Renewable power 'just raises Eskom's costs'
Public opinion may back an increasing proportion of renewable energy being plugged into South Africa's power grid, but Eskom CEO Brian Molefe says further independent renewable power production will be impractical and what he really needs is nuclear energy.
Molefe on Friday was defending a decision by Eskom this week to stop signing new agreements with independent power producers.
According to Molefe, the push for renewables from the industry was based on the integrated resource plan of 2011 which was now out of date. Any additional increase in allocation would simply further strain Eskom's cost base without making a useful contribution to the national grid.
"Sometimes it's important to confront the facts rather than be passionate about issues. On any given day I will need about 35000MW at 6pm for peak demand. When that happens, none of the solar panels installed in South Africa today will be available since the sun will have set.
"I cannot guarantee that there will be enough wind today at 6pm to take us through the peak. That is a fact that confronts me on a daily basis."
Meeting peak power demand meant having base-load power from coal-fired power plants from about 10am.
"I don't need it then, but if I don't have it then, I won't be able to ramp up for the peak," Molefe said.
He said Eskom was forced to buy day-time solar power or wind-generated power that it did not need from independent power producers.
"You can't talk about competition in power production and then force me to buy from IPPs in 20-year agreements. The whole renewable energy industry's competitive edge relies upon them being able to sign 20-year [power purchase agreements] with us. Surely that cannot be free-market economics?"
Instead, Molefe said he wanted South Africa's base load to be provided by coal and nuclear.
Molefe said Eskom had not yet sat down with the National Treasury to discuss the cost of more such plants, but the procurement process was a Department of Energy responsibility. "The correct thing to do is wait for direction."
Molefe said that despite his misgivings, he thought renewables had a bright future.
"Storage technology will come but it's still early days in the deployment of the technology. I think they're still at the development stage and I'm sad to say at this stage the deployment is still very clumsy. If one is really in favour of a green economy, one would actually support nuclear."
A new IRP was due later this year or early next year, he said.
"It was supposed to be revised every two years, but it hasn't been. The fact is, the current IRP on which the renewables programme is based is outdated and I don't think renewables are contributing as much as people say they are. I don't buy the argument that they have contributed to a reduction of load shedding.
There is a conflict of interest. The country needs diversification of primary power generators
"If anything, they've increased the burden. We have to buy solar and wind even when the wind generates at 2am. There's nothing we can do with it at that time. And of the installed capacity of wind and solar energy, availability is only 30%. If you have 2000MW installed, there is only 600MW available at any one time, yet we pay for 2000MW."
Kieran Whyte, head of the projects and energy group at the Baker and McKenzie law firm, said his main concern was the uncertainty now prevailing with regard to independent power producers.
The lack of clarity might mean capital would move elsewhere.
According to Whyte, the global trend was away from a dominant utility model and the local industry would be waiting to see how Eskom intended to continue developing its power base.
If Eskom stuck to a model of using its own balance sheet and approaching the regulator for increases to cover its costs, he said, corporate customers might increasingly look to develop their own power sources to achieve a degree of certainty over future costs.
Energy commentator Chris Yelland said there should be an independent grid management agency making decisions based on cost and economics, rather than having Eskom control access to the grid as a way of ensuring it could pay back the costs of Medupi and Kusile.
"There is a conflict of interest," Yelland said. "The country needs diversification of primary power generators."
He said that a combination of open-cycle gas turbines and renewables could provide adequate base load.
South Africa remained overly reliant on coal for base-load power, he said, and going big on nuclear would tie the country to one technology and one player for nearly a century while other technologies continued to advance and became cheaper.
"It's about economics and flexibility," Yelland said.
"Least cost and least regret. Can we afford nuclear? I don't believe studies on the levellised cost of power from nuclear versus diversified sources are receiving the public attention they deserve."