Capetonians can buy green electricity!

It is a great day in Cape Town. From today you can buy pure, carbon-free, wind produced electricity! And the price: Only 25c/kWh more than regular electricity. What a bargain!

Don’t believe me? Check out: www.capetown.gov.za/buygreenelectricity. You can get an application form there.

So what are you waiting for? Buy some green electricity today! (Capetonians only)

Frank

ESKOM's secret deals revealed

So the truth is out. The DA has released the secret ESKOM report (downloadable from their web-site here) that includes the details of the low-cost deals with some of the big electrical consumers in South Africa.

Here is my summary:

• Motraco, a Mozambican electricity distribution company, pays 12c/kWh. This agreement is in place until Dec 2025. Motraco owes ESKOM R100million.
• ESKOM’s projected cost of production in 2008/2009 was 32,2 c/kWh.
• Gross profit margin is 35.2%, Net profit margin is 6.9%.
• Net reserve margin in Mar 2009 was 8.5%. Critical is considered 15%.
• BHP Billiton consume 9.3% of all the electricity ESKOM consumes. Despite this, because of the commodity linked contracts, the revenue from BHP Billiton was 50% less in 2009/2010 than in 2008/2009. BHP contributes 0.1% to the SA GDP.
• ESKOM pays R108/ton on long-term coal contracts, but during the coal shortages, paid 150% more - R270/ton. The contributed heavily to ESKOMs R8.3billion shortfall in 2009/2010.
• ESKOM’s bad debt amounts to over R2.8billion. Soweto owes R1.8billion of this.
• An accounting provision is made for the Chief Executive Officer of R41.3m /year. This is why Jacob Maroga claimed R85m in severance (2 years package).
• Staff turnover of up to 7.3%.

There is another summary on Moneyweb.

In a nutshell, we have a poorly performing utility, selling a large chunk of its electricity well below cost that the rest of the consumers need to subsidise. If they can’t even get their coal contracts, large customer contracts and CEO contracts right, how can we trust them?

Frank

A sad day in South Africa's Ecological, Economic and Energy landscape

Last night the world bank loan was approved. To understand why this is a tragedy, Mark Swilling could not have explained it better in his article Intelligent Power, also published in the Cape Times a few days ago.

Frank

The World Bank Loan and South Africa's Energy Future

There has been a tremendous amount of debate and media coverage around two energy issues recently, both complex, both intertwined, both with the possibility of having a huge impact on South Africa’s energy future. The first is the proposed USD 3.75 billion loan from the World Bank to ESKOM to assist with the financing of the ZAR120-billion Medupi coal-power station, and the second is the current (2^nd) Integrated Resource Plan (IRP2) which will determine South Africa’s energy electricity roadmap for the next 20 years.

When I first heard that a strong NGO movement was forming to oppose the World Bank loan, I had mixed feelings. On the one hand, there is an energy crisis in South Africa, and it could be argues that South Africa still has a “right” to a certain increased level of carbon emissions. On the other hand, perhaps not getting the loan is just the wakeup call South Africa needs to realise that growing carbon emissions, even in so called Developing Countries, are morally wrong, especially when there are definitely other solutions to the energy problem that are most cost effective, create more jobs, reduce emissions, and guarantee a higher level of energy security. Thus unsurprisingly I have ended up with my feet firmly in the latter camp. The attempts to greenwash the loan have not helped my perception at all - the claim is that the loan is also for wind and solar, but in reality only USD260million (7%) is earmarked for 1x wind and 1x solar farm, and the remaining 93% for coal.

