“Landmark” power purchase agreements signed, but Mantashe still punts multiple energy technologies

“Leave the issue of environmental challenges to environmentalists. They will take us to court, allow us [the Department of Mineral Resources and Energy] to go to court… Eskom must not enter that space. They must take up energy. That’s it.” This was said by Minister Gwede Mantash, at the signing ceremony of the first three power purchase agreements under the RMI4P on 2 June. 

by Julia Evans, Daily Maverick

Mantashe was addressing Eskom CEO André de Ruyter, emphasising that Eskom should focus solely on energy generation, and not let environmental concerns stop it from having procurement in a range of energy technologies like gas and nuclear. The three power purchase agreements (PPAs) of the RMI4P, signed at the Independent Power Producers (IPP) offices, were dubbed “landmark projects” as they are considered to be the largest renewable projects of solar and battery combined technologies in the world. 

The Risk Mitigation Independent Power Producer Procurement Programme (RMI4P) was introduced to the market in August 2020 and aimed to close the immediate energy supply gap, as indicated in the 2019 Integrated Resource Plan, and reduce the extensive use of diesel-based peaking electrical generators in the medium to long term. 

The RMI4P had a target of procuring 2 000 megawatts (MW) of new generation capacity from different generation projects.  

Of the 11 PPAs awarded to preferred bidders in March and June 2021, three of the projects have now been signed, which saw Norwegian renewable energy company Scatec enter a 20-year agreement with Eskom to dispatch 150MW (all projects are 50MW each) to the national grid, between 5am and 9.30pm daily. 

Bernard Magoro, the head of the IPP office, called the RMI4P a “long journey” — the bid window was opened to the market in August 2020, and now, nearly a year after all the preferred bidders were announced, some of the PPAs are being signed into agreement.  

Delays can be attributed to ongoing litigation and administrative problems, such as three gas-fired projects failing to secure environmental permits to operate and red tape put up by the National Energy Regulator of SA (Nersa) delaying renewable projects. 

De Ruyter said at the signing ceremony: “This is unique technology in that for the first time we now have dispatchable renewable energy thanks to a combination of solar and batteries. 

“And this addresses one of the key challenges of renewable energy in that, typically, without storage, they are self-dispatching.” 

Jan Fourie, Scatec’s general manager for Sub-Saharan Africa, told Daily Maverick that to his company’s knowledge their project would be one of the biggest solar photovoltaic (PV) and battery projects on the planet. 

“It proves that dispatchable renewables are possible. It’s cost-effective. And it’s available today,” said Fourie. 

“So I think it takes away the argument that renewables are intermittent.” 

The “landmark” projects will be built in the Northern Cape 12-18 months after the financial close (3 August 2022) and have an installed capacity of 540MW of solar PV capacity and 1.1GWh of battery storage. 

Mantashe said that while he was excited about the contribution these projects will make, “I want a bigger contribution”, and the process of building generators needed to be reviewed and shortened to address the urgent issue of load shedding. 

“We must find a formula of cutting that process out and make it easy to do business in South Africa,” said Mantashe. 

Prices for these projects were bid at R1 884.61 per MWh – which is favourable compared to the R2 300 to R9 000 per MWh Eskom is currently paying. 

The projects have attracted R16-billion in investment and will create about 4 968 job opportunities (measured in job years) during their construction and operation. 

Anti-bribery and corruption clause 

De Ruyter said the agreements include anti-bribery and corruption clauses. 

“This is very important, of course. Eskom’s recent history has been characterised by capturing corruption, and we have therefore taken a very firm stance on this,” he said. 

“We are able to give the South African public the assurance that these agreements have been done with the very strictest standards of corporate governance and ethics. 

“I think it shows what the art of the possible is if we are all together held accountable for maintaining the highest standards of governance.” 

The benefits of renewable energy 

Terje Pilskog, the CEO of Scatec, whose company already has six renewable projects operational in South Africa said: “We believe South Africa’s abundant sun and wind resources combined with the quick turnaround of establishing renewable-based projects make for the most effective and sustainable solution to the energy risks the country is facing.” 

Pilskog illustrated the benefits of renewable energy, citing how it is cost-competitive relative to thermal energy, doesn’t experience pricing volatility like fossil fuels, is not linked to international commodity prices and is a big part of the solution of reaching commitments of the green transition and limiting global heating to 1.5 or 2°C above pre-industrial levels.  

“It has achieved its rightful status as the lower-cost, clean alternative to fossil fuels. And we should seize the opportunities that are arising as a result.” 

However, Mantashe was not sold. 

Mantashe sticks to gas and nuclear

Today, we signed power purchase agreements with 3 projects under RMIPPPP. These projects are expected to add new energy to the grid within 18 months. We did this against the backdrop of #Loadshedding which hinder on our economy & on livelihoods. #InvestInSAEnergy #InvestSA pic.twitter.com/TUgnMIvbvJ

— Gwede Mantashe (@GwedeMantashe1) June 2, 2022

In his address at the ceremony, after expressing his excitement at the Scatec projects, he emphasised that the energy mix should include several types of generation.  

