Beyond the Eskom crisis, just as critical is the challenge of far-reaching changes in how we produce, use and pay for electricity, reports Michael Morris.
“Time for blame game over, energy crisis needs collective action now” was the heading of a city media statement in mid-March, making the case for a stronger role for metros in the power arena.
The sense of urgency of that heading is underscored by the impact of now-routine load shedding which is estimated to cost local business more than R1 billion a month, excluding long-term job losses, stunted economic growth and declining investor confidence.
Yet the critical moment is occasioned not only by the woeful insufficiencies of the national power generator, it emerged in an interview this week with Deputy Mayor Ian Neilson and the city’s recently appointed director for trade and investment, former MP Lance Greyling.
A combination of factors – high energy costs, unreliability of supply, “green” consciousness of alternative energy sources, and new technologies – is prompting more consumers (mainly large – industrial or commercial – or wealthy ones) to consider “getting off the grid”. Already, Blackheath Industria boasts Africa’s biggest solar rooftop array.
If there are economic, environmental and even social advantages in this trend, it also poses a potentially grave threat to what Greyling called “the current revenue model” of an electricity system that delivers power not just to homes but the whole gamut of urban services down to traffic lights and thousands of kilometres of city roadways.
In this context, Neilson and Greyling pointed out, the blame game really is wasteful and the time for a concerted visionary effort is upon us.
What is needed, they said, is not just a strategy to mitigate the impact of the Eskom crisis, but one that will ensure the national – as much as the city’s – energy system survives the unavoidable change.
To achieve this the city is committed to a “collaborative” engagement. But energy is not a local mandate – the key players are the Department of Energy, Eskom, the regulator Nersa, PetroSA and various committees and units associated with them. Cities such as Cape Town, Neilson and Greyling argued, should find ways to contribute to solution-seeking, because their economic well-being depends on it.
Neilson said: “The scenario is that Eskom is not making it (as the sole supplier of power), and we are not persuaded they are going to be able to achieve it. Our assessment is that they will not have the capacity, and while they continue to be a key player in electricity, they don’t seem to have the wherewithal financially, managerially or politically to be the sole supplier. But we don’t want to sit and wait for the inevitable.
“Wind and solar sources are there, but in small amounts. So, never mind the state of Eskom, we need to diversify our energy mix as a strategic necessity.”
And the key opportunity in 2015 is a big push to secure the benefits of new energy options through the development of a natural gas terminal at Saldanha (one of three the government is considering in a 3 000MW gas import allocation, the others at Koega and Richard’s Bay).
“With gas finds along the coast from Mozambique to Angola, this is clearly an area we want to focus on. Natural gas is the key missing element in our energy mix.
“We are very interested in helping to make the Saldanha option a success and have sent a letter to the deputy president in the war room to indicate our willingness to be part of a gas-fired electricity supply in the 200-300MW ‘mid-merit’ range (from 6am to 10pm).
“Our numbers show that gas will still be more expensive than current Eskom tariffs but we don’t think it will be long before one catches up with the other. We will also need Nersa’s approval, and there will be an effect on our tariffs, though we think that impact will have disappeared in five years.
“So we are keen to encourage or assist in getting this gas supply, and not just for electricity. Looking at it from a total energy package point of view, we could also supply gas directly to industry and households. Whether this is done through pipeline or a tanker system, the market will determine the most appropriate mechanism.”
A national decision on the Saldanha option was expected within six months, after which the tendering process and the scheme would be clarified.
Neilson indicated there was huge market interest: “We have operators knocking on our door every day. If we were in a position to put out a tender tomorrow, we would get lots of offers. But this is beyond our mandate, and the fact is there are very significant costs involved, too.”
Greyling said: “We are looking for a collaborative approach. The unit price of gas would be too expensive for just our own 300MW. If we take some gas for a 300MW plant and some more to pipe to industry as an off-take, that will bring the unit cost down for everyone and make investment in Saldanha more attractive.”
Greyling and Neilson said the province’s Greencape initiative had done extensive preparatory work on this, including environmental impact assessments on pipeline routes out of Saldanha, and on the potential site for a new gas-turbine generator at Atlantis.
“A lot of the homework has been done, so the process can be tackled quicker,” Neilson said.
Getting in a gas supply would also help drive the green agenda, with the various technologies working in tandem.
