South Africa’s energy transition from coal to cleaner energy carries an economic opportunity equivalent to the discovery of gold in the country more than a century ago, a new South African National Energy Association (Sanea) report argues.

Published on June 30, the ‘South African Energy Risk Report 2020’ also argues that clean energy could be an active driver of the country’s economic recovery from the Covid-19 pandemic, especially if policy and regulation is changed to be more supportive of new business models for the delivery of infrastructure in a context of weak public finances.
The report argues that the opportunities associated with embracing the transition include:

a reduction in South Africa’s carbon emissions and power-station pollution;
increased benefication of minerals associated with the energy transition, such as battery minerals;
the localisation of energy value chains, including green hydrogen production, that leverage the country’s solar, wind and human capital resources;
improved economic growth and job creation;
the repositioning of South Africa as a leader in new and emerging markets;
an aligned and coordinated policy framework that promotes broad-based national strategies; and
improved investor confidence due to a clear vision and aligned policy.

“This fundamentally shifts South Africa’s energy transition trajectory and will be the equivalent of finding gold in South Africa over a hundred years ago, with the resultant economic and social benefits it brought,” Sanea secretary-general Wendy Poulton, who edited the report, argued during a virtual launch presentation.

She cautioned, however, that this “new gold rush” would have to be carefully managed if it was to deliver maximum national benefit, as well as ensure a just transition.

If the uncertainties listed in the report – which ranged from inappropriate policies and corruption, to price volatility and a lack of skills – were not managed, economic growth would remain weak, while energy demand would not be met.

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This third article from the interview by Chris Yelland with André de Ruyter on 15 April 2020 covers Eskom’s response to climate change and the need for a just energy transition in South Africa towards a greener future.
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See here for the first and the second articles

With Eskom being the country’s largest emitter of CO2 through the burning of coal for power generation, what is Eskom doing to reduce its carbon footprint, what are the key ingredients for unlocking a just energy transition in South Africa, and what role should Eskom be playing in this transition?

I must stress that Eskom fully recognises the importance of climate change and the fact that it has a negative impact, not only on the world, but in particular on South Africa as well.

South Africa is a signatory to the Paris Agreement and, therefore, as a major emitter of greenhouse gasses, we need to contribute to global efforts to address climate change. But that implies there is going to be a very wrenching adjustment from an economy built on cheap coal and cheap energy to an economy that is far more resilient and far less reliant on carbon.

The structural underpinnings of our economy have not changed yet and we are not very well prepared for the energy transition that is underway globally. That does not mean we can resist the energy transition. I think we need to accelerate very quickly on this long road in order to catch up and take advantage of the latest developments in technology.

If you look at the cost curves for renewable energy, compared to those for fossil-based energy, it is clear the technology developments and affordability of renewable energy have been such that you cannot afford to ignore this. It is beyond any doubt that wind and solar energy will play a key role in our energy portfolio and mix going forward. But that does not mean we will be able to back out of coal overnight. 

This is going to be a long passage as we wind down our reliance on coal and, unfortunately, I think we will be a major coal consumer and hence a major emitter of greenhouse gasses and associated pollutants for some time.

We are now on the verge of retiring some of our older coal-fired power stations. This affords us the opportunity to consider repurposing them to natural gas and to use the vacant land around those power stations, where we can rehabilitate open-cast mines for solar or wind power generation.

These properties are now owned by Eskom to use and you may be aware that Eskom recently issued a request for expressions of interest and proposals for the repurposing of decommissioned coal-fired power stations, with a closing date of 10 June 2020.

Some may see old coal-fired power stations that have reached the end of their economic life, and are heavy emitters of carbon and also other pollutants, as a liability. We see these as potential assets and exciting opportunities that can be used to create a just transition.

These opportunities provide a future for communities that have helped develop this country and allowed us to benefit from mining and using coal for low-cost electricity generation for the last 60 years. We cannot just leave them in the lurch, leaving ghost towns and communities behind as festering political, social and economic wounds.

So, the call for expressions of interest and proposals on our website is an indication of the seriousness with which we take this repurposing. We believe that, if we do this right, we can also enable solutions to the significant decommissioning costs we would have to incur.

By extending the life of these power stations we can enable a just social transition and a just energy transition. At the same time, this will allow some of the private entities and communities that have expressed an interest in investing in these repurposed power stations to participate with us in public-private partnerships (PPPs).