“My biggest problem as a person is the polarisation of the debate among energy technologies,” said Mantashe, saying that the debate made it seem that in order for one technology to expand, another must die. 

“We need all of them. We are short of energy. We don’t have universal access to energy. So everybody must have space to grow.” 

Mantashe said the IPP office should work to get the other eight RMI4P projects signed, including resolving the problem of Karpowership (which has three approved PPAs). 

Mantashe said he had seen Karpowership and gas-to-power technology work very well in Ghana and Gabon, as well as Europe.  

“In South Africa — no. All the gas projects that have been approved are taken to court. 

“But Europe has taken a decision that gas and nuclear are part of the energy mix. In South Africa, we don’t want to touch anything.” 

Mantashe added that Europe had labelled gas and nuclear as part of the energy transition. 

He said he made this point not because he thinks one technology is better than another, but because he believes multiple energy technology solutions can coexist together and resolve the problems of load shedding and energy poverty. 

New IRP finally being revisited 

In line with his thinking that multiple energies can coexist and solve issues, Mantashe revealed that on Wednesday night his department had made the decision to revise the Integrated Resource Plan (IRP), which last came out in 2019 and details what South Africa’s energy mix should look like based on cost and social imperatives. 

He said they were revisiting it now, as a big part of the plan had been implemented and they had to revise it now to look into the future, beyond 2030. 

Mantashe’s department has faced criticism for not updating the IRP sooner, as the introduction to the 2010 IRP (the last one to come out before the 2019 IRP), states:  

“The Integrated Resource Plan (IRP) is a living plan that is expected to be continuously revised and updated as necessitated by changing circumstances. At the very least, it is expected that the IRP should be revised by the Department of Energy (DoE) every two years, resulting in a revision in 2012.”  

When asked why the IRP had taken so long to be updated, Mantashe said the previous IRP came out in 2011, so this revision was happening a lot faster and they needed time to implement the plan and assess results. 

The minister also said that revising the IRP would be a very long process, so he could not give specifics on when it would come out.

This article first appeared on Daily Maverick and is republished here under a Creative Commons license.

Green Economy Journal Issue 52

READ GREEN ECONOMY JOURNAL ISSUE 52: On page 20, a case study details the renewable energy solution modelled for a tailings processing and exploration diamond mining operation. It demonstrates the engineering and economic feasibility of various hybrid energy approaches.

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Energy regulator to oppose court application to review Karpowership licences

The National Energy Regulator of SA has told The Green Connection that it will oppose its court application to review and set aside the decision to grant three electricity generation licences to Karpowership South Africa.

By Tembile Sgqolana

23 May 2022  

The National Energy Regulator of South Africa (Nersa) last week notified The Green Connection that it will oppose the sustainable development NGO’s court application to review and set aside the decision to grant three electricity generation licences to Karpowership South Africa.

This was on the same day that the Minister of Mineral Resources and Energy, Gwede Mantashe, laid out the department’s budget for the 2022/23 financial year.

Minister of Mineral Resources and Energy Gwede Mantashe. (Photo: Gallo Images / Felix Dlangamandla)

In September 2021, Nersa approved the Karpowership licences despite the Department of Forestry, Fisheries and Environment’s refusal to grant environmental authorisation. 

Nersa ignored the public outcry, particularly from small-scale fishing communities around Saldanha Bay in the Western Cape, Ngqurha (Coega) in the Eastern Cape and Richards Bay in KwaZulu-Natal, where these floating power plants were to be anchored.

Small-scale fishers are mainly concerned about the irreparable damage that powerships and other oil and gas projects could cause to marine life and ecosystems, thereby affecting their livelihoods.

The Green Connection’s Liz McDaid said that as Africa’s largest carbon emitter, South Africa not only lacked the vision needed to address the climate crisis, but the government seemed to oppose the president’s goals for a just transition from fossil fuels to clean energy. 

“While we welcome the increased commitment to renewable energy, there are still too many projects that do not appear to be in the public interest, such as Karpowerships. 

“Over the past year or so, several coastal communities around the country have expressed their dissatisfaction with oil and gas exploration. And the December 2021 court judgment against Shell found that it was wholly insufficient to merely consult traditional leaders. 

“We must have proper, meaningful public participation with all who may be affected,” she said.

McDaid said The Green Connection has been opposing powerships since early 2021.

“First were the flawed environmental authorisation processes, then came the electricity generation licence application process, which Nersa still approved despite Karpowership being refused an environmental authorisation.

“It was because of these flawed processes that The Green Connection filed its papers (on 25 April 2022) to review the Nersa generation licence. The organisation now waits for Nersa to provide all the records that justifies its decision to grant the licences. 

“The deadline for Nersa to provide these records was 20 May 2022, but Nersa requested an extension,” she said.

McDaid said both the Department of Mineral Resources and Energy and Nersa are supposed to make decisions in the public’s best interest and seek to address the climate crisis with a view to a just transition to renewable energy. 

