JOHANNESBURG, South Africa, Nov 11 2019 (IPS) - Africa, where close to half of its 1.2 billion people have access to electricity, is set to become a world leader in renewable energy. As global business and development leaders met in Johannesburg, South Africa, to attend the Africa Investment Forum (AIF), one of the key focuses of the deals being discussed was around sustainable, renewable energy.

Organised by the African Development Bank (AfDB) and its various partners, the forum is expected to see $68 billion in deals closed over the next few days.

Leaders are doing all they can to encourage investment

In attendance where heads of state from South Africa, Ghana, Rwanda and Mozambique. At an invitation-only discussion among the leaders, Rwanda’s President Paul Kagame said there was a lot of progress in Africa as a whole.

“I have always thought it was Africa’s time. We African’s have let ourselves down, we are now realising it has always been our time. And we are now seize every opportunity and be where we should be by now,” Kagame said.

- Kagame was the driver of the African Continental Free Trade Agreement (AfCFTA) during his time as chair of the African Union in 2018. The agreement had not been in existence during the first AIF last year.
- Established in March 2019, the AfCFTA has now been signed by 54 of the 55 African member states.

Alain Ebobisse, CEO of Africa 50, the Pan-African infrastructure investment platform capitalised by the AfDB, said that there was a consensus from African leaders that they needed to do whatever they could to attractive more private investment. He said that the AIF attendance showed that there was a changing narrative for investment on the continent.

- Earlier figures had been revealed by the South African premier of Gauteng Province, David Makhura, that over 2,000 delegates were in attendance from 109 countries. Of this, only 40 percent where from Africa with the majority of investors attending from Asia, Europe and the Americas.
- Gauteng is South Africa’s wealthiest province and includes the financial centres of Johannesburg and Sandton, as well as the seat of government in Pretoria.

Renewable energy on a positive trajectory

Ebobisse said that a lot was already happening on the continent and while the media focused on the challenges there were huge success stories too — like the 1.5 GW Benban Solar Park in Egypt, which is the world’s largest solar photovoltaic plant.

“I’m sure that people are not talking enough about this major achievement which is the Benban Solar Programmer, 1.5 GW of solar that was invested mostly by the private sector in a record time,” he said.

- Africa 50 invested in 400 MW in that project and completed it from design to commercial operations in two and a half years.

Ebobisse went on to highlight Kenya’s opening this July of the Lake Turkana Wind Power project, which at a generation capacity of 300 MW makes it the largest wind power project on the continent.

“It was funded by the private sector,” Ebobisse told the media. He also looked towards Senegal which was implementing many independent power producers or IPPs in the solar sector.

“So there is a lot that is happening. We need to also widely understand the challenges and understand what is happening on the ground. And people are actually making good money in this investment. And there is nothing wrong about that. Let’s celebrate those successes,” he said.

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Making Africa a world leader in renewables

A few weeks ago, the Governors of the AfDB met in Cote d’Ivoire’s capital Abidjan, approving a historic $115 billion increase to the bank’s authorised capital base to $208 billion. “This is the highest capital increase in the history of the bank since its establishment in 1964,” AfDB president Akinwumi Adesina said today.

During the October announcement Adesina had said that a significant portion of funding would be invested in climate change.

Today, in response to a question from IPS, Adesina further explained that the bank had doubled its investment in climate finance from $12 billion to $25 billion by 2020.

“Almost 50 percent of our finance will be going to climate adaptation as opposed to climate mitigation. So we are the first multilateral development bank to actually reach that balance in terms of adaptation and mitigation,” he said.

- Climate mitigation is the actions taken to reduce or curb greenhouse gases, thereby addressing the causes of climate change to prevent future warming. However, climate adaptation addresses how to live with the impacts of climate change.

“I believe that coal is the past. I believe that renewable energy is the future and we as a bank are investing in not in the past, but in the future in making sure that we are investing in solar energy, in hydro energy, in wind, all types of renewable energy that Africa needs,” Adesina said.

“We want Africa to lead in renewable energy.”