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Electricity utility Eskom has extended the deadline, to May 11, for responses to a request for proposals (RFP) to participate in its Short-Term Power Purchase Programme (STPPP), owing to the imposition of a 21-day lockdown in South Africa in response to the Covid-19 pandemic.

The initial bid submission deadline was April 30.

Through the STPPP Eskom intends contracting with those South African or regional entities able to supply short-term power, at an affordable rate, so as to reduce a supply gap that had developed as a result of poor production rates at its new coal-fired power stations, as well as its under maintained coal fleet.

Prior to the pandemic, Eskom estimated that the shortfall could be as large as 5 000 MW for the coming 18 months as it began implementing so-called ‘philosophy maintenance’, whereby deviations from prescribed service and repair protocols and intervals would no longer be tolerated.

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GM for risk and sustainability Andrew Etzinger tells Engineering News & Mining Weekly that Eskom is still analysing the potential impact that the pandemic, and the country’s response to it, could have on electricity demand once the lockdown ends.

Demand slumped by over 9 000 MW once the lockdown came into force at midnight on March 26, enabling Eskom to shut certain coal and nuclear units and ramp-up risk-based maintenance. The full implementation of philosophy maintenance was postponed, however.

Etzinger says the decision to reintroduce the STPPP scheme was made after Eskom was forced to declare State 6 load-shedding for the first time ever on December 9 and the RFP was released on March 23 after all governance approvals were secured.

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Two so-called draft “S34 determinations” by the National Energy Regulator of South Africa (Nersa) are the first step in the process of procurement of new electricity generation capacity in South Africa totalling some 13,813 MW from independent power producers (IPPs).
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South Africa’s national energy regulator on Friday published two draft determinations by Minerals and Energy Minister Gwede Mantashe in terms of Section 34 (1) of the Electricity Regulation Act.

The first draft S34 determination relates to the procurement of 2,000 MW of new generation capacity between 2019 and 2022, and the second draft S34 determination to the procurement of a further 11,813 MW between 2022 and 2027. 

These draft S34 determinations begin the procurement process after the gazetting of the South African national integrated resource plan for electricity, IRP 2019 on 18 November 2019. The determinations were submitted to Nersa by the minister on 21 February 2020 for “concurrence” by the energy regulator and published on Friday 20 March 2020.

A high court judgment in April 2017 ruled that in terms of the Electricity Regulation Act and the Promotion of Administrative Justice Act (PAJA), Nersa is required to concur with the draft determinations following a public consultation process before they become final and are gazetted. 

The public consultation process began after Nersa published two consultation papers on 18 March 2020. These call for public comment and input on the two draft S34 determinations issued by Minister Mantashe, by 14 April 2020 and 7 May 2020 respectively.

​Despite the current electricity supply emergency, which has resulted in up to Stage 6 (6,000 MW) load shedding in South Africa, Nersa has indicated that now, more than a month since receiving the draft S34 determinations, it will require a further three months to concur with the first S34 determination, and six months for the second.

Nersa does not seem to have got the message from Minister Mantashe when he said recently:

“Officials in the department are used to working according to rules, where it takes three months to do this, or six months to do that. The situation we are in requires a change of approach. That’s why we are engaging with Nersa and everybody to say: Guys, let’s accelerate processes, because if we don’t, we are going to be plunged into darkness.”

The Department of Minerals and Energy and Nersa are coming under increasing pressure and criticism for the snail’s pace of their bureaucratic processes and decisions. The energy regulator refutes this criticism and says that “Nersa is cognisant of the urgency of the request [for concurrence] as evidenced by the proposed fast-tracked concurrence process in the consultation papers”.

The draft S34 determinations indicate that electricity produced from the new generation capacity will be procured from IPPs “through one or more tendering procedures which are fair, transparent, competitive and cost-effective”.

The electricity procured from IPPs by the department in terms of the draft S34 determinations may only be sold to Eskom as the designated buyer of the electricity, in accordance with power purchase agreements (PPAs) concluded in the course of the procurement programmes.

Recent statements by the ministers of public enterprises and minerals and energy have indicated that Eskom should not be excluded from building, owning and operating new renewable energy generation capacity. However, the draft Section 34 determinations indicate that all new generation capacity up to 2027 – wind, solar, energy storage, gas and coal-fired – will come from IPPs. None of the new generation capacity will come from Eskom itself. 

