High carbon taxes would drive the development of solar thermal power in South Africa and coal would become a "thing of the past", Thomas Garner, Exxaro's growth and energy manager, said yesterday.
Exxaro is conducting a feasibility study to develop a 200 megawatt concentrating solar power (CSP) plant at Lephalale in Limpopo. The coal producer is looking to generate 5 000MW of power from both renewable and coal sources over the next eight years.
If Exxaro builds the CSP plant, it would produce twice as much electricity as Eskom's proposed 100MW CSP demonstration plant near Upington in the Northern Cape.
Garner told a congress of the International Solar Energy Society that to achieve a large roll-out of CSP, South Africa needed to localise manufacturing with about 80 percent of plant costs being rand-based.
"We won't be able to fund it in dollar terms," he said.
Garner confirmed an appetite among lenders for CSP projects in South Africa.
CSP, which uses reflective surfaces to concentrate sunlight that in turn creates heat, has been cited as a high-potential source of energy for areas with high solar radiation, including large parts of southern Africa.
Research by the University of Stellenbosch has pinpointed four provinces, Northern Cape, Free State, Western Cape and Eastern Cape, as having a combined 547.6 gigawatts of electricity production potential.
Garner said Exxaro was considering selling power from the CSP plant privately but was also looking at feeding into the grid. CSP has been included in the National Energy Regulator of SA's feed-in tariffs, which top up prices paid for certain forms of grid-connected renewable energy.
Referring to Eskom's application to raise electricity tariffs by 45 percent a year over the next three years, Garner said tariff hikes should have happened about three to four years ago.
"It is the only way we are going to grow this economy," he said.