He said one of the projects was the AfDB’s Green Baseload Facility, which according to the bank, aims “to accelerate the transition towards more sustainable baseload power generation options and prevent countries from locking themselves into environmentally damaging and potentially economically costly technologies”.

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HIGHLIGHTS ​ Share of gas in African energy mix to quintuple by 2040 Oil production to remain flat, gas output to more than double Africa's solar industry crucial to global energy transition

London — Africa will emerge as a major player in natural gas markets as a producer, consumer and exporter with gas output poised to more than double in the next two decades, the International Energy Agency said in a new report Friday.

The share of gas in the energy mix in Africa is projected to rise to around 25% by 2040 from 5% now, according to findings from IEA's Africa Energy Outlook 2019.

IEA said the future for gas in the continent could look different due to a series of major discoveries in recent years -- Mozambique and Tanzania, Egypt, Senegal and Mauritania and South Africa, which collectively accounted for over 40% of global gas discoveries between 2011 and 2018.

"These developments could fit well with Africa's push for industrial growth and its need for reliable electricity supply," the report said, as Africa will observe a huge rise in its population and the rapid industrialization of its economies, which will surge in the coming decades.

Oil production will plateau in the next two decades, as gas becomes a bigger priority for the key oil and gas producers.

Oil output will reach 8.2 million b/d by 2040 compared with 8.4 million b/d in 2018 while gas production will surge to 317 Bcm in 2040 from 240 Bcm last year. Mozambique, Tanzania and Egypt will be the main drivers of gas production, according to the report.

But developing gas infrastructure will be a major challenge because of "typically small market sizes and concerns about affordability,"the report added.

With an oversupply looming on the gas market, "much will depend on the price at which gas becomes available along with the development of distribution networks, the financing available for infrastructure and the strength of policy efforts to displace polluting fuels," the IEAsaid.

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DEMAND SURGE

Africa's importance in the global oil and gas markets will increase to the "growing appetite for modern and efficient energy sources."

Oil demand in the continent will grow by 3.1 million b/d between now and 2040 due to the doubling of the car fleet along with increaseddemand for LPG as a cooking fuel.

The report said African oil demand in 2040 would average 7 million b/d from 3.9 million b/d last year.

This is higher than the projected growth in China and second only to that of India, IEA added.

On the gas side, Africa will become the third-largest source of global gas demand growth over the same period, outlining its importancenot as a produce but also has a consumer.

Gas demand would increase to 317 Bcm in 2040 from 158 Bcm in 2018.

The report, however, sounded a note of caution to Africa's oil and gas producers that due to the changing development models in Africa,countries that are highly dependent on hydrocarbon revenues are coming under increasing pressure.

"Changing global energy dynamics mean that resource-holders cannot assume that their oil resources will translate into reliable future revenues," it said.

DEVELOPMENT OF GAS

African governments need to put policies in place to accelerate production growth to serve domestic demand and develop strategies to maximize the value of their resources, the report said.

Stressing that importance of East Africa's gas industry, IEA warned the governments of Mozambique and Tanzania to take adequate measures to ensure gas revenues lead to "tangible economic benefits."

"History suggests that, after major discoveries, some countries have quickly scaled up public investment and accumulated excessive debts based on unrealized future revenues, damaging their economic performance in the process," the report said. "Avoiding this so-called 'pre-source curse' is essential if income from gas exports is to provide maximum benefit to Mozambique and Tanzania."

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JOHANNESBURG - The sun burns 637million tons of hydrogen atoms into 632million tons of helium and thus creates 38460septillion watts (3.846 x 1026W) of energy per second, which equates to roughly 1386 watts per square metre (W/m²) in the upper atmosphere of Earth or 1000 W/m² at sea level on a clear day.

This is still about 10000 times more than the whole of earth needs at the moment and could over time eliminate the need to burn environmentally-unfriendly resources and as a result decrease carbon dioxide (CO2) emission levels.