This is a big shift from the current Eskom monopoly, towards a more diversified electricity supply industry. It also represents a significant diversification away from South Africa’s over-dependence on coal as primary energy for power generation, which stands at about 80% of the total electricity generated in South Africa. 

Chris Yelland is MD of EE Business Intelligence.

Energy regulator Nersa took a crucial step toward allowing the government to procure emergency power and to allow the building of more privately owned power plants.

The regulator issued public consultation papers after the energy minister allowed the procurement of 2GW of emergency capacity as soon as possible and the construction of 6.GW of capacity from longer-term renewable power plants. The longer-term plan is in line with a government energy framework that includes additional generation capacity in the form of non-renewable power. South Africa is in urgent need of more electricity to end recurrent outages.

As soon as the process is finished by the regulator, procurement of new capacity can begin, department of mineral resources & energy deputy director-general Jacob Mbele said on 3 March.

South Africa’s electricity generation crisis has created major opportunities for companies, businesses and individuals to start generating their own power, Exxaro CEO Mxolisi Mgojo said on Thursday when the JSE-listed black-empowered company declared generous dividends following a resilient 2019 performance, despite coal price odds.

“That’s a big shift, over and beyond what was originally planned in the IRP 2019. What is becoming very critical now is how we actually fast-track the enabling of self-generation to happen, because we know that for the coming 18 months to two years, we’re going to be confronted by continuous load-shedding, until such time as the maintenance programme has been done effectively, and Medupi and Kusile are sorted out.

“Like many other mining companies, we are looking at how we can plug part of that gap by providing our own ability to generate power for ourselves, and over and above that we see the area of renewable energy being a very critical area going into the future, hence our decision to buy the remaining 50% of Cennergi. All the conditions precedent have been met and at the end of this month, we’ll close that transaction formally, which means we'll own 100% of the renewable energy company,” he said.

Forming part of Exxaro’s response to climate change is the targeted reduction of its coal resources by 22% over time, as well as a commitment to achieving a carbon neutral footprint by 2050.

He said Cennergi provided Exxaro with an opportunity to focus its resources and capital allocation much more rigorously around renewables.

“Part of the strategy is to use Cennergi as a stepping stone off creating an energy business going into the future,” he told Mining Weekly.

He made an impassioned plea for climate change to be taken with the utmost seriousness. The black-led diversified resources company is itself aligning strongly to the Paris Agreement in response to climate change risk, and succeeding in promoting powerful environment, social and governance (ESG) excellence.

“If we don’t take climate change issues very seriously and see it as being part of our responsibility to respond in a very effective and impactful ways, God help us, because our children will be inheriting a very, very challenging future,” he said.

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E-Movement, the Formula E Bid company, has confirmed its intention and plans to host a Formula E race using a street circuit in the heart of Cape Town.
e-Movement chairperson Iain Banner says there has been positive progress since the members of Formula E operations completed a feasibility study during a site visit to the city in September last year.

“The objective of the study was to assess the suitability of Cape Town as a possible venue for a round of the ABB FIA Formula E Championship in future seasons.

“Three possible circuit layouts have been identified and we are now in the process of exploring these possibilities with the City of Cape Town and other interested parties,” explains Banner.
 
“As a starting point, the preliminary track layout and how it fits into the existing fabric of the precinct – as well as the future development proposals around the identified track – were all key factors in assessing the City of Cape Town’s suitability.

“The primary objective was to design a suitable circuit layout that will have minimum impact on the city, require minimum construction work, cause minimum disruption to general public and traffic, and, crucially, leave a lasting legacy.”

Banner adds that the proposed event will simultaneously anchor a renewable energy week, comprising a major conference and exhibition in an industry which he believes is poised “for rapid growth over the next decade”.

Councillor JP Smith, a member of Cape Town’s mayoral committee, has welcomed the positive outcome of the feasibility study.

“The event is so much more than an E-Prix – it provides an opportunity to position the City of Cape Town and the Western Cape region as the pioneering renewable energy hub of South Africa.

“The event would not only showcase the natural beauty of our city, but such an event places Cape Town at the forefront of alternative and green energy initiatives, and serves as a catalyst for attracting investment and creating employment in a sector for which major growth is projected in the foreseeable future.”

Jaguar Land Rover South Africa and sub-Saharan Africa marketing director Lisa Mallett is equally pleased with the momentum building around the event.

“Jaguar is at the forefront of electric mobility globally, and has made massive strides in electrification right here in South Africa.