The political comments being made about the loan have been fascinating. Public Enterprise Minister Barbara Hogan has said “"If there is a vote against, it will be the most unfortunate thing that has probably happened to this country in terms of its economy and in terms of developmental needs”. Scary that we are SOOO dependent on the World Bank! World Bank vice-president for Africa Obiageli Ezekwesili has agreed with the SA position, saying "There is no viable alternative to safeguard South Africa's energy security at this particular time”; I bet he is desperate to loan the money so he can get his bonus. In contrast, Avaaz, the large global web movement, has said “The proposed R29 billion World Bank loan to Eskom South Africa should not be extended because it would contribute to energy poverty, environmental destruction and climate change worldwide”. Pravin Gordon, the finance minister, has said that a "very small group of NGOs in South Africa" were placing "environmental concerns, which could not be immediately addressed, above the economic needs of South Africa". The small group consists of more than 65 South African civil society organizations, joined by 99 other groups in Africa and around the world. In addition, I don’t think Mr Pravin and our economic leadership appreciate or understand the inter-linkages between climate change, peak oil/coal and economic growth. But then our leadership, the ANC (the South African ruling party), stand to benefit enormously from the coal power stations – possibly up to R5,8-billion from their investment in Hitachi Power Africa.

The core issues is really whether we have to go the coal power station route to solve our energy problems, or if there is some other solution? That brings us to the 2^nd item, the long term energy planning of the IRP2.

The IRP2 process is being driven by an Inter-Ministerial Committee which includes the Department of Energy, Department of Finance and big business. Consultation with public bodies is expected to take place through April and May, and the IRP2 is expected to be gazetted by September 2009. It is my expectation from comments heard from senior players that we will see a strong focus on Nuclear and Renewables, in line with proposals in the Long Term Mitigation Strategy for carbon emission reduction, but still allowing for the current plan of three big new coal power stations.

The core issues with all of the above the fast, cheap way of creating additional power, namely Energy Efficiency, is hardly mentioned, despite the fact that we as a country are a terribly inefficient user of electricity with masses of opportunities to become more efficient. But as I have argued previously, this would reduce ESKOM’s revenue and profits, as well as other large corporations, such as Areva, which stand to make billions from new (expensive) nuke power stations. Another irony is that NERSA themselves have argued that all renewable technologies would be cheaper than oil, coal and gas technology by the end of 2015. Nuclear has got way to expensive, and takes too long to build to address the climate issues. Thus the solution to both our energy crisis and future energy security seems to be quite clear – energy efficiency to solve the short term problems, and renewable energy for the long haul.

So I hope we don’t get the loan. It may just get the IRP2 guys thinking about real long term sustainable job creating solutions.

Frank

Why I am a fan of Energy Efficiency, Clean Enery Manufacutring, and anti-nuclear...

Energy efficiency in US could create 333,000 jobs

California funds US$90m clean and renewable energy

Nuclear Power Does NOT Help to Combat Climate Change

Frank

Smoke (CTL) and mirrors (nuke)

At Copenhagen Pres Zuma indicated that South Africa would like to move to a low carbon economy, and meet the targets of the long term mitigation strategy to reduce carbon emissions by 34%. Since then, there have been many movements within national, provincial and local governments to be thinking about the green economy and green jobs.

This will all be for naught.

Not only are we planning to build 3 new huge coal power stations (which would make it simply impossible to meet these targets, and Carbon Capture and Storage is a pipe dream), but SASOL is rolling out a major expansion plan to boost its Secunda Coal to Liquid (CTL) plant by 5% at a cost of R12billion. To think Secunda is already the largest point source or carbon emissions in the world, and now they want to make it worse! (Well, on the bright side, that may not be the case for long, with SASOL building CTL plants in China, possibly China might overtake us in converting coal into petrol.)

Then, looking at nuclear, I have argued before that nuclear is too costly and takes too long to build to make any difference to climate change. The money would be much better used investing in other carbon emission reducing technologies and alternative energies. But it is now clear that the French Preseident Sarkozy is on the payroll of the nuclear industry. Not surprising really, since France has so much nuclear power (58 reactors), and Areva, the big nuke company, is stationed there. He is pushing to make the financing cheaper (i.e. shift more of the risk onto the taxpayer) and get developing countries to build them (i.e. another form of energy imperialism – more money flowing South to North).

