Renewables will also cost SA R1trn: minister - TechCentral

Renewables will also cost SA R1trn: minister

Energy minister Tina Joemat-Pettersson

Energy minister Tina Joemat-Pettersson

Renewable energy will also cost South Africa in excess of R1 trillion and it’s up to Eskom to say if they can afford it, as it will be funded from the power utility’s balance sheet, said energy minister Tina Joemat-Pettersson on Tuesday.

The minister and a delegation from her department as well as Eskom briefed the portfolio committee on energy on government’s intended nuclear build programme.

While reiterating that renewable energy remains government policy and part of a balanced energy mix in the country, Joemat-Pettersson said Eskom is well within its rights to say whether it can afford a renewables programme.

“If Eskom says it can’t find further funding for renewables, we have to listen. That doesn’t mean the CEO of Eskom (Brian Molefe) is making any policy pronouncements. He has an organisation to run to ensure the country has sustainable and stable cost-related energy tariffs,” she said.

Molefe set the cat among the pigeons earlier this year when he refused to sign any further independent power producer deals that related to renewable energy, claiming that the power utility could not afford it.

At the time, national treasury responded, saying Molefe was not in a position to make statements about energy policy.

At the same briefing on Tuesday, Eskom’s head of generation, Matshela Koko, repeated a previous statement that the power utility would be able to fund nuclear power from its balance sheet. In a letter in Business Day, he previously remarked that there had been a significant improvement in Eskom’s finances and improved revenue emanating from a better operating plant and the completion of the build programme.

He emphasised on Tuesday that Eskom will have cash balances in excess of R150bn and that these cash resources could be deployed to fund the new nuclear build programme. He added that Eskom’s 2016/2017 corporate plan has significantly increased the borrowing programme of Eskom to R327bn.

His utterances come after Joemat-Pettersson confirmed that Eskom would be the owner operator of South Africa’s nuclear build programme, as the power utility’s financial situation changed significantly since her department had been assigned the task of procuring the nuclear build programme earlier.

In 2014, in the light of funding constraints and load shedding at Eskom, the board said it could no longer provide funding for any new build power development beyond Medupi, Kusile and Ingula. However, the situation changed. Eskom now has a positive balance sheet, Joemat-Pettersson said.

The energy minister also revealed on Tuesday that her department would not present the integrated resource and integrated energy plans to cabinet as had been the intention.

These two energy plans, which haven’t been officially updated for years, will serve as the guideline for South Africa’s future energy needs.

Fin24

6 Comments

  1. We probably don’t have a trillion to spend on anything, but surely if you’re going to spend it, rather it be on renewables ?

    Making reasoned arguments about this is pointless though, as that assumes this is truly a question of making a balanced decision based on the various factors at play. It is apparent to anyone that a nuclear deal needs to happen in order to appease all the parties that own our president and his family.

    Molefe and Joemat-Pettersson are gleefully pushing nuclear but it’s hard to say if they are simply following orders or if they actually believe in the merits of spending a trillion ZAR on a nuclear build that our economy can neither afford nor actually need (in light of mostly flat growth in energy consumption patterns)

    Despite the sense of futility in doing so let’s iterate a few benefits renewables has over nuclear.

    – First though, the achilles heel of renewables – generating base load. Yes, it is not ideal, but it is also not impossible. Witness the Bokpoort CSP installation with it’s 9 hour storage capacity. Hydro storage is another proven option, though expensive with large ecological impacts and limited to specific geography.

    – Battery storage technologies both for residential, industrial and grid-scale applications are seeing an incredible amount of research and funding worldwide. It is a reasonable assumption that additional battery storage options will become available over the next decade or two that can add storage to PV and wind generation.

    – Renewable installations are quicker to build, allowing us to constantly add capacity in line with actual usage patterns instead of waiting 15 years for big nuclear to start pushing power into our grid.

    – Renewable installations are less complex, reducing risk of project time and budget overruns.

    – Renewable installations cost vastly less and in large part can be funded by private capital. The excellent REIPPP has proven this, even though Eskom and our energy minister has already sidelined this project as a casualty in the war for nuclear.

    – No nuclear waste. Wait, NO waste. (excluding production inputs of course, but the same counts for building anything)

    – Easy and cheap to decommission. Most of the land can be restored to it’s original state without a large amount of inconveniently radioactive things spoiling your day.

