Is renewable energy expensive or cheap? This question is central to the debates in Paris over how to address climate change. Though the conundrum has no simple answer, in South Africa the verdict is in. And it’s a surprising one.
Renewable energy arrived in South Africa as a green luxury. But this year, wind and solar farms turned out to be economy-saving necessities.
From November of last year until August, the nation was beset with rolling blackouts that crippled businesses and left homeowners scrambling for candles and matches. These scheduled power cuts shut down parts of the country on 82 days during the first half of the year.
The crisis was the culmination of years of foot-dragging in power-plant construction and a major coal-silo collapse at a generating station late last year.
Few South Africans realized at the time that their days would have been even darker if not for renewable energy.
New solar and wind farms partially bailed out the South African grid, says Tobias Bischoff-Niemz, who heads the Energy Center that’s part of South Africa’s Council for Scientific and Industrial Research (CSIR). The power they supplied reducing the duration or extent of the scheduled blackouts on 15 days in the first half of the year. On four of those days, renewables prevented power cuts entirely. “They are almost our emergency generators,” says Bischoff-Niemz.
In the midst of the North West Province platinum belt, Mark Maynard sits at his desk and counts 35 red lines on a graph of electricity supplies. Thirty-five times this year the national utility, Eskom, declared a power emergency in the region.
Each time, Maynard, as the head of engineering for Lonmin Platinum, had to order the shutdown of mills where ore is crushed and concentrated for smelting. “It created quite a squeeze for us,” says Maynard.
A few miles down the road, the RustMo1 solar farm is working to keep South Africa open for business. Through the open door of his office, Patrick Mbengwa can see the first of 105 rows of gleaming, indigo photovoltaic panels solar panels. But he keeps his focus on a laptop, watching his own graph — of ever-rising megawatt hours and revenues.
Even on a cloudy day, the solar panels have generated nearly 15 megawatt hours by 3 p.m., enough to power a large neighborhood for a day.
RustMo1 was one of the first solar farms built under an innovative South African effort to improve its carbon footprint by adding renewables to its coal-dominated energy mix.
In other countries, government agencies set the price utilities must pay for every kilowatt hour of renewable energy solar farms and wind farms feed into the grid. South Africa lets the private sector set the tariff in competitive bidding. Companies submit bids offering to finance, build and run solar and wind facilities for 20-year contracts, promising to pay them a set price — or feed-in tariff — per kilowatt hour they produce. A committee of experts chooses the qualify bids that offer to build for the lowest prices.
In each annual round of bidding, the qualifying solar- and wind-farm design projects offering to sell renewable energy for the most attractive prices are given contracts that guarantee that their power will be purchased. This has helped bring down costs, but until this year’s crisis, no one had imagined that green electricity would actually save the country money in the short term.
Power cuts have hobbled the South African economy. President Jacob Zuma has said that rolling blackouts reduced economic growth by about 1 percent — an estimated $3.5 billion — this year. The CSIR estimates that by reducing power cuts, wind and solar spared the economy $386 million in further damages in the first half of 2015, more than the $361 million paid to renewable suppliers in tariffs.
That is just the beginning of the savings. Unable to supply enough cheap electricity from coal-fired stations, Eskom has been routinely running costly diesel turbines that were meant for occasional use. On many days, every megawatt hour of wind or solar energy saved the utility 85 gallons (320 liters) of diesel, adding up to fuel savings of $300 million from January to June.
The CSIR’s results surprised everyone, especially because wind and solar supply only 2 percent of South Africa’s electricity.
“A small amount of additional generation in this situation makes a very significant contribution,” says electrical engineer and publisher Chris Yelland.
The financial return on renewables might be even larger in some other African countries, burdened with electricity crises that make South Africa’s shortfalls seem minor. Many economies on the continent depend heavily on hydroelectric power, which has been sharply curtailed by drought. Zambia, for example, used to rely on a single dam at Lake Kariba for most of its electricity, now sharply reduced by low water levels.
“The situation is that Kariba is empty,” Zambian Energy Minister Dora Siliya recently said. “We are dealing with an emergency.”
Zambia is currently paying for power from a generating ship moored off neighboring Mozambique.
This week in Nigeria — a country with chronic electricity supply problems — the International Finance Corporation and a consortium led by solar developer Alten signed an agreement to build one of the largest photovoltaic solar farms on the continent.
South Africa is enjoying a four-month respite from power cuts at the end of this year as the supply from coal stations has improved and demand has slowed. But Bischoff-Niemz expects the economic benefits of renewables to keep flowing.
“We have somehow missed the silent revolution that has happened in the last five years that solar and wind are now completely cost-competitive to any alternative we have,” he says.
Renewable energy “certainly is one of the good-news stories of the energy sector in South Africa, and there are lots of bad-news stories,” says Yelland.
Wikus van Niekerk, director of the Centre for Renewable and Sustainable Energy Studies at Stellenbosch University, points to another advantage of solar and wind farms: They can be built more quickly than traditional power plants.
RustMo1, for example, connected to the grid ahead of schedule and within budget less than two years after its bid was accepted. Eskom’s latest coal-fired station, Medupi, is already 3 years behind schedule and billions of dollars over budget.
To completely replace South Africa’s dirty coal with clean energy, however, will require technological leaps of the sort proposed by Bill Gates last week in Paris. He announced a two-fold push for research and development that will open the doors to a zero-carbon future.
The Breakthrough Energy Coalition is made up of 28 private investors, including Gates, who agreed to aggressively fund energy research and development. This is complemented by a commitment from 20 nations to double their energy R&D in the next five years.
As for South Africa, van Niekerk says that poor planning and an aging fleet of coal-fired stations will lead to tight electricity supplies for decades to come.
“They’ve painted themselves into corner, so that the only technologies to get South Africa out of this going forward are gas and renewables,” he explains. “The fact that they are clean and low in carbon-dioxide emissions is the cream on the top.”