If the SA government is srious about reorientating our economy to compete in the new green world, tehn they need to catch a wake up now, and deal with the carbon emission problem that is predominantly based in ESKOM, SASOL and their big customers.

Frank

Energy Efficiency Subsidy

South Africa is the unfortunate position of having it’s friendly behemoth ESKOM run it’s Solar Water Heater subsidy program, in the name of energy efficiency. Great idea, poor execution. Let’s see what the UK & US are doing:

Obama Announces Cash for Caulkers Program

* Small-scale upgrades like insulation, duct sealing, water heaters, HVAC units, windows, roofing and doors would be eligible for 50 percent rebates up to $1,500 or combined upgrade rebates of up to $3,000.

* Entire-home retrofits would be eligible for a rebate of $3,000 towards an energy audit and upgrades amounting to 20 percent energy savings. Any savings over that would be eligible for more rebates.

* Safeguards would be put in place to ensure that the upgrades actually improve efficiency: all contractors must be certified in energy efficient installations and independent auditors will perform surveys to make sure upgrades were installed correctly and are saving energy.

* The program would also help state and local governments create financing options for these retrofits so more consumers can participate.

UK launches Pay as you Save “Greener Homes Strategy”

* Cut emissions from homes by 29% by 2020.

* Give up to 7 million homes eco upgrades by 2020.

* Create up to 65,000 jobs in the green home industry.

Guess we could do a lot more to ramp up our Energy Efficiency programmes...

Frank

ESKOM's finance director Paul O'Flaherty is a DOFF BALL

On what planet does ESKOM’s finance director Paul O'Flaherty live?

The World Bank is considering loans to South Africa to the order of R29 Billion for new coal (3600 MW), nuclear (3000 MW+), and tiny little insignificantly solar plant (100MW). Commenting on this last week, in a news article entitled “Eskom goes low carbon”, he said, “The funding is well-aligned to jump-start progress on South Africa's commitment to a lower carbon footprint”. Lower carbon-footprint? What planet does he live on? Certainly not the rapidly heating up planet called Earth! How on this hot earth can the long term plans of THREE coal power stations + ONE nuclear + One tiny solar plant equal a commitment to a lower carbon footprint? This is a commitment to a HIGHER carbon footprint!

If ESKOM’s finance minister can’t get his math right, can we trust him with the World Bank’s money?

Frank

PS See also:

Gordhan pans opposition to Eskom's World Bank loan

Clean Energy for South Africa, not Coal

Proposed Gauteng vs Western Cape energy targets

I have put together my own comparison of the energy targets in the Draft Western Cape Sustainable Energy White Paper Amendment (Department of Environmental Affairs and Development Planning) and the Gauteng Integrated Energy Strategy Draft (Department of Local Government and Housing).

Here it is:

Action	Gauteng Target	Western Cape Target
Renewable energy generation(electricity only)	7% by 2014, 16% by 2025	15% by 2014
Overall energy efficiency against business as usual scenario	7% by 2014, 15% by 2025	15% by 2014
Carbon dioxide emission reduction (in 2000 levels)	13% by 2014, 27% by 2025	14% by 2014, 15% by 2020
Renewable Energy purchased by Provincial Government	No Target	10% by 2020
Efficient Water Heater Installations	20% by 2014	No Target
Electrification targets (proclaimed stands)	100% by 2014	No Target
Free Basic Alternative Energy Access in informal households	20% by 2014, 80% by 2025	No Target

Basically the Western Cape has more ambitious renewable energy and energy efficiency targets, but the Gauteng strategy is more detailed and more long term focussed. One glaring problem in the Western Cape Strategy is a low long-term CO₂ reduction figure (15% by 2020).

I still think these targets could be improved, especially in terms of energy efficiency.

Frank

Maize farmers urge u-turn on biofuels

Why is it that South Africa farmers would really like to use maize for biofuels?