“The minister harps on sector plans like the gas plan and plans for nuclear, but fails to provide any clarity about holistic and socially inclusive energy planning. 

“When can the country expect to see the updated integrated resource plan instead of this piecemeal approach that, to date, appears set to undermine our climate commitments?

“What we need is a bolder vision for our future energy plans. We need a roadmap – specifically the integrated energy plan as outlined in section 6 of the National Energy Act – to lead us out of the energy crisis we are in. 

“But so far, we do not see the minister showing the necessary leadership to drive such a process, which would require meaningful input from all South Africans,” McDaid said.

She added that South Africans are united in their frustration with load shedding. 

“What we should see is more effort to address this, from the grassroots. For example, the government could give small businesses and homes a tax break for putting up solar systems – it should also expedite the process to allow such generators to feed into the grid,” she said. 

The Green Connection said in a statement on Monday that it remains concerned about Energy Minister Gwede Mantashe’s ongoing “divisive comments” about those who are anti fossil fuel. 

“With the country facing a climate emergency, it seems bizarre for a government minister to deride and oppose people’s efforts to combat climate change. 

“In addition, the minister continues to push for the very fuels which will make things worse, and which will likely lead to more suffering for people on the ground,” read the statement.

The Green Connection’s community outreach coordinator, Neville van Rooy, said: “Is this now officially an onslaught from the government and industry, to bully communities and violate their rights to a healthy and clean environment? 

“Even after two court interdicts that stopped seismic surveys – part of the initial phase to search for oil and gas – demonstrated the people’s opposition, the government is still forcefully pushing for these fossil fuels. 

“In our view, communities want to phase out oil and gas, and move to the just transition, but, instead, more oil and gas projects are popping up without proper, meaningful community participation.”

He said the Department of Mineral Resources and Energy’s agenda seems to ignore climate crises. 

“The recent floods in KZN should be a clear warning that this is no longer a distant phenomenon. Climate change is at our doorstep, and we cannot afford to be stranded with fossil fuel decisions any longer. 

“We have a right to choose the energy future we want for our country, and the future we want is renewable,” said Van Rooy.

“It would be un-African of us to just sit by and let the government’s sluggish climate response potentially ruin the country’s chance for a just transition. 

“Not only will we have to survive more floods and droughts, but our people are missing out on the many accessible socioeconomic opportunities that will come as part of the transition, if it is done in partnership with the people.”

On Friday, 20 May, Eskom gave notice that it would not oppose The Green Connection’s application and would abide by the court’s decision. 

McDaid said that, to the best of their knowledge, Eskom had not signed the power purchase agreement with Karpowership. To them, this indicates that Eskom might also have concerns about the impact of potentially higher electricity prices if the powership deal goes ahead. 

Courtesy of Daily Maverick

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Green means go for new generation capacity

Nersa has agreed to put into effect Operation Vulindlela’s suggestion to drop power purchase agreements as one of the requirements for registering embedded generation projects below 100MW.

In a bid to be recognised as a global leader in energy regulation, NERSA (National Energy Regulator of South Africa) confirmed that it would also be focusing on automating the 100MW registration process for embedded energy projects as part of a broader strategy to automate its business processes. (Although these facilities do not need a licence, they must be registered.)

This will ensure much-needed investment in new generation capacity and will alleviate load shedding.

The first two projects making use of licence exemptions for generation facilities of up to 100MW have successfully been registered with Nersa. The two projects are developed and operated by Sola Group and will generate power for Tronox Mineral Sands’ operations located in the North West. The registration of the projects took 73 days from submission.

Power will be wheeled across Eskom’ s transmission grid to Sola’s operations on the West Coast and in KwaZulu-Natal. The projects have 28GWh of excess energy per year, which Sola is looking to market to other interested clients connected to Eskom’s grid.

The licence exemptions are expected to unlock investment in the energy sector to help address the generation capacity gap of between 4 000MW to 6 000MW. Implementing the Operation Vulindlela recommendation will help unlock the investment conduits of 50 projects with the combined energy potential of 4 500MW.

Operation Vulindlela is a joint initiative of the Presidency and National Treasury to accelerate the implementation of structural reforms and support economic recovery. Operation Vulindlela aims to modernise and transform network industries, including electricity, water, transport and digital communications.

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Heating your geyser for less:  The hidden costs of solar thermal and heat pumps systems

This year South Africans are bracing for electricity hikes of up to 25%, this means your geyser – the biggest electricity guzzler in your home – is going to cost 25% more to run. What’s more the National Energy Regulator of South Africa (NERSA) is planning to target grid-tied solar users, driving the cost of electricity used at night peak times up and effectively destroying the business case for installing solar PV (electricity), unless you’re totally off the grid. 

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What’s really going on with SA’s energy supply?

The National Science and Technology Forum (NSTF) Discussion Forum on Load shedding and power cuts – what is really going on?

