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SA’s sun, wind resources enough to meet the country’s needs

8th November 2019

By: Schalk Burger

Creamer Media Senior Deputy Editor

     

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Solar and wind resources can be used as bountiful energy sources for development, similar to how abundant coal resources in the late nineteenth- and throughout the twentieth-century powered industries and fuelled development, says energy solutions provider Energy Partners Solar CEO Manie de Waal.

Not only are these energy sources sufficient to meet most of South Africa’s current needs and beyond, but the country also has the engineering skills and capital to develop the assets and infrastructure to generate power from them at half the cost of current coal-fired electricity prices, he says.

De Waal adds that energy-intensive industries cannot completely replace their grid energy with renewable systems, but highlights that the sustainability of electricity grids is tied to sound economic fundamentals, which makes the price of renewable-energy sources significant.

“Our business develops financially viable and sustainable projects for clients, where an immediate financial benefit is realised or an organisational risk is lowered.”

A recent deal signed in the US resulted in the client buying electricity at 1.7 c/kWh (35 c/kWh in rands). This places the cost of renewable solar electricity at about half the price of coal-fired electricity in South Africa.

“The largest power purchase agreement we signed in Africa was with retailer Pick n Pay, which involved a 2.4 MW solar rooftop project. The technically arbitrary limit of 1 MW for private projects in South Africa, which was implemented after this project, makes no sense and has been a barrier slowing down development in the local industry since 2017,” highlights De Waal.

Recent price changes mooted by State-owned power utility Eskom, where availability charges would increase dramatically, could further slow down the growth of renewables. However, experience has shown that people quickly adapt to such artificial constraints and they can accelerate the move to complete energy autonomy.

“The low cost of electricity generated by renewables projects means that developers, including Energy Partners, can typically provide the capital for such projects, earn a viable return and still sell power between 30% and 50% lower than grid prices.”

The low cost of the energy also means that clients typically use as much of the energy produced as possible, which adds to the utilisation rate and economic benefits of these systems. The client can also buy the energy for up to 25 years, rent or buy the system.

De Waal warns that, while battery storage costs remain too high – battery storage increases the cost to R2.20/kWh – to include them in most projects, the cost of energy storage is expected to follow a similar curve to that of solar and wind energy systems over five to ten years.

Storage can be deployed once its costs come within the scope of a project or meet operational needs beyond solely the cost of electricity. Storage is compatible and can readily be integrated when needed.

Additionally, once sufficient commuters and transport fleets have transitioned to electric vehicles, storage capacity can grow rapidly. This means that there may very quickly be a large pool of distributed energy storage systems in place that can be used for more than 22 hours a day, notes De Waal.

“In some parts of Namibia, the costs of renewable-energy projects with storage are already on a par with electricity grid costs. This situation will be replicated in other territories as falling costs of these systems push the costs to being on a par with the electricity grid [or cheaper].”

De Waal warns that Eskom may not be able to sell its older coal-fired power stations to defray its debt, because the stations may be financially unviable for investors or could become stranded assets as the costs of pollution control and carbon tax – from which Eskom is exempt until 2023 – push costs of production higher than their rates of return.

He adds that dividing Eskom into generation, distribution and transmission will allow for the potential use of private capital to add to the generation network, which can catalyse the transition to a distributed generation grid and a more secure national energy pool.

“Our view is that Eskom should collaborate with the massive, and willing, market to reach an equitable agreement for all parties concerned and thereby unleash the untapped potential and private capital South Africa has to collectively engineer ourselves out of the current and future power challenges,” concludes De Waal.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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