The term “load shedding” is grimly familiar to South Africans, two years after rolling blackouts struck the country.The image at the top of this post comes from an analysis I did early this year, and I wrote then:
The power cuts – following the failure by state-owned utility Eskom to increase capacity over the previous decade – subsided in late 2008 as the economy slumped. But with growth returning, its generating capacity of 40,000MW is once again under strain, making the return of blackouts increasingly likely.
“From 2011 to 2012, there will be a very tight supply,” says Marc Goldstein, an energy analyst at Frost & Sullivan. The problem will ease in late 2012, he says, when the 4,800MW Medupi coal-fired power station is commissioned.
“Things will stabilise for a bit, but it won’t give us enough of a margin for much longer after that. There will be a second crisis period in about 2014,” he says.
The problem is largely down to the free market instincts of Thabo Mbeki, the former president, says Kannan Lakmeeharan, managing director of Eskom’s system operations and planning division.
“In 1998, and later, Eskom indicated new capacity would have to be built by 2008. But there was a clear policy decision that Eskom shouldn’t build new plant; it should be built by independent power producers,” he says.
But independent producers were slow to appear, largely because of South Africa’s exceptionally low electricity tariffs. Only in 2004 did the government reverse the ban on Eskom building new power stations: too late to catch up with rising demand.
Since then, the utility’s efforts have hit problems.
It has struggled to raise funds for Kusile, a second coal-fired power station, which had been expected to contribute 4,800MW to the national grid from 2014 but has seen its future put into doubt.
The funding constraints have posed a “significant challenge to security of supply”, Paul O’Flaherty, the utility’s financial director, admitted in August, after the failure of efforts to bring a private partner on board.
There are also environmental concerns. The country’s abundance of coal has led it to rely heavily on it for electricity, with more than 90 per cent of its energy derived from the commodity. That sits uncomfortably with a recent pledge to reduce carbon emissions – aiming for a reduction of 42 per cent by 2025.
“It is generally acknowledged that the carbon-intensity of our economy is unacceptable,” says Ralph Berold, an energy analyst at Quartile Capital. “But progress on renewable energy hasn’t been fast at all,” he says, with only a handful of small projects so far operational.
An important benefit of renewable energy, Mr Berold says, is the relatively short time taken to establish a solar or wind farm – as little as 18 months – which has made it a priority in the race to build new capacity.
The government wants 10,000GWh of power – 4 per cent of capacity – to come from renewable sources by 2013. But a study by Pew Charitable Trusts found that South Africa would spend only $125m on clean energy investments this year, compared with Brazil’s $7.4bn.
The figure above shows (a) carbon dioxide intensity of GDP for South Africa for 1980 to 2020 (back line, data from EIA and Maddison), (b) BAU carbon dioxide intensity of GDP (red line, assuming growth occurs at historical average rates), and (c) carbon dioxide intensity of GDP implied by the emissions reduction target of 34% below BAU emissions. The implied annual average rate of decarbonization of the South African economy is about 3.4%.If South Africa wants to source 4% of its power from renewables by 2013, that leaves 61% of its coal consumption plus all new generating capacity to be sourced from carbon-free energy supply, if South Africa is to meet its less ambitious emissions reduction target.
I estimate that South Africa could achieve this target by replacing about 65% of its 2006 coal consumption with nuclear power, necessitating the equivalent level of effort of about 35 new nuclear plants by 2020. That is why I call it a magical solution.
The FT says that this situation "sits uncomfortably" -- quite so.