Why load shedding is necessary

Gav Hurford, National Control Manager: System Operator, Transmission, Eskom

There are multiple layers to understanding load shedding. It begins with South Africa’s power system value chain: generation, transmission and distribution (transporting electricity to the consumer), and customer services. A centralised control is needed to keep the power system stable.

Gav Hurford: Why load shedding is necessary

In general, bulk electricity cannot be stored. It must be generated at exactly the same time it is consumed. The System Operator manages the supply/demand balance at every second.
There is very hierarchical control of the high voltage power system, with instructions moving top down from national control (765-132 kV) to regional control (132-66 kV) and finally local control (66-11 kV), such as municipalities. Hurford says: “There is no ‘big red button’ in the National Control Centre (NCC) that we hit to start load shedding. It’s a lot more systematic than that.”

South Africa’s NCC operates parts of the network in Swaziland and parts of the network in Mozambique. Hurford says there are plans to make the NCC a separate entity outside of Eskom.

National Control Centre and the supply/demand balance of 50Hz

The System Operator is part of the NCC and the NCC is responsible for the overall wellbeing and real-time operation of the entire power system. In general, this means:

  • Dispatching available generators to meet demand or reducing demand to match the available generation (eg load shedding). If there’s too much demand and not enough power generation, the whole system starts to slow down ie the frequency starts to drop. This puts the network in jeopardy. Typically the network should run at 50Hz or close to it. Hurford says that this supply/demand balance of 50Hz relates to the generators’ mechanical capabilities. South Africa’s large coal-fired generators must remain running at or close to 50Hz.
  • Managing maintenance outages of the vast transmission network. The South African network is interconnected from Cape Town up to the Democratic Republic of Congo, and from Namibia across to Maputo. These all run at the same frequency of 50Hz. The bigger the grid, the more stable it tends to be. However, it also means the countries are “locked in and share the same fate”, says Hurford. South Africa’s Eskom operates the largest system. According to the 2019/2020 Southern African Power Pool (SAPP) statistics (sapp.co.zw), the maximum demand was 38 897 MW. Next highest was Zambia with 2 237 MW. It’s clear that South Africa won’t receive a lot of help from its neighbours.
  • Controlling the power system to maintain stability.
  • Overseeing the safety of people and plants.

Eskom’s generation responsibilities

Source: ‘Why load shedding is necessary’

  • Brown rows: owned by Eskom.
  • Green rows: the two Independent Power Producers (IPP) and these are open cycle gas turbines (OCGT) which burn diesel.
  • Grey rows: renewables that have been added to the power grid since 2015 (about 560 MW). The bulk of these are wind generation, solar PV (photo voltaic, like solar panels) and CSP (concentrated solar power).

Hurford says that South Africa already has significant amounts of renewable energy (RE) on the grid. Typically, during the week there is a contribution of 12% and there have been contributions of over 20%.

Grid Code and maintaining the 50Hz supply/demand balance

The South African power industry is governed by the Grid Code, a National Energy Regulator of South Africa (NERSA) suite of documents. It lays out what licensees (participants in the power system) can and can’t do, what is expected of them technically, and what to do to maintain the stability of the power system. It includes what to do in a power crisis.
The frequency of the power system needs to stay within 49Hz and 50.1Hz. In that range, generators should operate continuously. Grid Code Level 1 restrictions occur when the frequency drops by 0.5Hz (49Hz-48.5Hz). A large generator only tolerates this for about 80 minutes over its lifetime of 30 years.
Automatic tripping starts at Level 2 (48.5Hz-48Hz). Here the lifetime tolerance is about 10 minutes, operating for one minute in this range. Each consequent level shows a 0.5Hz drop with automatic tripping after a very short time.
Below 47.5 Hz it becomes chaotic, says Hurford. Generators will then automatically trip off to protect themselves and there will be a cascading situation. As more generators trip off, there is less capacity available to supply the demand and the frequency drops even further. This results in the tripping of every generator connected to the power system and a national blackout. (Note that there are other causes for large and national blackouts beyond lack of generation capacity, including faults on the transmission system.)

To maintain the supply/demand balance, Eskom uses a range of options:

  • During normal system operations. The base load power and self-dispatched generation comes from nuclear, coal, IPPs, and Eskom’s RE.
  • As demand increases within normal system operations. Eskom uses more RE. There are also various products. Examples include specific customers switching off their plant or part of a plant, as well as contractual agreements where Eskom can interrupt demand. The benefit of these products is rapid response. (It’s quite a slow process to ramp up a large coal fire station – about 8 MW per minute – for example.)
  • At highest peak during normal system operations. There is a country response with calls to reduce load ie the ‘power alert’. Hurford says that the public does respond and the impact can be significant. “We can get about 275 MW response if we haven’t shed for a while,” he says.
  • System Emergency. This is declared in terms of the National Code of Practice (NRS048-9). It’s a document adopted by industry and approved by NERSA. It sets out a systematic way of load shedding, from the System Operator declaring a system emergency to load shedding stages and further. The third edition is currently being developed. The guiding principle of NRS048-9 is that all participants be treated equitably. This does involve ensuring essential services meet criteria, like hospitals having back-up generators. NRS048-9 allows for very specific circumstances – if something critical is happening – where power is not interrupted.
  • After System Emergency. There is large customer and international load curtailment, scheduled load shedding (stages 1-8), and unscheduled load shedding. Load curtailment means load reduction from customers who can reduce demand on instruction. Load shedding is load reduction from disconnecting the load at selected points on the transmission and distribution network.
  • Beyond stage 8 load shedding. Hurford says there are contingency plans if South Africa needs to go beyond stage 8, such as large blocks (towns and cities) dropped off the network plus more. The aim is to prevent a total power system collapse.

