept deteriorating, always keeping cogeneration projects marginal. This problem was further compounded by globally low commodity prices, which forced intensive energy users to shut down capacity and made it very difficult to raise the required funds to implement cogeneration projects. Malan notes that this has severely limited the potential for expanding the cogeneration market in South Africa, which has an estimated potential above 1 GW.
“These projects further require long offtake agreements. With changes in financial reporting standards, contracts of this nature are no longer just a footnote in the financial statements, but a line item entry, placing an encumbrance on a company’s balance sheet. Very few potential users of cogeneration can tolerate such a burden on their borrowing ability.”
In addition, Malan notes that the technologies required for cogeneration are typically very complex and the expertise seldom exists within a user organisation to operate and maintain such a system outside of its core business – however, this is where Vuselela Energy has found its niche.
The company has stepped into the role of developing, constructing, operating and maintaining cogeneration plants for companies by bringing together accepted concepts from different industries and combining them to innovate solutions across industry, he adds.
“The challenges facing the market have also forced us to become very innovative with our technology and commercial structure.”
An example of such innovation is a project involving a urine battery, for which Vuselela Energy is assisting in developing a prototype. The battery was originally conceived by Menlopark High School learner Nicole Barwise, who was jointly awarded the Africa Energy Innovation award in March last year with Vuselela Energy, for its Eternity Power Thermal Harvesting project.