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More solar, less diesel power and coal

15th February 2013

By: Creamer Media Reporter

  

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By Pancho Ndebele

State-owned power utility Eskom’s reliance on hugely expensive diesel- powered open-cycle gas turbine (OCGT) plants to keep the lights burning during peak demand periods is coming under scrutiny.

Also up for consideration is the use of what many will regard as an unlikely technology to produce cost-competitive peak-time power and reduce the amount of OCGT and even coal-based electricity required by our country. The technology is concentrated solar power (CSP).

The National Energy Regulator of South Africa (Nersa) was formally approached to investigate OCGT costs during its recent hearings on Eskom’s application for yearly 16% tariff increases over the next five years.

Among the costs Eskom hopes to cover through the increase is R25.9-billion for generating electricity from its own OCGT plants and buying electricity from two new OCGT stations commissioned by the Department of Energy (DoE) from an independent power producer (IPP).

OCGT costs are exceptionally high. Eskom states in its application that the cost of generating electricity from OCGT plants is ten times higher than the cost of generating coal-based electricity. The cost works out at about R2.40/kWh, compared with Eskom’s current average tariff of R0.61/kWh, which will more than double to R1.28/kWh if the tariff application is granted.

But this pales against the price Eskom will pay to buy electricity from the DoE peaking plants. It plans to spend R13 340- million – or R2 668-million a year – to buy 1 926 GWh, which works out at R6.91/kWh.

With its reserve margin perilously low, Eskom uses OCGT plants to avoid blackouts during the early morning and evening peak demand periods. OCGT plants stand by, ready to be switched on the moment electricity demand exceeds supply.

OCGT plants burn millions of litres of diesel, gobble foreign exchange and contribute to South Africa’s excessive carbon emissions. Eskom’s OCGT plants burned 231-million litres of diesel over a recent seven-month period, according to information given to Parliament.

However, government plans to have many more OCGT plants. Its Integrated Resource Plan (IRP), which projects electricity demand to 2030 and determines the mix of fossil fuel and renewable-energy technologies to be used to meet requirements, allocates 4 900 MW to diesel-powered OCGT plants.

The Minister of Energy recently issued a determination that a further 2 415 MW of this amount must be procured from IPPs. Based on current OCGT costs, Eskom will need to fork out another R6-billion a year to buy this electricity.

The Southern Africa Solar Thermal and Electricity Association (Sastela), which represents CSP developers and suppliers, is deeply concerned by this expenditure, more so because it believes CSP provides a cost-effective, ecofriendly and sustainable alternative.

Sastela has requested Nersa to investigate the costs of OCGT plants and the merits of CSP as a renewable-energy technology that can begin to replace diesel-powered peak time generators.

CSP generates electricity in much the same way as coal power stations, except that CSP uses the free and infinite energy of the sun as its fuel. CSP systems use mirrors to concentrate a large area of sunlight onto a small area. The concentrated light is converted into heat, which drives a steam turbine connected to an electrical power generator.

What sets CSP apart from other renew- ables is its ability to store heat. This enables CSP to generate electricity at night.

South Africa’s first two CSP power stations will have storage of two to three hours. A third plant will have storage of nine hours, enabling it to approximate coal or nuclear power stations’ round-the-clock generation capability.

CSP can, therefore, match our country’s electricity demand curve. This comes at a cost, but these are declining, while the price of coal will continue to rise.

The third CSP plant will sell electricity to the national grid at 2.51/kWh. This is nearly three times cheaper than the two DoE OCGT plants and on a par with Eskom’s own OCGT plants. If the R2 688- billion to procure electricity from the two DoE OCGT peaking plants were to be used to buy electricity from CSP power stations, Eskom would receive 1 062 GWh/y, about double the annual consumption of Polokwane, including, of course, peak-time consumption.

More pertinently, CSP will become increasingly cost competitive, particularly if the technology is procured on a large scale, enabling it to benefit from economies of scale and efficiencies developed through the research being undertaken in many parts of the world.

CSP could, in fact, match the price of new coal plants by the time Eskom makes its next tariff increase application in 2018. This is supported by a recent study by the Industrial Development Corporation on the potential of CSP in South Africa. The study quotes a paper by Australia’s Commonwealth Scientific and Industrial Research Organisation, which estimates that CSP costs will decline by between 28% and 41% by 2017.

This indicates that CSP will be able to sell electricity to the national grid at prices of between R1.50/kWh and R1.80/kWh by around 2017. If Eskom’s application is approved, its average tariff by 2017 will be R1.28/kWh. If Eskom is required to build more coal-fired power stations after this, further double-digit tariff increases will be needed, raising the average tariff closer to the R2/kWh mark.

Despite this, the Minister’s recent determination not only procures an additional 2 415 MW of OCGT. She has also directed procurement of an additional 2 500 MW of coal-fuelled electricity from IPPs but only 400 MW of CSP. This brings to 600 MW the amount of CSP that will have been bought within the next few years.

The IRP allocates only 1 200 MW to CSP by 2030, leaving procurement of a mere 600 MW between now and 2030.

Government’s pending review of the IRP clearly needs to take into account CSP’s growing competitiveness as a baseload and peak-time generation option that can cost-effectively reduce the amount of electricity required from OCGT and coal.

 

  • Ndebele is a founder of the Southern Africa Solar Thermal and Electricity Association, which represents concentrated solar power developers and suppliers.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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