As I have illustrated in Business Report over the past few weeks, this realisation is one of the reasons why the solar photovoltaic market has been expanding exponentially. Costs of silicon solar cells have declined considerably in the past few years, making solar photovoltaic systems easily accessible to many house or building owners.

However, one of the biggest complaints against solar is that solar panels installed at a house or building do not look aesthetically or visually appealing. But the ever-innovative Elon Musk and his company Tesla may have solved the problem of aesthetics by totally changing the visual appearance while at the same time providing a reliable source of solar electricity.

The Tesla Solar Roof, consisting of integrated solar glass shingles, is a building-integrated photovoltaic (BIPV) product that integrates the functionality of solar panels and roof shingles, currently available in Tuscan, slate, textured and smooth glass tiles.

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Although solar roof tiles and other solar modules integrated into buildings have been on the market for some time, the concept of an entire solar roof is new. The full roof coverage approach involves a solution where photovoltaics do not represent just an addition to an existing roof surface, but instead it is integrated into the structure of the house for aesthetic, constructive and electrical purposes.

The Tesla solar system could both convert and store solar energy throughout the day and then make it available when needed such as during the night. To store the solar energy the Tesla Solar Roof incorporated an embedded Powerwall battery system.

A major benefit of the Tesla Solar Roof is the durability of the tiles and shingles made from quartz and therefore virtually unbreakable. According to Tesla the glass tiles are harder and more stable than traditional clay tiles. They have a class 3 hail rating and class F wind rating. It carries a 25-yearwarranty, which is in line with traditional roof warranties.

The Tesla Solar Roof was originally announced to the world in October 2016, but due to some design issues production was initiated only in 2018. The rollout was, however, very limited while Tesla was working on version 3 of the design.

The price of Tesla Solar Roof Tiles decreased by 40percent from version 2 to version 3 (now known as the Solar Glass Roof) due to optimisation and faster installation. Tesla installation took double the time than the installation of a normal tile roof, which usually takes about five to seven days depending on the size of the roof.

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Multinational power company Enel, through its renewable energy subsidiary Enel Green Power, has started construction on its Karusa and Soetwater wind farms, in the Northern Cape

The plants, each with an installed capacity of 140 MW, are expected to be completed by the end of 2021 at a cost of over €200-million each. 

Enel Green Power CEO Antonio Cammisecra says the company is building five wind projects in South Africa, for a total installed capacity of around 700 MW, which is “further evidence of [the company’s] ability to supply emission-free energy to . . . support its transition towards renewables”.

He points out that the pipeline of projects under construction is in addition to the portfolio of wind and solar assets that Enel Green Power has already commissioned owing to the commitment with which it had worked in South Africa since the start of development activities in 2011.

“We are showing the same determination when it comes to innovation and sustainability, as all of our plants are being built through state-of-the-art technology and sustainable construction practices, while creating local employment and income opportunities,” Cammisecra comments.

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Karusa and Soetwater are the fourth and fifth wind projects Enel Green Power has started building in South Africa since the start of this year, in line with its investment programme in the country. The other projects, with an installed capacity of 140 MW each, are Nxuba and Oyster Bay, in the Northern Cape, and Garob, in the Eastern Cape.

All five projects were awarded to Enel in Round 4 of the South African government’s Renewable Energy Independent Power Producer Procurement Programme. The wind farms will be supported by 20-year power supply agreements with South African State-owned energy utility Eskom.

During the construction phase of Karusa and Soetwater, the state-of-the-art tools and practices Enel Green Power is expected to use include advanced digital platforms and software solutions that will monitor and remotely support all site activities and plant commissioning, digital tools to perform quality controls on site and smart tracking of wind turbine components.


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The unbundling of Eskom, Not just a Roadmap, But a Death Trap for South Africa’s Energy Independence

The South African Federation of Trade Unions (SAFTU) joins NUMSA and NUM in opposing the decision to go ahead with the unbundling of Eskom.

