Let us start by stating that Eskom supports the introduction of Independent Power Producers (IPPs) and recognises the significant potential of renewable energy technologies. Renewable energy technologies will in future become a key element of the energy mix as the industry and the relevant technologies mature.
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During the PowerGen 2016 Conference, Eskom’s group chief executive, Brian Molefe, made a plea for decisions about Africa’s power generation not to be based on emotions but on research, facts and scholarship to ensure that the correct choices are made. In support of this fact-based approach, Eskom has established and funded a Centre of Renewable Technologies at Stellenbosch University.
The aim of this centre is to research and drive further developments in renewable technologies. This has been undertaken under the auspices of the Eskom Power Plant Engineering Institute established in 2012. This will include a Nuclear Engineering Specialisation Centre in selected local universities in conjunction with a reputable international university. The objective is to create a brain trust that will consider various technologies, such as renewables and nuclear so that these debates are resolved in a dispassionate manner.
Professor Anton Eberhard and other analysts are entitled to their opinions but not to distort the facts. Here are the facts: the renewable load is not available when needed the most during peak hours. As at March 31, renewable IPPs had a total installed capacity of 2 310 megawatts (MW) and their average load factor is only 31 percent, effectively generating 716MW on average.
Demand
This renewable load capacity is mainly available during the day, when Eskom has excess capacity of up to 6 000MW from non-renewable base load stations.
It is by-and-large not available when capacity is needed the most during peak hours. To ensure demand is always met, the non-renewable fleet must always be available and, therefore, does not have the luxury that renewable IPPs have.
This is not an opinion but a fact.
Eskom improved the energy availability factor (EAF) from 69.6 percent in the first quarter of last year to the current level of 78.9 percent. To achieve this, Eskom had to operate within the maintenance budget of 11 500MW in summer and 8 500MW in winter. Employee engagements were prioritised to instil passion and pride. This improvement in the EAF resulted in an additional 3 775MW of available power. This is the fundamental reason why load shedding has stopped. It is also the real reason why diesel consumption for Eskom’s open cycle gas turbines has been reduced by 98 percent.
Eberhard and others should tell the public what the real costs of the Renewable IPP Programme are. The contingent liability guaranteed by the National Treasury for the IPPs is R200 billion, according to the Budget Review released in February.
Recent reports quote the Bloomberg New Energy Finance as saying that this liability will grow by R550bn by 2020. This does not make sense for a non-base load option because there is no economic storage system that has the right properties to balance supply and demand.
Misleading
The cost of back-up facilities and storage are conveniently not taken into account by Eberhard and yet back-up is always needed for solar panels and wind turbines. Therefore, the real costs of renewables often quoted by Eberhard are understated and misleading. As Bill Gates said at this year’s annual Nelson Mandela lecture: “If you wanted to use a lithium ion battery to store enough electricity to run everything in your house for a week, you would need a huge battery and it would triple your electric bill.”
The only renewable energy technology that has base load potential in South Africa is concentrated solar power with molten salt storage.
However, this has yet to be proven. The current production cost for this technology is R2 000 per megawatt-hour (MWh) for off peak rate and the peak rate is R6 000/MWh, compared with the production cost of Koeberg at R433/MWh.
For as long as this is the case, South Africa requires a base load solution in its energy mix, and this cannot come from coal due to South Africa’s COP21 commitments. It can only come from a nuclear energy source. If the National Treasury can afford a contingent liability of up to R750bn for non-base load options, then they can enable a base load nuclear solution, in chunks that the country can afford.
Eskom believes that renewable energy technologies will play an increasing role as energy efficiency and storage technologies mature. It is for this reason that Eskom has set up a renewable research facility at the University of Stellenbosch lead by Professor Wikus Van Niekerk, under the auspices of Eskom Power Plant Engineering Institute.
It is not correct that Eskom’s revenue stream is threatened by renewable IPPs. Eskom has increased cross-border sales by 12 percent in the last financial year and plans to double these sales in the next two to four years. Africa needs power and Eskom is determined to meet this demand. Eskom will actively strengthen the backbone of its transmission grid in order to supply the African market. Renewable energy projects are not a threat to the Eskom business case, they complement what Eskom is already doing.
Interestingly, Eberhard was one of the four energy advisers in the government war room on energy. Unfortunately, he has not had a meaningful and cogent discussion with Eskom in his capacity as an energy adviser.
Instead, he prefers to take potshots at Eskom in the media. The professor is just being populist in his remarks. It should also be noted that the views he raises have nothing to do with the structure of Eskom. The issues remain valid irrespective of whether Eskom is unbundled or not.
* Matshela Koko is Eskom’s group executive for generation.
** The views expressed here do not necessarily reflect those of Independent Media.
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