The current energy crisis is a powerful incentive for the renewable energy (RE) industry, but the regulatory framework is hampering rapid progress. This is according to Kevin Nassiep of the SA National Energy Research Institute. He was speaking at a wave energy workshop organised by the Stellenbosch University Centre for Renewable and Sustainable Studies (CRSES).
The good news
Nassiep says several factors are conducive to the commercial development of RE sources. First, international market development for RE continues to grow exponentially. Worldwide investment in RE in 2007 was estimated at US$66 billion, as opposed to 39 billion in 2005 and 55 billion in 2006. Researchers believe RE could contribute as much as 50% to the global primary energy supply by 2050. Nassiep says this goal is possible for southern Africa, if regional projects that build on geographical strengths are developed. Wind and wave energy farms on the Cape West Coast, where conditions are optimal for renewable energy generation, could contribute energy to the grid in future but at this stage such projects are in their infancy. The Klipheuwel experimental wind farm generates some 3,2MW and Phase 1 of the proposed Darling national demonstration wind farm will produce 5MW – a drop in the ocean considering that a large power station generates 3 000MW. Tenders are out for a wind farm near Koekenaap, which will generate 100MW from fifty turbines, but according to Eskom, it’ll only be operational by 2010.
On the positive side, Nassiep said there’s a narrowing gap in RE technology prices versus cleaner fossil fuel plants. RE has shorter lead times for construction and the proximity to end-use could reduce transmission and distribution costs, if the RE source is located at source of demand.
The bad news
However, Nassiep points out that the current regulatory framework doesn’t encourage smaller independent power producers (IPPs) to enter the market, because grid access conditions aren’t ideal. Rules governing third party access to the national grid haven’t been devised. “The Top-Up Feed-in tariff, the only mechanism that’ll support RE uptake over the 10-year target period, still isn’t in place,” says Nassiep. Because RE is more expensive than electricity generated by coal-fired power stations, Eskom needs to negotiate feed-in tariffs that’ll make it attractive for RE generators to feed electricity into the system. However, no such tariffs have been negotiated yet. Although green power trading was approved by Cabinet recently, there are no incentives rewarding the purchase of green power. Moreover, most renewable energy technologies are capital-intensive and access to financing is problematic, despite the development of “green financing” options by several financial institutions. At this stage, IPPs don’t receive government incentives in the form of tax concessions or subsidy schemes.
Solutions
Nassiep says there are plans to address the shortcomings of the regulatory framework. The DME has introduced a master plan for liquid fuels, the National Treasury is investigating green budgeting, together with environmental fiscal reform, and the soon-to-be-tabled Energy Security Bill will propose instruments to support RE uptake. A Top-Up Feed-In Tariff is also being discussed. – David Steynberg
Renewable energy stats
RE currently supplies 17% of the world’s primary energy, with large hydroelectric installations accounting for 15% of global electricity production in 2006. At the end of 2007, the worldwide capacity of wind-powered generators was 94,1GW. Globally, wind power generation increased more than fivefold between 2000 and 2007. Between 2006 and 2007, it increased by 31%, according to the Global Wind Energy Council. Grid-connected photovoltaic is the fastest-growing power generation technology in the world. 2006/2007 has seen a 50% annual increase in cumulative installed capacity, which was estimated at 7,8GW by the end of 2007.
Why South Africa needs RE
South Africa is one of the biggest culprits in the world when it comes to polluting the atmosphere with carbon dioxide, which contributes to global warming and climate change. More than 75% of SA’s primary energy requirement, and more than 90% of SA’s electricity is generated from coal. SA is the 14th top emitter of carbon dioxide in the world, while Eskom as a company is ranked as one of the world’s largest emitters. The Sasol II plant is often cited as the world’s largest single source of greenhouse gas emissions. As the issues of climate change and emissions reduction gain international momentum, the pressure on polluters (including those in developing countries) will mount. Large UK supermarkets, for example, are already putting pressure on South African farmers to reduce their carbon footprints. These emission reduction demands are likely to penetrate other areas of trade.
