Smart Energy Country Profile – South Africa

South Africa is changing rapidly, and the ANC government of Jacob Zuma has big plans. This blog will examine the changing picture in terms of its energy supply and its plans to become a primary supplier to the growing global fuel cell industry.

The South African economy is closely tied to the energy sector, with demand of 127.8 million metric tons of oil equivalent (Mtoe) primary energy consumption (2007), which is growing at 4.4 percent a year.

One of the aims of the 2008 Energy Act was to diversify the country’s energy portfolio. According to the BP Statistical Review of World Energy, South Africa has some 9.2 percent of the world’s coal reserves (anthracite and bituminous) at 33.5 million tons

The South African utility, Eskom, produces and supplies over 95 percent of all electricity in South Africa, and over 45 percent of all electricity used in Africa. The company got something of a wake up call in 2008 when the country experienced a number of rolling blackouts causing the country millions of rand in lost revenue, and seeing platinum and palladium reach global highs in price. The issue, as was reported at the time, was that the power generation reserve margin was only 5 percent. The two fall-outs of this were creation and enactment of the Energy Act and the opening up, at least in theory, to other fuel generation sources.

To date, the South African economy has been overwhelmingly dependent on coal, and during the apartheid-era developed world-leading coal-to-liquid technology. Now, though, the government has plans to develop 42 GW in new electricity capacity by 2030. This total includes a target of 18 GW (approximately 42 percent) from so-called green energy sources. In reality, 23 percent of this is planned to be nuclear, 15 percent new thermal power plant capacity, and the rest from wind, solar, biomass, and hydroelectricity.

The implication of this is likely to be the development and deployment of substantial distributed generation technologies, and potentially, a thriving market for energy storage. The reason why I am confident of the DG option is that a large percentage of South Africa’s population is still without access to grid electricity. Policy is to push for deployments as quickly as possible, so when we see development of technology such as wind and solar we are likely to see this tied to some form of DG, possibly at the village level.

To help pay for all this change the residential users in South Africa are taking something of a beating. Residential energy users have historically enjoyed some of the lowest electricity prices in the developed world, but since the blackouts of 2008, Eskom has been seeking annual price hikes of up to 31 percent to raise funds to build new capacity. The following increases have been approved:

– 24.8 percent increase for 2010/11 financial year

– 25.8 percent for 2011/12

– 25.9 percent in 2012/13

To put this in perspective, in 2008 residential users were paying 55 cents/kWh (according to the IEA), lower than any just about any other developed nation.

The core mission of the Southern Africa Power Pool (SAPP), a consortium that includes electricity providers from 11 sub-Saharan nations, is to facilitate the development of a competitive electricity market across the region. SAPP is looking to invest some $5.6 billion in transmission projects by 2015. Thus, South Africa’s recognition of potential renewable energy pathways could serve not only to open up new market potential for its own businesses, but also help to develop the economies and business of a vast swath of the continent.

Article by Kerry-Ann Adamson, appearing courtesy the Matter Network.