    A focus on CSP technologies for their base-load provisioning also provides process heat that can be used for desalination. (scoring dual points for taking steps toward solving our massive water problem also. you know, just like nuclear.)

    Finally this all ignores the political aspects of having a corporation / privately-owned-state-department like Rosatom control our core energy production assets.

    So to summarise, dear minister, an actual energy ‘plan’:

    – Start backing the REIPPP again; push capital, resources and most importantly investor trust into this excellent program.
    – Drive the focus of this program towards CSP as much as it makes sense to cater for base-load. (and potentially desalination)
    – Split Eskom in two entities; one for generating power and two for distributing power.
    – Spend the first R50bn of your “R150bn cash resources” towards investment in renewable generation via REIPP and research.
    – Spend the next R50bn towards upgrading our aging transmission network into a modern asymmetric grid, opening up the energy generation market to ever smaller players.
    – Donate the last R50bn towards universities to try and appease the students breaking them down at the moment.

    If those steps seem complex, an easier one-two punch could work almost as well: request the Eskom board to axe Brian Molefe and then tender your resignation.

  2. GreenOrangeKat on

    The minister is clearly batting for her slice of the bribe if she believes that Eskom is capable of making this decision on their own. If history is anything to go by:

    1.) Eskom is completely and utterly useless at controlling the costs and construction time. Their inept ability is proven in Medupi and Kusile. They have overrun initial budgeted costs astronomically with time also being completely shot to hell-n-gone!

    2.) Eskom have also shown that they cannot make this sort of decision without completely flawed motivation. They don’t have the expertise to make this sort of decision without taking a myopic approach.

    3.) Nuclear build around the world is struggling, if not a critically endangered specie. The Russians (who we’d most likely turn to) have demonstrated that they struggle to complete projects anywhere near reasonable time planned. IIRC, they also have a few projects which have been put on ice mid-way? France may be the better bet, but world economy is likely to play against them for this sort of commitment.

    Nuclear also comes with long term environmental consequences.

    The said minister appears to have deliberately opted to exclude the better alternative of PPP in renewables. It is my recollection that there are numerous opportunities / partners / companies wanting to invest in this in SUNNY SA, but for the mockers put on them not too long back.

    Clearly the swill in the trough is blinding the minister’s better sense of judgement. Perhaps she too has already got her Swiss bank account filled to the brim with greenbacks.

  3. “Joemat-Pettersson said Eskom is well within its rights to say whether it can afford a renewables programme” Actually, in the latest bid windows, solar (@71c/kWh) and wind (@59c/kWh) cost LESS than Eskom power, and is at about HALF of what power from Medupi and Kusile will cost.

    And nuclear power from Hinkley Point C (if it ever becomes a reality) will cost AT LEAST 92 pound sterling per MWh, or 9.2 pence per kWh — substantially more even than power from Medupi & Kusile.

  4. The unit cost of 71c and 59c are artificially low due mostly to low cost of capital, green loans, and CDM subsidies to renewables. The build cost of renewables is higher than nuclear for the same energy output. There is no guarantee that cheap rate green loans and subsidies will continue in the future. Add the cost of storage to make renewables look like dispatchable energy and you have a system which will bankrupt us.

  5. 小杜 (xiao du) on

    Horsepoop.

    Solar and Wind are cheap, and getting cheaper.
    Solar has dropped to R0.35/ kw now since our last REIPP (see Abu Dhabi’s install pricing of 2.4c USD / kw).
    No reason why a new solar install here can’t achieve that or **lower**.
    At that pricing we can afford a mix of tech. Wind + Solar + Storage, and still come in under Nuclear or even Coal pricing fairly easily.

  6. William Stucke on

    > Molefe and Joemat-Pettersson are gleefully pushing nuclear
    No. They are gleefully pushing _BIG_ nuclear. Just like we have BIG Medupi and BIG Kusile – the 5th & 6th biggest dry cooled coal fired plants in the world. Which are years late and so far off budget it’s a joke. The problem isn’t coal or renewable or nuclear, it’s this mad insistence on always building the biggest – and then coming badly short because we don’t have the project management skills and mind-set.
    I’m firmly in favour of some nuclear in our energy mix And some renewables of several flavours. The thought of Rosatom building and controlling a giant 9.6 GW plant does not make me happy. We had world-leading PBMR technology. We threw it away. So now we want to replace it with a dubious 3rd generation giant plant? No. Far rather several small 4th generation nuclear plants – from a country that we can trust

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