As some of you may be aware, South Africa banned the use of maize for biofuels a few years back in order to protect food security in the region. This was a wise choice, and I have written about it elsewhere, and have also commented on the USA’s policy to allow this.

Well the economics of why the farmers are desperate to do this are quite simple:

• Grain for bread etc = low price, therefore food = low price
• Oil = high price and increasing
• 1^st generation biofuels: grain = oil
• Thus high price for oil = high price for biofuels = high price for grain
• Therefore high grain price = high food price

This is not rocket science. If more money can be made converting grain into diesel, then this is what farmers will do. This will put pressure on food prices and food supplies, as the fact that 25% of the US’s corn market goes to biofuels has, and continues to do so.

What the farmers (and biofuel producers) really should be doing is looking at the developments in 2^nd and 3^rd generation biofuels. 2^nd generation is turning cellulosic materials (ie trees) into fuel, and 3^rd generation is using algae into fuel. Fast growing trees on a sustainable basis use less land for the same energy as grain, and algae can be grown in otherwise unusable sunny land for the production of fuel.

I have little doubt that the ban on using maize for biofuels should remain in place, and that strategically South Africa should be looking to new technologies in the biofuels space.

Frank

Why the ESKOM price hike does not need to add to inflation

So the decision has been taken. ESKOM electricity price to go up about 25% per year for the next 3 years. Some say too little (us Renewable Energy people), most say too much. It seems that everyone expects ESKOM to be able to deliver cheap power as they have for the last 20 years or more, everyone wants ESKOM to build new power stations, but they dare not charge more for the power.

But if they don’t put up the price and don’t build power stations, as the classical thinking goes, then there will be no additional power, just more blackouts. Everyone is talking about the inflationary effects of the price increase, but few have calculated the inflationary effects of having NO power.

But let me tell you why I think that the price increases need not add to inflation. Everyone is catching a wakeup about energy prices – the wakeup just has to be directed in the right direction. By investing in Energy Efficiency, we can stimulate economic growth, massively reduce demand (and our electricity bills), and reduce the need for new power stations (and maybe keep the price hikes down in the long-run). But this obvious intervention seems to be neglected by all. “A solar water heater is toooo expensive” bemoans the consumer, and then goes out in his/her 4x4 for take-aways.

Here’s my challenge: be you a business or an individual, get off your butt and find away to reduce your energy consumption and save money, DESPITE the price hike.

Frank

The Car Carbon Tax

“New passenger vehicles will be taxed based on their certified CO2 emissions at R75 per g/km for each g/km above 120 g/km.”

According to Car Pages, there are in the UK 904 cars under 120 g/km (no tax), 6142 between 120 and 185 g/km, and 2556 cars over 185 g/km (going up to 500 g/km for a Lamborghini Murcielago LP640 Roadster).

Thus, assuming similar cars come to SA, 9% will have no tax, 67% will be taxed between R0 and R5000, and 24% over R5000 per car. This is peanuts.

I recon the cars over 185 g/km (25% of all cars) should get NAILED!

Frank

Nuclear uncurrents

A little birdie whispered in my ear today. It said that the proposed 30% energy target from IPPs in the medium term is predominantly going to come from privately owned nuclear power. Of course, the government will need to give guarantees to make this work. Thus private corporations will profit while government (i.e. the taxpayer) takes huge risk.

This does not surprise me. Nuclear has been in the news a lot recently:

http://www.engineeringnews.co.za/article/major-nuclear-power-new-build-programme-will-need-hefty-investment-2010-02-15

http://www.timeslive.co.za/business/article305215.ece

These articles reveal a figure of 21 GW of new nuclear by 2035, about 30% of our electricity by then, at a cost of around R1 TRILLION, not including any overruns, and not including any of the PBMR white elephants.

