No country has or should have the vision of a hermit. Countries learn from each other by replicating what has worked and avoiding what hasn’t.
Ideally, each country should take only the best foreign practices and adapt them to its circumstances. In terms of the application of energy generation innovations, SA has learnt a lot from Germany.
We owe our industrialisation, that began in the 1920s, to German ingenuity. But a closer look at recent developments in Europe, particularly the implementation of energy transition from fossil fuels to renewables, suggests we should avoid Germany’s costly mistakes.
Let’s look at 20th-century lessons therefrom which SA adapted with great success and the 21st-century ones from which we must learn.
First, Germany was indirectly instrumental in Eskom’s establishment. It was in Germany that the power utility’s founding chair and eminent SA industrialist Hendrik van der Bijl, an engineer, was trained.
Second, German innovation was instrumental in the establishment of SA’s petrochemical giant Sasol. German scientists Franz Fischer and Hans Tropsch were leaders in coal use research. Their findings led to the Fischer-Tropsch process used to extract petrol, diesel and other chemicals from coal.
The technology was first brought to SA by mining company AngloVaal, which purchased the right to use it. AngloVaal hosted Tropsch in SA and dispatched coal samples to British and German laboratories for feasibility testing.
Patented in 1925, the Fischer-Tropsch process triggered the interest of scientists worldwide. Among them was Etienne Rousseau, a South African science student at Stellenbosch University.
In 1950, after the harsh experience of oil rationing in this country as a result of World War 11, the government established a committee to investigate all aspects of producing liquid fuel from coal. Fuel independence was considered a national priority.
Rousseau was part of the committee. While other members thereof toured the US and Britain to search for solutions, Rousseau turned to Germany.
The committee recommended a state-owned company be established to take over the coal-to-liquid fuel venture that AngloVaal abandoned.
The factory to be built, the committee recommended, would use the Fischer-Tropsch process that employed German reactors to produce diesel and a plant designed by the Kellogg Corporation to produce petrol.
In late 1950 Sasol was established, with Rousseau its founding head. Sasol’s history is well documented in Mind over Matter by John Collings. The company would go on to use the German invention on a larger commercial scale than the Germans had imagined. Over time, Sasol was privatised and became a global company with listings in Johannesburg and New York.
As Germany embarked on the transition to renewables, it provided the third lesson for SA. This time, it’s not clear whether SA is taking notes.
In 2007 it featured in Antoine van Agtmael’s book The Emerging Markets Century: How a New Breed of World-Class Companies is Overtaking the World. SA’s Sasol is such a company.
Germany had invested heavily in coal-related research and development. Coal powered its industrialisation, alongside nuclear power and gas. With three powerful sources of baseload energy Germany couldn’t go wrong in economic development.
So it became the most powerful industrial nation in Europe after the UK, which it eventually overtook. With reliable and affordable energy supply, Germany’s Mittelstand manufacturing plants did their magic without much effort. The country produced hi-tech export products.
But at some point there was a need to transition from fossil fuels to renewable energy. Germany, like SA, is a signatory to international instruments aimed at curbing climate change mostly attributed to fossil fuels.
As Germany embarked on the transition to renewables, it provided the third lesson for SA. This time, it’s not clear whether SA is taking notes.
In February 2020 German chancellor Angela Merkel visited SA. She encouraged this country to transition from coal to renewable energy, a message President Cyril Ramaphosa lapped up without much difficulty. (Germany doesn’t have the type of coal reserves SA has).
But Merkel was also honest enough to give a warning, which was seemingly not taken seriously, based on Germany’s experience. She said renewables needed careful management because they were intermittent.
By then Germany had experience of the transition, having embarked on an ambitious renewable-built programme with gusto, and decommissioned its coal plants quicker than it installed alternative energy sources.
With nuclear energy having become politically unpopular within the German coalition government, it too had to be phased out. Germany was, for the first time, going to be overly reliant on natural gas from Russia, pumped through the Nord Stream pipeline, and renewables.
This transition cost Germans dearly. By 2021 the median household there was paying 43% more than the average power bill in 27 other countries in the EU, according to Sarah Lohmann of the American Institute for Contemporary German Studies at Johns Hopkins University in the US.
At least 50% of the costs added to the electricity bill was meant to cover the cost of the transition to renewables. She noted that Germany paid a record of $38bn (about R656.9bn) for green electricity in 2020 and projected a further increase.
Something was clearly not right with Germany’s transition. Lohmann suggests the country’s mistake was to elevate passion over numbers. “Unfortunately, in its passion to lead the pack [on renewables], Germany didn’t quite do its math. It has not created nearly enough renewable energy to replace the nuclear and coal it is determined to phase out,” she wrote in September 2021.
She estimated that when the last of its nuclear reactors were due to be turned off in 2022 there was likely to be a shortage of 4.5GW or the equivalent of what 10 large coal-fired power plants would provide.
No country in Europe teaches an invaluable lesson about the importance of baseload and the need for a well thought out transition to renewables than Germany, the leading country on renewable installation.
She cited the German federal audit as having said Germany was at risk of grid blackouts from 2022 to 2025. The audit said more than $600bn (about R10.3-trillion) would be needed until 2025 to maintain a stable grid and warned that the “energy transition will endanger Germany as a business location”.
Lohmann was prescient about the geopolitical implications of Germany’s transition to renewables. In effect, the country was transitioning from being an energy-independent country to being energy-dependent. It would rely predominantly on France’s nuclear and Russia’s gas supplies for baseload power.
Russia invaded Ukraine in February. Suddenly German’s dependence on Russia’s gas becomes a major foreign policy dilemma. Russia holds the energy levers in the geopolitical contest where Germany is an adversary by virtue of supporting Ukraine.
Russia has reduced gas supplies and there are fears it might cut them off completely. Recent developments have sent energy prices in Germany soaring to record levels.
Supplies of gas to Germany or other European countries can no longer be guaranteed, at least not at as per normal. Besides, if Germany had its way, it would be the one terminating Russian gas imports to boost the effectiveness of sanctions by the Western Bloc.
Theoretically, Germany’s installed renewable capacity should help it stand up to Russia’s Vladimir Putin. In practice, renewables capacity cannot replace baseload provided by gas, coal and nuclear. The sun doesn’t always shine to satisfaction and the wind sometimes doesn’t perform as expected.
So what did Germany do in response to its energy needs and geopolitical dilemma? It postponed the decommissioning of the remaining nuclear plants and restarted mothballed coal-fired power stations. German companies have begun burning diesel and fuel-oil. And there is talk of power rationing.
No country in Europe teaches an invaluable lesson about the importance of baseload and the need for a well thought out transition to renewables than Germany, the leading country on renewable installation.
In SA, we ignore these lessons at our peril. Eskom plans show we may have entered this territory. The company is planning to reduce baseload coal generation, hold nuclear generation constant and increase variable renewable power at a cost of more than R1-trillion.
What are we likely to get out of this? The answer can be found partly in Germany.
Van der Bijl learnt from the Germans to build Eskom. So did Rousseau to build Sasol. It’s time we sent current and future Eskom leaders to Germany to study the performance of renewable capacity in relation to other energy sources.
They must then use the German lessons to advise our government to adopt facts-based policy instruments suitable to our circumstance as a developing country that aspires to industrialise and create much-needed jobs.
The policies must accommodate technological changes. Most importantly, they must be rational and not place fanaticism above science.
* Bayoglu is MD of Menar, a private investment company
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.