Eskom's real quandary is its choice of technology
November 17, 2009
By INGI SALGADO
Riveting though the leadership drama at Megawatt Park has been, the issues that are likely to grip our imagination over the next few years are neither the ex-chief executive nor the ex-chairman of Eskom. We'll be more preoccupied with other issues, like the costs we will have to pay to generate electricity from a variety of technologies.
Around the same time that Eskom's leadership vacuum started taking on the characteristics of a black hole, sucking in all and sundry, the National Energy Regulator of SA (Nersa) put some interesting statistics into the public domain.
The regulator projected the costs of producing power from 10 different technologies over the next two decades in a document explaining its decision for the second phase of renewable energy feed-in tariffs.
To start with, Nersa said the cost of generating electricity from coal would more than triple to R1.66 a kilowatt-hour by 2030, becoming the sixth most expensive of the technologies surveyed. Nuclear generating costs would surge at a similar, albeit slightly slower, rate to R1.76 a kilowatt-hour by 2030 from about 73c currently.
By comparison, the cost of generating energy from concentrating solar power would almost halve to R1.88 a kilowatt-hour. Solar photovoltaics were projected to decline 9 percent over two decades to nearly R3.59 a kilowatt-hour. The cheapest technologies in 2030 would be landfill gas (75c a kilowatt-hour), biogas (87c), biomass (89c) and wind (just short of 90c). Open-cycle gas turbine costs would almost double to R4.23 a kilowatt-hour, presumably driven by fuel costs, while closed-cycle gas turbine costs were forecast at R1.33.
These figures are no thumb-suck. Thembani Bukula, Nersa's regulator member for electricity, says: "We put in the necessary work, these are serious projections. We wouldn't publish something we hadn't completely applied our minds to."
The data tells us, first, that the costs of technologies requiring fuel as an input are on an upward trajectory, while the costs of renewable energy technologies are falling.
Second, coal may appear to be our cheapest option now but it won't be for too much longer.
Third, the nuclear industry likes to point out that atomic power is a cheaper option than wind. But according to Nersa, wind will become cheaper than nuclear somewhere between 2020 and 2025.
Lastly, the cost of producing electricity from solar sources will in future drop lower than those of fuel-dependent technologies. The earlier we build our solar capacity, the faster this process, presumably.
These, of course, are long-term observations but they are nevertheless relevant as South Africa takes decisions about its energy mix - decisions we will have to live with as long as the plants we build today are operational.
The discussion is complicated by the fact that Eskom doesn't have enough funds to build even coal-fired power stations. Its proposal to triple tariffs over three years is to build capacity in mostly coal-fired power - this with a R60 billion state injection that nonetheless leaves a R30bn shortfall.
Can you imagine the howling if South African consumers were at this point in time required to fund in full an expanded programme to harness the power of the sun - even though it's the most logical option with the biggest long-term benefits?
We will, in short, need a heap of financial assistance to reduce carbon emissions from producing electricity. From the inward-looking perspective of South Africa, this is what's at stake during global climate negotiations in Copenhagen next month.
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