What is at stake here is much more significant than simply breaking Eskom into three separate parts. The proposals made in the DPE’s Roadmap for Eskom in a Reformed Electricity Supply Industry, if implemented, will wreak havoc on South Africa’s energy system. The reason offered for the restructuring of Eskom into three subsidiary businesses – generation, transmission and distribution – is to “reduce the risk that Eskom poses to the country through its dependence on fiscal allocations and inability to supply the economy with adequate power.”  But what is being proposed will leave Eskom in a worse state and leave consumers worse off. By 2030, South Africa will have lost its energy independence, sovereignty and will be dependent on multinationals based in Europe and China. Costs will rise astronomically, and these costs will either be recovered through increased tariffs, state interventions, or both. We will be back to square one, but we will have lost control over our energy system.  

Moreover, there is no attempt to account how it came that a world leading energy company ended up with a massive debt of between R450 and R500 billion. There is no attempt to explain how unbundling will address this debt trap. No explanation is given as to how breaking up Eskom into three components with three CEOs, three executives, three boards and staff will drive the costs down.

​Information is hidden to the public that Eskom is effectively subsidising overseas private firms.  The country is not being told that the Independent Power Producers are importing readymade renewable equipment such as solar panels out of the country. They are creating employment in other parts of the country but generate profits at the expense of the public utility, Eskom. Above all, Eskom is not allowed to enter the renewable space which is designed and reserved for the Independent Power Producers who have been asked to invest in renewables without taking any risks. Their profits are guaranteed for the next twenty years. This is a rip off and a deliberate milking dry of the public utility. This will render Eskom useless to bolster the chance of the private sector to take over the provision of the public good not in a too distant future. The question that arises is who really stand to benefit from this? What model of a competition is this? Wake up South Africa and smell the coffee, the country is being sold the to the highest bidder!

The DPE’s Roadmap claims that breaking up Eskom will usher in a “new business model.” This model is not consistent with the principle that electricity is a public good that should be used for human development and to strengthen the national economy. The proposed new model can be labelled “electricity for profit” where private interests, many based outside of South Africa, will enjoy Government backed guaranteed returns on investment as a result of 20-year power purchase agreements (PPAs).

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Without mentioning the word “privatisation” once in the entire Roadmap for Eskom document, it is plainly obvious that what the DPE is proposing comes straight from the World Bank’s privatisation handbook. It is consistent with the Bank’s “privatisation in stages” approach attempted in many other countries. 

According to this plan, first the public utility is broken up, but its component parts will remain--for a while--in public hands. Then for-profit independent power producers (IPPs) are offered long term contracts (power purchase agreements, or PPAs) to take over new generation capacity. We have seen this already with the Renewable Energy Independent Power Producers Programme, or REIPPP.  Privately-owned generation is phased in, publicly owned generation is phased out.

According to the DPE, Eskom’s future in power generation will be as one of many generators bidding for PPA contracts. It is claimed that this is but a steppingstone that “will thereafter transition to an open-market model.” In other words, Eskom’s generation must first compete with other IPPs as if it were a private entity. According to the DPE, “Consideration is being given to create two or more generation subsidiaries to introduce intra-company competition among the generation subsidiaries and drive efficiencies in generation.” In other words, separate parts of Eskom’s fleet will be forced to compete against each other on what will be an overcrowded generation market and sluggish energy demand. This is how privatisation happens: impose “market rules””, split up the business and sit back and watch how public entities struggle to reconcile their public mission of providing affordable electricity with the imperatives of profit making.

The DPE points to Vietnam as a successful example of this approach, but it fails to mention that demand for electricity in Vietnam has been rising at an average of 7% per year and nearly all of this added demand is being provided by new coal-fired capacity. In the context of South Africa, revenues from what is now Eskom’s existing fleet will plummet and the “death spiral” will intensify. With the planned decommissioning of 12GW of coal by 2030 under IRP 2019, it is clear where things are heading. Eskom’s share of generation will fall from 90% to 60% by 2030, and fall still further after that.  The share of private generation will rise accordingly. But South Africa will still be dependent on coal-fired power for most of its electricity

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Integrated primary vanadium producer Bushveld Minerals has agreed to support the merger of vanadium redox flow battery (VRFB) manufacturer Avalon Battery Corporation and redT energy with interim funding of $5-million.

