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Nuanced approach needed
to pursue renewables
The sharp decline in the cost of clean renewable energy globally has made it the
obvious choice for African countries to generate new capacity, but a more nuanced
approach is needed, considering an appropriate energy mix, costs, the variability
of renewables, and energy demand.
By Liesl Peyper, issued by African Utility Week
Ted Blom, partner at Mining and Energy Advisory,
warns that renewable energy costs significantly more
than energy generated from coal-fired power stations.
“In South Africa, coal power from the old fleet costs
less than 40c/kWh, while the average cost of the
renewable bid windows, already approved as at
1 January 2018, is more than R1.88/kWh,” Blom says.
One way to address the cost matter would be to
revisit power purchase agreements that governments
and utilities enter. Dan Klinck, CEO of East African
Power, calls for a “new set of requirements” for
power purchase agreements. “The power purchase
agreements are currently very rigid,” he says.
“Flexibility would work well for bigger projects. The
current structure does not work, neither is it feasible for
smaller projects.”
AN ENERGY MIX FOR AFRICA
In its report Lights Power Action, published in 2017, the
Africa Progress Panel says although renewable energy
— specifically solar — has become the preferred choice
for clean power generation across the continent, it is
still prudent that countries have an energy policy mix to
meet their short-term energy needs, while switching to
renewables in a more “phased and realistic” manner.
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Blom is highly critical of the South African government’s
recent signing of 27 renewable energy independent
power producer (IPP) projects. He warns that the new
IPP projects will lead to significant losses at Eskom,
as the national power utility will be forced to buy and
distribute this additional renewable power. “A quick
calculation reveals lost sales to Eskom will be at
least R20-billion per year for the next 20 years, as
renewables have been guaranteed that Eskom must
purchase all their power,” Blom says.
Daniel Njoroge Butti, energy economist at Karatina
University in Kenya, echoes this sentiment. “Energy
sources, like renewable energy, have relatively low
initial costs and periodical costs involved in operation,
which eventually become very high. Therefore, we
need a decent conversation of how energy sources can
complement each other. The conversation on energy has
to be approached holistically.”
An example of a coal-fired
power station.
Butti says the “balance” between base-load energy and
renewable power needs to be understood. “There are
various studies underway in an attempt to understand
this. This is a technical challenge that can be solved
through understanding and analysis.”
May 2018 Volume 24 I Number 3