Impact of national blackouts

Planned and unplanned load shedding is part of the solution to avoid a national blackout. So far, South Africa has not had a full national blackout. However, there have been a number around the world. Hurford says the one in March 2019 in Venezuela drew many parallels with South Africa. They have a similar system and the cause was poor maintenance. Venezuela was down for around five months.

The impact in Venezuela included: looting, running out of water, the inability to process sewerage, people dying at hospital (no electricity for essential equipment), business interruption, the inability to keep food fresh, and much more. There was an impact on almost every single part of daily life.

There are other considerations with a national blackout. Hurford says the telecommunications backbone would fail in about eight hours. Another example is the impact on available liquid fuel. While it’s used to power so much, it also needs powered storage. Just moving around the country would become severely limited.

South Africa’s system design includes contingency plans and capabilities to deal with a blackout. There are Black Start capabilities to restart the power grid.

Understanding our emergency reserves

Emergency reserves provide a limited amount of energy and are only available for a short duration. There is also an ongoing need to replenish emergency reserves. The cycles become clearer when looking at pumped storage and open cycle gas turbines (OCGTs).

Pumped storage schemes involve water stored in an upper reservoir and then released to drive turbines that generate electricity. The water ends up in a lower reservoir. At night, excess energy allows the water to be pumped back up. It’s a 168-hour cycle so reserve power is not easily restored. Hurford says that pumped storage is about 75% efficient but offers the only viable means of storing large amounts of energy. South Africa has three pump storage stations.

South Africa has 20 OCGTs and Eskom owns 14. These cost about 10 times more than coal to run, using almost 1900 litres of diesel per minute per generator. The cost is excessive. Beyond that, it’s not even possible to move diesel fast enough to these generators.

Between pumped storage, OCGTs, and gas turbines, Eskom is able to dispatch almost 6000 MW, making up the majority of the emergency reserves.

Managing a constrained power system

“We’ve had to manage the power system very differently from the traditional way,” says Hurford. “Obviously we need to do maintenance on generators but we can’t shut them all down. We are forced to do maintenance as and when we can.”

Managing the systems involves Eskom teams doing scenario planning, looking at installed generation capacity, plant unavailability, the demand forecast, planned outages for maintenance, and potential unplanned outages. Eskom works with three scenarios at any given time. Even with this planning, the system is volatile and unreliable. It “makes giving the country certainty absolutely impossible”, says Hurford.

However, the system is continuously monitored and, where there is enough time, Eskom gives the country as much warning as possible. Note that Eskom is fully mandated to do whatever is required to get the power system stable even if there’s no time to give a warning. Hurford says he knows there’s anger around load shedding and consumers have a right to be angry. He also hopes that understanding the situation in more detail will ease the frustration.

What happened? Load shedding in South Africa and how to fix it

Dr Jarrad Wright, National Renewable Energy Laboratory (NREL), USA

Dr Jarrad Wright: What happened? Load shedding in SA and how to fix it

South Africa’s power system is in crisis with urgent action needed to ensure system adequacy while simultaneously creating a cleaner and more diversified long-term energy mix. So says Dr Jarrad Wright when he presented on ‘What happened? Loadshedding in South Africa and how to fix it’. He was, until recently, at the Council for Scientific and Industrial Research (CSIR) and is now at the National Renewable Energy Laboratory (NREL) in the USA.

Wright says there is a worrying trend of a continuous increase in load shedding. There has also been a shift from equal levels of planned maintenance and unplanned outages in 2017 to more unplanned outages at higher levels as the years progress. This means there’s limited space to do planned outages and maintenance. He says, “There is still a lot that needs to come into play until we get an adequate power system over the next two to three years.”
To reduce load shedding and increase power generation, his recommendations include enabling regulations and institutional capacity for customer response at scale (power self-supply) to all customer segments. Wright says South Africa also needs to accelerate the augmented Department of Mineral Resources and Energy (DMRE) Risk Mitigation Power Procurement Programme. All things need to be done in parallel including implementing the Integrated Resource Plan (IRP) 2019 now. This is so there is sufficient time for lengthy procurement processes, technology specific lead times, and so on.

