6 May 2007 - 09:27
  • News Code: 103895

South Africa will be burning three times as much coal by 2027 to power the economy than it is using now.

When it comes to environmental sustainability, South Africa talks green but opts for dirty coal.

As concerns about climate change grow, the global trend is to diversify away from finite fossil fuels towards renewable energy in an effort to mitigate the impact on the environment.

Speaking at a recent energy conference, environmental sustainability ran like a golden thread through Eskom CE Thulani Gcabashe’s speech. Among some of Eskom’s commitments are plans to cut coal-based generation from 86% to 70% and to almost treble renewable energy’s contribution to the energy mix.

The commitment sounds benign but figures can be used in a beautifully deceptive way.

Analyzing the projected energy supply growth figures, it appears that Eskom will pay little more than lip service to reduce its carbon footprint as it embarks on a massive expansion program.

Eskom will roll out projects worth R150 billion to increase electricity supply to meet demand over the next five years. It will add 52000MW to the total current capacity of 38368MW. And with demand forecast to grow at 4% a year, 77960MW more generation capacity will be added over the next 20 years, translating into more than 168000MW in total generating capacity by 2027.

Making the calculations, it is clear that SA will be burning three times as much coal by 2027 to power the economy than it is using now.

Furthermore, the commitment to materially increase generation capacity from renewable sources must be seen in context. Now, only 1,2%, or 865MW, of SA’s electricity comes from renewable sources. Coming off that low base, trebling the use of green energy means Eskom will add a paltry 1600MW of renewables into the energy mix.

A greater degree of willingness by independent power producers to embrace renewable technology may go some way to mitigate the effect on the environment.

SA’s climate, in particular, is suited to the exploitation of alternative energy from wind, sun and ocean waves. But despite a growing appetite from private investors to explore opportunities presented by the potentially lucrative industry for renewable energy, the commercial roll out of sustainable energy alternatives is held back by a lack of decisive public sector buy-in.

A prohibitive regulatory environment and the absence of incentive structures in particular present a hurdle to prospective investors in environmentally sustainable energy sources, according to research by growth consulting firm Frost and Sullivan.

The industry in SA, worth $58m and growing at a modest 1%, is nonetheless set for rapid expansion as the demand for green alternatives accelerate, with the growth rate over the next five years estimated at an annual 20%, propelling industry revenues to $220m by 2012.

But the government is not making it easy for independent power producers, says Frost and Sullivan analyst Cornelis van der Waal, citing the example of the Darling wind farm, established by the Oelsner Group. It took the group seven years to get a license, and then only after court action against the government was launched to secure a decision.

Another significant barrier to entry is the cost of renewable energy technology and Eskom’s cheap electricity aggravates the struggle for the commercial viability of renewables.

Increased product efficiency, decreased production costs and additional revenue streams such as carbon credit trading will ensure that the market becomes more attractive, yet still the government incentives are needed to prod commercial applications.

Stakeholders believe the answer lies in introducing feed-in tariffs. These helped Germany become one of the largest global renewable energy producers. The process in essence entails households or small suppliers being paid tariffs for feeding clean energy into the grid. The method encourages the switch to renewables.

In global terms, SA is not a large producer of carbon emissions but, measuring carbon emissions against gross domestic product (GDP), it has a dismal carbon footprin



News Code 103895

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