The interim funding will give Bushveld an opportunity to acquire a strategic interest in the merged energy storage company and, on successful completion of the merger, the loan will convert into shares in the merged entity.

Avalon and redT announced their intention to merge in July, with the resulting business to trade on the Aim in London. It is expected to have a global sales footprint with a robust near-term project pipeline across North America, Europe and Asia.

While the merger remains subject to further due diligence by each party, definitive legal agreements have been reached and at least $30-million of new funds are being raised by redT and Avalon to support the merged business.

​Bushveld has agreed to provide a convertible loan of up to $5-million to Avalon, half of which will be loaned by Avalon to redT, to support the companies through the due diligence process, finalisation of the merger negotiation and completion of the fundraising.

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These funds also allow both companies to continue delivering on their current project pipelines.  

The investment is in line with Bushveld’s strategy of building a leading downstream vanadium-based energy storage platform, by increasing the company’s exposure to the potential of stationary energy storage, as well as partnering with selective VRFB companies with attractive upside potential and demonstrating upstream support from the vanadium industry for the development of the VRFB sector and encouraging additional investment into the combined company

The merger is expected to complete, and the trading of shares of the merged entity on Aim are expected to resume, during the first quarter of 2020.

Commenting on the opportunity, Bushveld Minerals CEO Fortune Mojapelo described it as “a major leap forward” in the development of the company’s downstream energy business.

He said it also demonstrated Bushveld’s conviction in the VRFB technology’s potential and the company’s ability to meet the vanadium supply needs of the energy storage industry.

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The South African government has opted for an evolutionary approach to the restructuring of Eskom, the details of which are provided in a ‘special paper’ released by Public Enterprises Minister Pravin Gordhan on Tuesday.

Titled a ‘Roadmap for Eskom in a Reformed Electricity Supply Industry’, the paper outlines a multiyear process for the unbundling of the vertically integrated State-owned utility into separate generation, transmission and distribution entities.

The paper highlights the unsustainability of Eskom’s debt, which stands at more than R450-billion currently, and reiterates the position that the utility remains the single-largest risk to the South African economy.

Finance Minister Tito Mboweni would provide details, in his Medium-Term Budget Policy Statement, on government’s approach to Eskom debt relief, which would be additional to the recent financial injections. Transfer commitments of R23-billion a year have been agreed for the coming ten years and the National Treasury has also introduced a Special Appropriations Bill outlining transfers of R59-billion for the coming two years. In total, Eskom will receive a fiscal injection of R49-billion in 2019/20 and R56-billion in 2020/21.

​The paper says that the Department of Public Enterprises and the National Treasury have studied various debt-relief measures and indicated that the principle of “fair treatment between lenders” would be maintained. It also promises transparent and clear communication with lenders once the “solutions crystalise”.

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The restructuring plan included in the paper provides firm details, with timeframes, on the creation of a new Transmission Entity (TE), which will continue to be a State-owned company falling under Eskom Holdings.

The TE will be functionally separated from the other two entities by the end of March 2020 and a new interim board will be appointed in the coming weeks. Full legal separation is anticipated in 2021.

Besides operating, maintaining and expanding a transmission network comprising 33 000 km of lines, as well as substations and transformers, the TE will also house the system operator, which will be responsible for sustaining system balance through a range of least-cost generation options. The entity will also be the market operator, whereby it contracts with suppliers and distributors of electricity.

During the transition, the Department of Mineral Resources and Energy (DMRE) will remain responsible for procuring new electricity, while the TE will house the buyer function.

The paper also foresees Eskom’s Generation remaining under Eskom Holdings, but with the 16 power stations clustered into three or four units in an effort to introduce greater cost transparency and competition between the clusters.

Gordhan said the cluster model was selected in a bid to inject an element of competition to a monopoly environment, which was typically associated with low levels of efficiency and “extravagant” costs.

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