The case for renewable energy

Professor Frik van Niekerk: A compelling case for fast-tracking renewable energy in SA and the region

Prof Frik Van Niekerk noted that we have a growing population and a growing energy need. At the same time, there is an unreliable energy supply and the burden of the climate crisis. The current renewable energy (RE) use is too low and he says our future planning is insufficient. Van Niekerk presented on ‘A compelling case for fast tracking variable renewable energy in South Africa and the region’. He is from the Unit for Energy and Technology Systems, Faculty of Engineering, North-West University.
Van Niekerk says that we need a strategy to accelerate the green energy trajectory. He recommends deregulating and deploying RE of which there is an abundance in South Africa and Africa, ensuring a fair energy transition, and recognising the lowered cost of RE and storage technologies.

Dr Melanie Murcott: Ending SA’s reliance on energy from coal

Dr Melanie Murcott also spoke on the just energy transition in ‘Ending South Africa’s reliance on energy from coal? An introduction to the policy framework for South Africa’s Just Energy Transition’. She is from the Department of Public Law, Faculty of Law, University of Pretoria.
She notes that it’s a false binary to pit concern for the environment against employment. The energy landscape in South Africa must transition, not just because of loadshedding. In a time of climate change, fossil fuel-driven energy is a justice issue, particularly for vulnerable and disadvantaged communities. (Note that according to World Bank data, South Africa is the 13th highest greenhouse gas emitter in the world.)

Tommy Garner: The perspective of independent power producers

Tommy Garner presented on ‘The perspective of independent power producers’. He is Business Development Manager at Earth and Wire, and the Chair of the Independent Power Producers (IPP) Association. Garner notes that Eskom operates an ageing generation fleet, with more than half of the stations over 37 years old. Replacement and refurbishment of major components mean extensive outage time and is costly.
He says the significant increase of unplanned outages over time shows the low reliability. “You don’t know when it’s going to break down,” says Garner. This makes it difficult to plan for maintenance.

Obstacles to renewable energy

Van Niekerk looks at what is holding us back from more RE. He says that IRP2019 still has too much coal in the energy mix and the idea of ‘new coal’ should be avoided. IRP2019 isn’t ambitious enough and there’s insufficient attention to storage. Deregulation is needed, as well as a more distributed small-scale generation rather than just a centralised system. He emphasises more urgency around RE, including prioritising it within the highest offices of government.
He doesn’t believe the problem to be technological but rather around political considerations. These include Eskom debt liability, labour politics, gate keeping, and procurement issues. Garner agrees with him.
Garner explains that when new technology gets to the point of lower costs, this drives more demand in the RE sector. (RE costs are now up to 45 times cheaper over the last 10 years while coal, nuclear and carbon capture are not reducing in cost.)
With more demand in the sector comes more production investment and more supply – which in turn drives lower costs. This feedback loop continues, with more infrastructure investment and more government support. This then drives better capability and more public acceptance. It also drives less demand of older technology.
Garner says that this was happening in 2010 when government added RE into the energy mix. There was also investment in the IPP office, and the Renewable Energy and Energy Efficiency Partnership (REEEP) programmes were very successful.

However, in 2014, these positive causal feedback loops came to a halt. As part of state capture and the Gupta family intervening in Eskom, government supported the fossil fuel industry, says Garner. Agreements for REEEP weren’t signed and the programme started to fall over. There was less infrastructure investment and less government support in RE. Garner says this also led to IRP2019 including coal.
All of this has resulted in a stop-and-start process.
Garner says South Africa needs between three to five times our current generation capacity with variable renewable energy (VRE) and between 35-90 hrs of battery storage. We can then go to a complete VRE system.

Hurford does note that, when planning power grids, we need to keep in mind the ‘one in 10 year’ event where there is no wind or sun to maintain stability of the network

Garner recommends updating IRP2019, especially regarding battery storage, prioritising investment in grid infrastructure, and government pushing through the unbundling of Eskom and supporting RE and IPP, among other things. He also sees deregulation as a significant driver.

Professor Roula Inglesi-Lotz: The impact of electtricity shortage on SA’s economy

Prof Roula Inglesi-Lotz, South African Association for Energy Economics (SAAEE) and Department of Economics, University of Pretoria (UP) presented on ‘The impact of electricity shortage on South Africa’s economy’. Among other things, she shows the effects of electricity supply on attracting Foreign Direct Investment and the need to stabilise the energy supply.

Professor Xiaohua Xia: Go Solar

Prof Xiaohua Xia from the Department of Electrical, Electronic and Computer Engineering, University of Pretoria (UP) and Director: Centre for New Energy Systems, UP presented on ‘Go solar’. He looked at an off-grid PV system that is being piloted at the university, suitable for rural and urban environments.

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Latest tariff increase highlights why South Africans should generate their own power

The National Energy Regulator of South Africa (Nersa) recently approved a 9.61% increase in the price of electricity for Eskom. While this is much lower than the utility’s requested 20.5%, it is still clear that finding alternative energy solutions has never been more important for South Africans.

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Eskom tariff increase driving consumers to eco-friendly appliances

The National Energy Regulator of South Africa (NERSA) has approved Eskom’s application for a 9.6% increase in electricity tariffs to become effective from 1 April 2022.  