Frank

Notes from Minister Sonjica's State of the Nation Address

The honourable minister of water and environmental affairs, BP Sonjica, gave her state of the nation address yesterday. Some highlights from her speech were as follows:

• Clarification of the climate change targets. A 34% reduction in greenhouse gas emissions relative to Business As Usual by 2020, and 42% by 2025 is proposed, but is conditional on a binding international treaty and means of implementation i.e. give us money and we will reduce emissions.
• A rise in carbon emissions in developing countries in the short term is allowed, thus we can build more coal power stations.
• To show a commitment to carbon reductions, a 100MW CSP plant and 1 million SWH will be rolled out in the short term, with “support” for wind projects.

What this means is that until the large emitters come to the table with reductions and money, South Africa will continue on a business-as-usual path. This is so short sighted. Building new coal commits us to high carbon emissions for a further 30 years or more. The commitment to low-carbon at a national level is thus far is nothing more than tokenism.

It is still up to local communities and cities to drive the change needed.

Frank

Attacks on the Intergovernmental Panel on Climate Change Obscure Real Science

The storm-in-a-teacup around Climategate seems to continue unabated. Yes politicians and corporations whose business is emitting carbon have blown in out of proportion in order to drive their own agenda – to stop any form of climate legislation in the USA.

The Union of Concerned Scientists has come up with a nice response: http://www.ucsusa.org/global_warming/science_and_impacts/global_warming_contrarians/attacks-on-the-ipcc.html. Unfortunately it is unlikely to put the dispute to rest – the issue is no longer one of science but of one of politics.

Frank

Energy Planning

Some good moves on the part of the government announced in the State of the Nation Address:

• An inter-ministerial committee has been formed to develop a 20-year Integrated Resource Plan for generation in South Africa. I seriously hope that they take energy efficiency and renewable energy seriously.
• An Independent System Operator (ISO) is to be setup outside of ESKOM to run the electrical grid.

In addition, the Department of Energy has indicated that a target has been set to acquire 10% of energy from Independent Power Producers (IPPs) within 3 years, with a long term of 30% of power to be from IPPs.

On the climate change front, by the end of the year SA should have a Green Paper to follow up on the Copenhagen commitment reducing its greenhouse gas emissions by 34 percent by 2020 and 40 percent by 2025.

Frank

UK's new feed-in tariff

UK just launched some pretty cool small-scale Renewable Energy Tariffs.

For electricity:

Technology	Scale	Tariffs (ZAR/kWh)
Anaerobic digestion	≤500kW	1.380
Anaerobic digestion	>500kW	1.080
Hydro	≤15 kW	2.388
Hydro	>15 - 100kW	2.136
Hydro	>100kW - 2MW	1.320
Hydro	>2kW - 5MW	0.540
MicroCHP pilot*	≤2 kW*	1.200
PV	≤4 kW (new build)	4.332
PV	≤4 kW (retrofit)	4.956
PV	>4-10kW	4.332
PV	>10 - 100kW	3.768
PV	>100kW - 5MW	3.516
PV	Standalone system	3.516
Wind	≤1.5kW	4.140
Wind	>1.5 - 15kW	3.204
Wind	>15 - 100kW	2.892
Wind	>100 - 500kW	2.256
Wind	>500kW - 1.5MW	1.128
Wind	>1.5MW - 5MW	0.540
Existing microgenerators transferred from the RO		1.080

For heat:

Technology	Scale	Tariffs (ZAR/kWh)
Small installations
Solid biomass	Up to 45kW	1.08
Biodiesel	Up to 45kW	0.78
Biogas on-site combustion	Up to 45kW	0.66
Ground source heat pumps	Up to 45kW	0.84
Air source heat pumps	Up to 45kW	0.9
Solar thermal	Up to 20kW	2.16
Medium installations
Solid biomass	45kW-500kW	0.78
Biogas on-soite combustion	45kW-200kW	0.66
Ground source heat pumps	45kW-350kW	0.66
Air source heat pumps	45kW-350kW	0.24
Solar thermal	20kW-100kW	2.04
Large installations
Solid biomass	500kW and above	0.192 - 0.300
Ground source heat pumps	350kW and above	0.18
Biomethane injection	All scales	0.48

More info at: http://www.renewableenergyfocus.com/view/6908/uk-feed-in-tariffs-announced

Frank

The real risk to ESKOM: coal

With all the current hype about ESKOM’s current request for massive tariff increases, a bigger threat to our energy security is currently being ignored. And that is the supply of coal.