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South Africans looking to purchase a backup power solution should be careful when considering suitable batteries.
The prevalence of load-shedding has led many to resort to battery-inverter systems that are able to charge when the power is on and then provide stored electricity for use during power cuts.

These battery systems are also used to store energy generated from renewable energy solutions like solar power.

Understanding the specifications of these batteries can be difficult for those unfamiliar with electrical systems, however.

Batteries that aren’t rated to perform as advertised are in the market, and even those who buy from respected sellers should be wary of misleading performance ratings.

Blue Nova Energy, which recently launched its MegaBoy intelligent Energy Storage Solution (iESS), told MyBroadband what to look out for – detailed below.

The problem with battery specifications
Certain vendors used load-shedding to exploit a lack of knowledge among consumers to sell battery products that aren’t necessarily intended for backup power.

While many vendors don’t explicitly lie about a battery’s specifications, subtle manipulations in how the performance factors are calculated can misconstrue its true capability.

“A lower-quality product can be made to look better on paper by obscuring or neglecting to mention certain product specifics, and therefore seem to be more affordable,” Blue Nova explained.

The company said that consumers tend to compare product prices, rather than taking long-term product running costs into consideration.

“The data available on the data sheets of these products is, for the most part, accurate. The difficulty is determining what the published data is based on exactly,” said Blue Nova.

“For instance, minimum cycle life depends mainly on chemistry, maximum daily depth of discharge (DoD) percentage, ambient temperature, and capacity retention at end-of-life.”

“The latter is sometimes mentioned in small-print in warranty documents,” the company added.

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JSE-listed real estate investment trust Balwin Properties has, together with financial services provider Absa, launched South Africa’s first green home loan – the Absa Eco Home Loan.

The home loan will come with features and benefits that will appeal to customers looking to live green, the parties said on Thursday.

Balwin CEO Steve Brookes, during the launch event held at The Reid residential complex, in Sandton, said the idea of a green home loan was inspired by the International Finance Corporation’s (IFC’s) Green Bond.

He called this “the loan of the future”.

“I was impressed by how much they have achieved in driving climate-smart investment and saw an opportunity to extend this philosophy to our customers. My team and I set out to find a like-minded, innovative partner with the right technical expertise and delivery capabilities to develop such a product – Absa became an obvious choice,” he said.

“The Absa Eco Home Loan is testament to our commitment to create products and offerings that are centred on what the customer and the future of residential property needs. We recognise that sustainable living is a priority for our customers and so it must be a priority for us,” commented Absa home loans managing executive Geoff Lee.

The residential property developer last year achieved EDGE certification of 16 000 of its units, across seven of its built-to-sell developments. The IFC at the time confirmed that Balwin’s EDGE registration of 16 000 units was a global first, covering more homes than any single property developer in the world as at June 2019.

EDGE certification for new homes is implemented in South Africa by the Green Building Council South Africa (GBCSA), in partnership with IFC. The EDGE certification can be achieved once a home achieves a 20% reduction across energy consumption, water use and embodied energy in materials.

Brookes said it had become an imperative for the company to help its customers reduce energy costs while electricity tariffs continue to rise in South Africa.

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A leading South African bank is forecasting “exponential growth” for the country’s small-scale embedded generation (SSEG) market in the coming few years, having already committed to funding project pipelines worth more than R1-billion, mostly in the form of rooftop solar.

Nedbank CIB energy finance principal Duncan Abel tells Engineering News that the market has already expanded materially from close to zero only five years ago, in spite of ongoing regulatory uncertainty. Liberalisation of the grid, wheeling and battery storage will further fuel rapid growth, he asserts.

The bank is also a leading financier to South Africa’s utility-scale renewable energy programme, with over R35-billion committed to funding such projects.

The growth in SSEG has been underpinned by a sharp fall in the cost of solar photovoltaic (PV) technology in particular, as well as a desire among South African companies for tariff certainty in a context of ongoing, above inflation, Eskom hikes and load-shedding.

In addition, many SSEG deployments, particularly those being undertaken by multinationals operating in South Africa, are increasingly motivated by internal decarbonisation targets and commitments to the United Nations Sustainable Development Goals.

Abel says there is significant pent-up demand for small-scale deployments, which have hitherto been restricted mostly to sub-1 MW projects, owing to regulatory uncertainty regarding the licensing of larger plants.

Even absent any possible change to the regulations, Abel anticipates that demand will continue to increase strongly.

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