While lower than the initial increase of 20.5% that Eskom proposed, the current increase will still place additional financial pressure on consumers. The cost of water is also expected to rise between 6-10% on 1 July 2022.

In addition, on Thursday 27 January 2022, Reserve Bank Governor Lesetja Kganyago hiked the repurchase rate (repo rate) by 25 basis points to 4%, an act to curb the upward trajectory of inflation, but one that adds pressure on consumers.

South African consumers are focusing their attention on eco-friendly appliances to save on the increasing cost of utilities.

“Eco-friendly appliances are increasing in popularity for many South Africans that are looking for ways to ease the burden on their budgets,” says Rajan Gungiah, Beko Regional Marketing Director for sub-Saharan Africa. The cost benefits of these appliances reduce expenses after the first use. 

Gungiah says that as an example, a washing machine with a A+++*** energy rating can save up to 22% on electricity compared to washing machine with an A+ rating. A dishwasher with an A++ rating can save 11% in comparison to dishwasher with an A+.

“Contrary to popular belief using a dishwasher is more economical than washing dishes by hand. Using a dishwasher saves about 57 litres of water per load. Washing a load of dishes by hand uses about 66 litres of water, the same amount being cleaned in a dishwasher uses only 9.5 litres,” says Gungiah.

The interest in eco-friendly appliances extends beyond saving water and electricity, it’s also a sign of the rising awareness of consumers to lessen their impact on the environment.

“Many leading appliance manufacturers are actively using innovation and technology to ensure that the products they offer meet not just the consumers’ need for energy and water efficiency but also for a quest to lessen their environmental footprint,” says Gungiah. Eco-friendly appliances also provide additional benefits that consumers are looking for, such as lowering greenhouse gas emissions and reducing their carbon footprint because they emit fewer harmful gases.

South African consumers can rely on the Standards and Labelling (S&L) programme implemented by the Department of Energy (DoE) to determine whether or not the appliance they are about to purchase uses energy efficiently.  In 2018, the DoE made it easier for South Africans to identify eco-friendly appliances by updating their label criteria for this segment and by launching the Appliance Energy Calculator Mobile App.

“The App allows consumers to insert the price of the appliance and the annual electricity consumption rate of the appliance (this information can be found on the label), and the App will then work out the estimated running cost and the amount of power the appliance uses,” says Gungiah.

“It is vital that appliance manufacturers commit to innovations that are eco-friendly, serving the environment, but also promoting healthy living and convenience for consumers at large,” he says.

Beko recently ranked 20th on The Real Leaders®️ Top 200 Impact Companies of 2022, a testimony to the company’s sustainability mission and its belief that “healthy living is only possible on a healthy planet”. Beko’s product line uses recycled materials, bio-composites and detergent saving technologies for sustainable living.

The Real Leaders 200 Top Impact Companies Award recognises organisations making a positive social or environmental impact across a well-respected impact brands of various sizes and from a variety of industries.

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The 25 REIPPPP preferred bidders announced

During a media briefing today on 28 October 2021 the Minister of Mineral Resources and Energy Gwede Mantashe, announced the Preferred Bidders selected under the Fifth Bid Window of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP Bid Window 5).

The highly anticipated REIPPPP Bid Window 5 was released to market on 12th April 2021 and is the first bidding round to be launched under the Second Determination by Minister Mantashe on 25th September 2020. The bid window aims to procure a total of 2 600 Megawatts, which include 1 600MW from onshore wind and 1 000MW from solar PV plants.

The 25 preferred bidders, procuring a total of 2 583MW of contracted capacity.

The Bid Submission was on 16th August 2021 and attracted a total of 102 Bid Responses with an oversubscribed total capacity of 9 644MW. The evaluation process was conducted over a period of six weeks by an independent Evaluation Panel of Transactional Advisors, overseen by an Independent Governance Team to ensure that the evaluation is done in accordance with the procurement prescripts. The whole process was managed by the IPP Office, under strict security measures.

The outcomes of the evaluation have resulted in the selection of 25 preferred bidders, procuring a total of 2 583MW of contracted capacity, divided, as follows:
• 1 608MW from onshore wind; and
• 975MW from solar photovoltaic

The weighted average Fully Indexed Price of the preferred bidders, including both wind and solar photovoltaic is R473.94/MWh.

The 12 wind projects selected as preferred bidders have a weighted average Fully Indexed Price of R495.22/MWh, whilst the 13 selected solar PV projects have a weighted average Fully Indexed Price of R428.79/MWh.

The 25 projects will further create a total of 13 903 job years, of which 7 743 job years will be created during the construction period and a further 6 160 jobs during the operations period of the 20-year PPA term. Of these, 72% of jobs will be for South African Citizens – a total of 10 048 SA jobs, of which 5 450 job years will be during the construction period and 4 598 jobs during the operations period.

