ENERGYStrategy to fix electricity crisis could result in a high growth economy
For a zero load-shedding baseline another 4,000MW-6,000MW must be added to the grid in the near termGabriel Makin and Frans CronjeLast week the Social Research Foundation released an assessment of the electricity position in SA and proposed a route first to resolve the load-shedding crisis, and then to put the country on an energy track capable of sustaining an economic growth rate of 5% of GDP. The assessment concluded that both objectives can be met within 12- and 60-month time frames respectively, while placing the country in a position to complete a 240-month transition to a clean energy future.
The report judged that SA needs to plan (from a baseline of zero load-shedding) to up its annual electricity consumption rate by about 2.5% per annum if it is again to aspire to an economic growth rate approaching 5% of GDP (the implications of higher and lower increases in consumption to secure that level of economic growth were also tested).
At that rate of economic growth the unemployment rate would likely halve every decade while government revenue would grow sufficiently strongly to afford an expanded deficit and sufficient welfare and social development spending to eliminate extreme poverty within a generation.
To reach a zero load-shedding baseline a further 4,000MW-6,000MW of generation capacity must be added to the grid in the near term. This should be straightforward and may even be achieved within 12 months.
When the Koeberg nuclear station is again fully operational about one stage of load-shedding will be eliminated. By running gas turbines at their maximum potential a further two stages might be done away with. By improving the capacity of the broader coal fleet by 5% (via procuring quality coal and improving basic maintenance) a further two stages could be eliminated. Private household and small business rooftop solar provision could eliminate a further two stages. Securing environmental clearance to bypass some emissions safeguards could eliminate a further two stages.
That would amount to nine stages of load-shedding being eliminated, and there are various mathematical formulations around different energy mixes that reach essentially the same conclusion. Even if only half of these options are realised, SA’s power cuts will be much reduced.
Once load-shedding is eliminated, to sustain a 2.5% rise in annual electricity consumption it will become necessary for electricity production to rise from about 30,000MW to nearer 40,000MW over the subsequent decade.
This is achievable via a coal fleet overhaul. That fleet has an installed capacity of about 45,000MW, though it is only producing about a third of that. The overhaul would target a cumulative 15,000MW of coal capacity and involve auditing defunct coal plants or those entering the end of their productive lives, refitting components that are worn or failing, and thereby bringing the plants back into production.
Such a refit should take between three and five years and culminate in adding 10,500MW-12,000MW to the grid over 60 months, assuming capacity factors of 70%-80%. This would allow total national electricity production numbers approaching 40,000MW, which is in line with the number we judge necessary to enable a 5% rate of economic growth.
The foundation’s report also tested the implications of consumption rates rising at levels of 1.5%, 3.5% and 4.5% in pursuit of that 5% level of economic growth. Under the highest of these rates production levels would need to rise to about 45,000MW within a decade, which our calculations showed becomes nearly reachable with the support of pledged Western-sponsored green energy projects.
The refit option is attractive as it does not require the building of any new power stations or additional grid capacity. It can be financed by the SA government or domestic private investors or foreign investors. Contrary to much opinion, Western institutional investors are open to financing the refurbishment if it can be shown that improved power station efficiency will lead to a reduction in net emissions, thereby qualifying such investment as transition finance. Alternatively, either China or Russia could partner with the SA government.
If a further 10,000MW of Western aid or privately financed wind and solar energy is also constructed that would add a further 2,000MW-3,000MW to the grid (at capacity factors of 20%-30%) over the next decade, raising the total potential electricity production level some way beyond 40,000MW.
However, severe grid constraints afflicting areas of greatest solar radiation, matched with often erratic wind patterns and the high cost of battery storage technologies, mean wind and solar plants are at this time not feasible options to raise production levels by the near 20,000MW needed to make possible the desired 5% rate of economic growth.
On the 240-month view the advice is to commence a nuclear build capable of replacing the refurbished coal fleet as this comes to the end of its life, and complementing that build with vast private renewables investment, though technological advancement — especially in relation to storage technologies — may over time be sufficient for the renewable component to eat into the extent of the required nuclear build.
The proposed 12, 60, 240 monthly strategy is perfectly consistent with SA’s just transition ambitions and does not amount to locking the country into a coal-dependent future. If the government pursues the strategy it will culminate, subject to broader policy reforms, in a high growth economy that within 20 years is fuelled almost exclusively by clean technology.
It is counterintuitive that reaching SA’s clean ambitions must commence with new investment in hydrocarbons, but the present energy position is so dire, and its socioeconomic consequences so harsh, that failing such investment there may not be a competitive economy and related democracy that cares much about things like "just transitions" 20 years from now.
Makin is an associate at the Social Research Foundation, where Dr Cronje chairs the board.