President Cyril Ramaphosa’s announcement on Thursday that industries will be allowed to generate up to 100 MW of their own power for their own use without a licence had everyone cheering, including me. “Good news!” was my immediate reaction. But after thinking about it, I’m not sure how good it is, or even what it means.
Previously the energy minister, Gwede Mantashe, had restricted own generation to 1 MW. Industrialists pleaded with him to increase it to 10 MW or 50 MW but suddenly he has increased it to 100 MW, with the rather endearing confession that he had bent to the President’s persuasions. I’ve had a bit of experience with self-generation or “embedded generation”, which has made me ponder.
To put some scale on these numbers, the maximum demand for the whole of South Africa is about 32 000 MW. One unit at Koeberg is 940 MW. In South Africa there are paper mills, sugar mills, mines, and Sasol plants that already have in total many hundred MW of embedded power. Most of the time, they use it all for themselves.
In 1990 I worked at a pulp and paper mill in KwaZulu-Natal. We had two 40 MW steam turbines producing electricity for the mill. Since then the mill has added more of its own generation. Usually it needed more power than its own generators could provide, and got it from Eskom, but there were times, during low paper production, when it could generate surplus power, which could be sold into the national grid. I’m not sure what effect Ramaphosa’s announcement will have on this mill, since it was already licensed for generating electricity.
Does Ramaphosa mean that anybody may now set up a generating plant of up to 100 MW for own use only? Or would it be allowed to sell to other companies or to the grid? He says these private generators will be allowed to “wheel” (transmit) the electricity through the national and municipal transmission lines. But is this only to other off-site branches of their own companies or to other customers, including the grid?
I believe in a free market in electricity where anybody can sell to anybody provided only that they meet electricity regulation on phase, frequency and voltage and, in the case of the grid, provided there is a market demand for their electricity. Under our ridiculous and staggeringly expensive REIPPPP (renewable power program), Eskom is forced to buy wind and solar energy at high prices whenever they happen to be generating, whether it wants it or not. The “load factor” (LF) tells you what a generator produces compared with its nominal capacity to produce. If its nominal capacity is 100 MW and on average it only produces 50 MW, its LF is 50%. In South Africa, the renewable load factors are wind: 32%, solar PV (photovoltaic): 25%, and CSP (concentrated solar power): 30%.
Bowing to political pressure, many industries now want to install solar PV plants (making electricity directly through panels). These are useless at times of peak demand, at breakfast and supper time in winter. Many industries, such as smelters and mills, require electricity 24 hours a day, 365 days a year, which solar is unable to provide. (The solar panels themselves require enormous amounts of aluminium, which can only be made in massive smelters, requiring huge amounts of electricity 24 hours a day, 365 days a year). If a mill installs a solar power station on its site, it will require no Eskom electricity at times of low demand during the middle of the day. Eskom would lose revenue at this time and would have to slow down its own generators, making them run less efficiently. Eskom would have no option but to change its tariffs to such customers, with very low tariffs during the day and very high tariffs during peaks and at night. I don’t see how this would benefit anyone.
There were 11 successful bidders in the recent RMIPPPP (risk mitigation private power procurement) for providing 2 000 MW of “dispatchable” (which means “reliable”) power. Three of them, providing the most power, were the “powerships” using natural gas. The other eight used solar and wind in combination with batteries or diesel or gas. All eight charged far higher prices than Eskom. I notice that most of the new solar plants are in the Northern Cape, which has about the world’s best solar conditions. These plants would send their electricity to customers hundreds of kilometres away, perhaps as far as 1 000 kilometres away. So much for renewables promoting “localisation”. The only renewable plants that can provide dispatchable electricity are CSPs with storage. The latest of these charges over 500 cents/kWh at peak times – five times the price of Eskom electricity. And this does not include the enormous costs of the transmission lines to the Northern Cape. Will private industries be happy to pay 500 cents/kWh for embedded CSP on their sites?
Ramaphosa’s announcement is to be welcomed. But the idea that private producers and renewable energy will solve our energy problems is nonsense. Much better to get Eskom working as well as it did in the past. But I suppose the ANC and the greens would never allow that.
The views of the writer are not necessarily the views of the Daily Friend or the IRR
If you like what you have just read, support the Daily Friend