The gas opportunity, Greyling said, was part of a bigger modelling exercise, taking in the consequences of potentially revolutionary advances in power technology.
“We are conducting our own modelling around all of these technologies – gas, solar, wind, or a combination of them – and their effect on tariffs, and how to integrate them. Part of that is batteries, particularly utility-scale batteries.
“We are at a critical juncture, not just because of the national energy crisis and how to mitigate it, but also in terms of the current revenue model for electricity.
“If we see a massive disconnect from consumers, putting up solar panels and installing home batteries themselves, we will see that model come under major threat, too. So we need to rethink how over the next five to 10 years we reorganise the model to deal with that.”
Neilson added: “Wealthier households and larger businesses are already implementing this, putting in solar panels, batteries and inverters, and paying a premium for uninterrupted supply.
“The technology is bound to become cheaper, particularly against rising tariffs, and I would guess Eskom tariffs will be between 50 and 100 percent higher than today in five years.
“We are not saying, ‘What can we do to stop this?’. We accept people will react rationally. The risk, then, is that we start losing all upper-end customers who are paying higher rates on electricity, while retaining all poorer customers. And, then, how do we afford to maintain our distribution network? That’s the critical issue. Does all of that cost descend on poorer customers – because someone has to pay for distribution – or do we go back to a fixed daily charge… which might compel wealthier people to go completely off the grid? So there are complexities, and we are having to be speculative in our modelling.”
Greyling added: “We want to be ahead of the curve. We know change is coming and we don’t want to try and hold it back, but to position the city so it can be seen more as an opportunity than a threat. Anything we introduce now must speak to that change. We have to model all of it to understand what the choices are.”
Batteries open up DC possibilities
AC or DC? – that’s the question, or one of the questions, being subjected to speculative modelling by city and provincial energy planners in an attempt to foresee and prepare for potentially radical changes in the short to medium term in how we use electricity.
A key factor is rapid advances in battery technology, which, depending on how quickly they become cheaper and more effective, could become neighbourhood features, delivering DC (direct current) power to clusters of users, incrementally replacing or, in the shorter term, augmenting the now century-old AC (alternating current) national grid system.
Neilson said: “If the battery price comes down to affordable levels, that’s a complete game-changer.
“At the moment, you get everything through high voltage AC current, and for every computer and printer and thing you have, there’s a converter to change the power to DC current. Now you start putting in batteries and solar panels, which are all DC. Conceivably the time is not far away when we start rewiring our houses for DC current directly from solar panels.
“Interestingly, Yale University had a DC system up to the 1970s, with their own power station at the bottom of garden which supplied the whole campus. These opportunities might start happening.
“If this is happening at a household scale, and perhaps with multi-storey buildings being wired for DC, it means we can start doing away with the conversion within appliances from AC to DC, and start moving at a network scale to that same model. Then, instead of each household having a battery pack, you have a battery pack at the neighbourhood level, as part of the distribution network, distributing to everyone on the DC model.
“That might be more economical. It cuts out out the inverter, which would be a big saving. Eventually, all the household would need would be some solar panels – no inverter, no battery because the network would provide that.
“This is all speculative. It will not happen tomorrow, but we have to start getting to grips with it.
“If we can get a model like this, it might solve the issue of poorer households, too. They could put up solar panels, have a solar hot water system, put cooking on to gas and use LED lighting and energy efficient appliances, and so on.
“Over the next 10 years, the whole system could morph into a different model. This is all speculative, but we have to start understanding the options better in terms of operations, so that when it becomes totally financially viable, we are ready.”
Capetonians seek to generate power
Ten City of Cape Town electricity consumers have already taken up the option to generate their own power through solar panels, and sell surplus electricity back into the grid, and 15 more applications are being considered. The city has set a 1 megawatt limit per system, and – chiefly to avoid generating licence requirements set by the National Energy Regulator (Nersa) – insists these customers be net consumers, buying more electricity over a year than they sell back into the grid.
Deputy mayor Neilson said: “To put that into context, the city electricity department’s peak power demand is about 1 800 megawatts, at peak time in midwinter. So a 1 megawatt contribution is not huge. But if you have 100 of them it becomes significant.”
The city’s protocol was pioneering, but national Nersa guidelines were expected by the end of this month.
“Broadly we believe they will do something similar to what we have out there,” he said.
Weekend Argus