As with all previous REIPPPP programmes, the fifth bid round also set out a number of key economic development targets to be achieved by the bidders. In this regard, the 25 projects appointed as preferred bidders have achieved South African Entity Participation of 49.2% on average, against the minimum threshold of 49%.

The majority of the equity owned by South Africans has been taken up by black people. On average, black South Africans own 34.7% of the equity across the different projects, while the minimum threshold was 30%.
In line with the requirements in the Request for Proposals (RFP), the preferred bidders committed to 25% of ownership by black people in the construction companies. In addition to the commitment during construction, the preferred bidders committed 28% ownership by black people during operation.

For the first time, the renewables programme introduced ownership by women in project companies as a qualification criterion. It is very encouraging that the preferred bidders committed an average of 7% black women ownership in project companies.

In an effort to stimulate local manufacturing and production in the renewable energy value chain, the RFP required projects to commit at least 40% local content during construction. This local content target can be achieved by purchasing local goods across the renewable energy value chain. On average, the 25 Preferred Bidders committed about 44% local spend during construction as a percentage of Total Project Value. This is in addition to the utilisation of designated components as determined by the Department of Trade, Industry and Competition.

For the first time, the RFP also required bidders to commit to local content during operation. In this regard, the preferred bidders have committed to spend about 41% of their committed budget during operations purchasing goods that are locally produced and that meet the requirements for local content. Communities will own on average 2.5% of the REIPPPP BW 5 Projects. The preferred bidders have also committed a total of R2.7-billion towards socio-economic development and enterprise and skills development initiatives over the 20-year lifetime of the projects.

The implications of grid connection constraints on new renewable energy investments, specifically in the greater Cape area, were widely reported following the release of Eskom’s Generation Connection Capacity Assessment of the 2023 Transmission Network in July 2021. Minister Mantashe emphasised that with the appointment of these 25 preferred bidders, available grid connection capacity in the Northern Cape has now been fully saturated. Grid connection availability in the Western Cape, another historically popular site for renewable projects, has also been almost fully saturated.

A positive development for the future is, however, that a total of eight projects were selected in the Free State Province, and the first renewable onshore wind project in KwaZulu-Natal Province was also selected as preferred bidders through this bid round. This promising trend indicates that the procurement of IPPs could very likely, in future, shift to other provinces, whilst the medium-term challenges around grid capacity development in other areas are addressed.

The appointed preferred bidders will be expected to reach commercial close in about four months’ time, subject to the required regulatory approvals. During this time, the preferred bidders are also expected to finalise their outstanding approvals including, but not limited to, obtaining generation licenses from NERSA. The DMRE together with Eskom, as the buyer of the generated electricity, will also utilise this time to obtain the required government approval to enter into the commercial agreements. The appointed preferred bidders are expected to start generating electricity by the earliest in April 2024.

Picture by Pieta Erasmus

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DMRE on amended schedule 2 of Electricity Regulation Act 4 of 2006

The Department of Mineral Resources and Energy gazetted the Amended Schedule 2 of the Electricity Regulation Act 4 of 2006 on 12 August 2021, for 100 megawatts of embedded electricity generation as approved by Minister Gwede Mantashe.

The amendment follows President Ramaphosa’s announcement on 10 June 2021 that the Schedule 2 Amendment of the ERA would be published within 60 days. The Amendment serves to increase the threshold for embedded generation from the current 1 megawatt (MW) to 100MW without the need for a license. The intervention to reform the electricity regulation regime has been hailed as a positive way forward by the energy sector and industry across the board. It is envisaged that this step will unlock significant investment in new generation capacity in the short-to-medium term, and make significant inroads towards achieving national energy security, as well as reduce the impact of load shedding across the country.

Under the newly gazetted Amended Schedule 2 of the ERA, applicants for 1 – 100MW embedded electricity generation projects will now be exempt from the obligation to apply for a Licence but, will be required to register with the National Energy Regulator of South Africa (NERSA.)

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Nersa to oppose Eskom High Court application

Nersa to oppose Eskom High Court application to review energy regulator
decision on the regulatory clearing account and supplementary applications for the 2018/19 financial year

The National Energy Regulator of South Africa (NERSA) confirms that at its meeting held on 28 April 2021, the Energy Regulator resolved to oppose the High Court application brought by Eskom Holdings SOC Limited (Eskom) against NERSA to review and set aside the Energy Regulator’s decision pertaining to the approval of a Regulatory Clearing Account (RCA) balance of R13.271-billion for the 2018/19 financial year, and the Energy Regulator’s decision to grant Eskom’s supplementary revenue balance of R1.288-billion in respect of the 2018/19 financial year.

The Eskom judicial review application was received on 12 April 2021. In arriving at the decision to oppose the application, NERSA considered the factual matrix, applicable regulatory and legal principles. NERSA further considered the impact of Eskom’s continuous court review applications on the Government’s economic recovery plans, as well as hardships on customers. In this regard, interested stakeholders are welcomed to join NERSA in opposing the review application if they consider that the Court decision may negatively affect them.

NERSA will be opposing the judicial review application within the required time frame and process.

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