Coal is a limited resource whose price has already come under extreme pressure (see http://www.indexmundi.com/commodities/?commodity=coal-south-african&months=300). Having sat in the range of USD20-35 per ton for many years, since Jan 2007 it has sat above USD50 per ton, spiking to over USD160 per ton last year. South Africa was largely shielded from these large increase due to long term coal purchase contracts. However, significant new investment into coal is required to supply the new power stations being planned (Medupi currently being built, Kusile to be built).

China is building new coal powered stations at a rate, and by 2030 they are likely to have more than doubled their current coal consumption (http://www.eia.doe.gov/oiaf/ieo/coal.html). In addition, oil supply is constrained, and thanks to technology from companies like SASOL, coal can be turned into oil, so these prices have become linked.

To think that South Africa will continue to be able to buy coal at its historical low price is to believe pigs can fly. Thus when ESKOM states that we need urgent investment into coal mines (http://business.iafrica.com/news/2193264.htm), this should be raising alarm bells left right and centre! If ESKOM was prepared to may a market price for coal, companies would invest. But clearly they are not, hence the investment is not happening.

Watch out, South Africa, the blackouts from lack of coal are bound to return.

Frank

South Africa and the Nuclear Industry

It really distresses me that, instead of focussing on Renewables, there is still such emphasis on Nuclear in South Africa.

The background is that simply nuclear is too expensive as a future option (see http://www.greentechmedia.com/articles/read/nuclear-power-too-costly-to-revive). The claim is that nuclear can be a massive help in terms or reducing carbon emissions, but in reality there are two reasons why this is not true:

1. By the time a nuclear power plant is built, it is too late for any carbon benefits that they may have to accrue – we need climate change action now.
2. By the time a nuclear power plant is built (without the overruns that always happen), solar will be a cheaper option, creating more jobs, with far less risks.
3. Even now a combination of gas turbines + investments in carbon sequestration is cheaper and reduces carbon more per dollar invested than nuclear (see http://www.rmi.org/rmi/Library/E08-01_NuclearIllusion).

So it’s no surprise that Ontario just cancelled their nuclear plans due to price reasons: http://greeninc.blogs.nytimes.com/2009/07/01/ontario-puts-nuclear-expansion-plans-on-ice/

Yet in South Africa the nuclear lobby has setup an Industry Association (NIASA). R900,000 has been raised from the “sponsors” (including Eskom, Necsa, PBMR, Areva and Westinghouse) to promote Manufacturing, Education and Training, Communications and Regulation around Nuclear in South Africa. Due to this, it is likely that all major universities will have a curriculum in nuclear science and engineering by 2011. In addition, a 1 hour documentary is being produced for TV to promote Nuclear. (See http://www.eepublishers.co.za/view.php?sid=19842)

This is all, of course, backwards. Venture Capital in clean energy hit USD155.4 billion in 2008 in continues to grow, and the rest of the world is focusing on Clean Tech as the big next job creating space.

But here in South Africa it seems we are to continue on the risky, low jobs, capital intensive, big corporate profits Nuclear Path and ignore the obvious – that solar is our future.

Frank

FOOD TO FUEL

The whole biofuels space sometimes makes me sick. How can it be allowed that the US converts ¼ of their grain food crop into petrol when there are a billion people starving in the world? Not only has George Bush’s energy policies caused the Iraq/Afghanistan tragedies, they are now leading to people starving.

http://www.guardian.co.uk/environment/2010/jan/22/quarter-us-grain-biofuels-food

Frank