South Africa’s Renewable Energy Misadventure

It is a truth universally acknowledged that South Africa’s Renewable Energy Independent Power Producer Procurement Program (REIPPPP) was a great success.

The renewable industry has done one the most phenomenal public relations jobs I have ever seen. The frequency and quantity of articles promoting renewable energy and proclaiming the success of the REIPPP programme have been astounding. Their job was made easier due to the disintegration of Eskom. The PR machine kicked into high gear last year when Eskom declined to sign REIPPP contracts associated with the fourth round of the programme. The reason for the delay was due to a combination of maladministration and Eskom’s dire financial position. The contracts were eventually signed in April 2018 by Energy Minister Jeff Radebe. He left it to NERSA and Eskom to work out the cost implications.

Yesterday, Radebe released the draft Integrated Resource Plan (IRP) and the allocation to renewable energy sources continues to increase. I believe that the REIPPP programme will go down in history as one of the great financial swindles perpetrated on a developing country. Renewable energy and financial firms have made billions of Rands, leaving SA’s treasury covering guarantees of R200bn and South African consumers with higher electricity price increases. We have not been the only ones who have been fleeced as renewable energy has seen $800bn in subsidies globally over the last decade with very poor results.
The narrative backed by the media and (aided by amazing PR firms) is that renewable energy is a complete and proven technology whose cost is now below that of nuclear and fossil fuels. The truth is very different:

 
Renewables are more expensive

 
One of the main reasons people dont realise how expensive renewables are is that it’s not easy to measure the difference in value between intermittent and dispatachable (on demand) energy. So while renewable costs have fallen below coal/nuclear in theory, the reality is that they make electricity a lot more expensive. Electricity when you DONT need it is worth a fraction of electricity that is needed when you do. Rob Jeffrey attempts to show how you need to incorporate the capital cost and load factor to get a true cost of renewable electricity, which is much higher than the Levelised Cost of Electricity (LOCE) that is touted in support of renewables. Throughout the world, “low cost” renewables have only managed to drive up the cost of electricity

 
Renewable energy is an incomplete and imperfect technology

Intermittent renewable energy without proper storage is an incomplete technology; solar power without the high capacity and cost-effective battery technology is NOT a viable source of mainstream power.

 

A Solar future has been promised to us for years, but has never been delivered:
When I was young the highlight of a visit to my grandparents was the access to my grandfather’s library of “Popular Science” magazines. It was exciting to read about how we would drive, fly and live in the future. That was around 30 years ago and unfortunately the way we drive and fly has remained pretty much unchanged. There was always great excitement around the potential for solar energy to power our homes, cars and even planes. None of that is even close to fruition four decades later even as the technology has supposedly progressed substantially. Solar power companies around the world have struggled to reach commercial viability even with great incentives and subsidies, and when those subsidies are removed they tend to go bankrupt very quickly (Solyndra, SunEdison, Solarcity). The truth is that predicting how technology will evolve is very difficult. However, there are plenty of people incentivised to make those predictions and lobby accordingly. The following are popular science covers from the 70’s and 80’s:

While solar panels have improved, the fantastic predictions on our energy future have not come to fruition. The media has little understanding of how technology evolves.

Today there is a widespread belief that renewables are the future of energy generation, even though though they cannot deliver the type of power necessary for an industrialized economy. The technology necessary to advance renewables for mainstream purposes is years, if not decades away. As a poor country, South Africa does not have the resources to contribute to this project of unknown cost and horizon. Countries like Germany have aggressively pursued renewables, and pushed up their electricity prices to among the highest in the world. Germany can make that choice as they are one of the richest countries in the world. South Africa should not.

I am not “anti” renewable energy. There is no reason not to want clean power. I just believe that South Africa should wait until the technologies are perfected before considering implementation. Judging by how poor the predictions of technology have been, we do not even know whether the current renewable strategies (solar/wind) will be the ones that prevail. Given that solar has been a failure for the last 30-40 years, it would not be my bet for a primary energy source. My understanding of the science is limited, but my intuitive belief is that nuclear or “clean” fossil fuels are more likely to be the dominant power technology in the future. Meanwhile, there exist massive vested interests who aim to capture the explicit and implicit subsidies that renewable energy generation business provides. This means that we will continue to be subjected to a barrage of misleading science and economic opinions and predictions. Given that we don’t know which technology will prevail, and how long it will take for the next generation of power technology to be perfected, poor countries like SA should not be risking scarce resources by betting on an uncertain outcome.

On the positive side, we know that South Africa specializes in economic plans that never get implemented; the latest IRP will likely be one of them. It is a consolation that no further renewable projects will be signed for the next four years, by which time it will be more apparent that REIPPP was a disaster.

 

 

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