Real Estate Investor Magazine South Africa September 2013 | Page 42

STRATEGIES

BY KEN GAFNER

Gas-Powered
Generation

The future of energy is here

P

ower in South Africa is predominantly
generated in large coal - burning power
stations. Each kilowatt-hour of electricity
consumes 1.42 litres of water, produces 161g of
ash and puts enough CO2 into the atmosphere
to fill a 1kg CO2 fire extinguisher. This makes
South Africa one of the major contributors
to CO2 emissions worldwide with emissions
from power generation exceeding all European
countries except Germany.
Electricity in South Africa is no longer cheap.
Energy efficiency interventions and fuel switch
projects, which were previously not financially
viable, have become increasingly attractive.
Buildings and industrial processes in South
Africa typically have very poor energy efficiency
with substantial corrective action required to
bring these in line with current South African
and international standards.

The potential for green energy to
reduce emissions
Green energy has moved from the lunatic
fringe to mainstream for all the right economic
and sustainability reasons. An industry has
developed around energy optimisation with
the benefit of proper support from Government
through Eskom subsidies and incentives. Solar
photovoltaic projects, again with the support of
incentives, are being deployed at an impressive
rate.
Nat u ra l g a s is a c lea n f uel w it h low
emissions relative to the South A frican
grid electricity, coal or liquid fuel. The most
effective application of gas is in displacing
these energy sources for heating applications.
In these applications virtually all the energy
in the gas is effectively used, providing clear
cut cost benefits. Buildings such as hospitals,
residences and hotels, with a substantial and
relatively constant hot water or steam demand,
are idea l for conversion to gas-powered
heating.
40

September 2013 SA Real Estate Investor

Gas-powered generation with effective use of
the waste heat has not achieved its potential
in South Africa. This technology is known
as Combined Heat and Power (CHP) and
provides exciting opportunities for industrial
plants and buildings with access to a gas
supply. Power is generated onsite using gas
engines or micro-turbines with engine waste
heat captured for heating and cooling. In ideal
cases over 80% of the input energy is used
compared to 30% for conventional coal-fired
generation. This solution is cost effective and
reduces emissions by over 50%.
CHP is a well-entrenched technology in
Europe, where 11% of power (2008 figures) is
generated by CHP with several countries over
30%. This is largely due to well-developed gas
distribution infrastructure and realistic pricing
of gas relative to electricity.
The gas distribution network in South Africa
is limited to Johannesburg and a corridor along
the route of the Sasol pipelines. This, coupled
with low electricity tariffs has, until recently,
inhibited the uptake of own generation.

CHP has the potential to improve energy
eff iciency and reduce emissions in South
Africa. It is estimated that, by 2030, CHP
could contribute 17% of total electricit y
generated in South Africa which would have a
significant mitigating effect on South Africa’s
CO2 emissions.
T he pr ic ing u ncer ta int y a nd l im ited
availability of gas have increased project risk
and resulted in many projects being deferred or
shelved. The new NERSA regulations, coming
into effect in 2014, cap th HX^[][H?[[???X?H??\??]?]\?H[??X\?\???\Y?B?????H?\??]?[?\??H??\??\?[???]?Y??X?K?\??X]\??YX?X?[]H[??\??X?[??[?[????Y??X?Y[?X\??[????\??\??\Y\???[?\?HX\??]?[?]\??[?Y?[??M??[?]\?[?\?[???]Y??X?H\??\??[?B?[]?\?Y?XHH?\??\[[?H???H?[??[?[?[X?\]YH?X??\???]?H?Y??X?Y[???\X?]H??\?\??\???\?\??H??[H??Z?K]\[???]Y??X?K?]?[?Y[???X????[??]]?[H[??Y[??H?\?]?Z[X?[]H[????˜?Z[XY????B??