Will shutting down Eskom’s plants and replacing them with renewable energy help?
|Published
By Vuslat Bayoglu
Concerns about climate usually trigger utopian solutions in policy discussions in South Africa.
The much-touted option is to shut down Eskom plants and replace them with solar panels, wind turbines and batteries.
Problem solved?
That’s what some lobbyists think.
But our energy future is not that simple.
It is a well-known scientific fact that renewables don’t have the capacity to provide baseload or readily dispatchable power due to their inherent dependency on the vagaries of weather.
They can be deployed only as supplementary to existing baseload power.
This is why China, the US and some European countries are installing renewable capacity while doubling down on baseload sources to ensure energy security.
It’s not an either/or. Gas, a fossil fuel, is the favoured coal replacement in some economies that have access to it or can afford it.
South Africa does not have access to gas.
Installing imported gas power on the grid would lead to the dollarisation of the energy prices set in rand.
Dollarisation would introduce unnecessary exogenous shocks into the South African economy.
However, domestic coal is abundant, cheap and priced in rand. Though we have had sharp rises in Eskom tariffs over the past few years, South Africa’s electricity prices are relatively better than some of the developed economies that are increasingly powered by a combination of imported gas and renewables.
Germany and the UK are the examples.
At about R4.11 and R5.66 per kilowatt hour, respectively, in these countries is more than double South Africa’s tariff which stands at R1.84/kWh.
While debates about the long-term energy outlook continue, there is a brewing e-revolution that promises to solve the energy dilemma by prolonging the use of fossil fuels while cutting carbon emissions.
In March, Kelvin Power Station, a privately owned coal-fired plant in South Africa, installed a carbon capture and utilisation technology.
The CoalCO2-X initiative, which is supported by the Department of Higher Education, Science and Innovation, has huge implications for South Africa as it aims to reduce carbon emissions by as much as 50%.
The pilot holds a potential to disrupt the one-dimensional thinking about decarbonisation that focuses on variable energy sources. If the concern among energy players is purely about decarbonisation and nothing else, then there must be universal applause for CoalCo2-X.
Some may doubt whether carbon capture methods could be scaled up to make economic sense. There is an unrelated case study for doubters — the origins of Sasol in the 1950s.
The company’s history teaches us how hard it was for influential elites to believe that Fische Tropsch, the coal-to-liquid fuel technology, could be used at scale to produce diesel and petrol.
South Africans bought the technology from Germany where access to cheap oil made it unnecessary to convert coal to fuel. Sceptics only believed the technology’s viability when Sasol started producing after several hiccups.
The flexibility of coal usage to various technological applications proved the sceptics wrong.
And Sasol remains the largest industrial giant in the country, employing about 30 000 people and supplying about 28% of South Africa’s liquid fuel, including jet fuel.
We are on the cusp of yet other industrial developments involving coal usage. Besides the CoalCo2-X being tested at Kelvin Power Station, the Council for Geoscience is leading advanced research in carbon capture and storage.
A pilot site with favourable geological formation in Leandra, on the East Rand, has been identified for its potential to absorb carbon.
The government is among the funders of the project. South Africa is part of many countries engaged in the race to make a scientific breakthrough and to crack open a new economy involving carbon capture, storage and utilisation technologies, and trade.
Malaysia is conducting a study on carbon capture and storage development. It seeks to develop policies on carbon imports and storage by 2025. Similarly, the Indonesian government has issued regulations in anticipation of a new industry of operations licensing, storage, transportation and even cross-border trading.
With oil companies searching for places to store carbon, Malaysia and Indonesia are positioning themselves for opportunities. “Bloomberg” has reported that Exxon has secured exclusive carbon storage rights in Indonesia and Malaysia. Shell has signed a deal for feasibility studies in Malaysia.
Chevron will study a project in Indonesia and Total Energies is also exploring storage possibilities in that region. The entry of major oil companies in the research and development and commercial deals for carbon storage holds huge significance. They have vested interests in sustaining an ecosystem of multitrillion-dollar industries of exploration, extraction, refining, trading and consumption. They have the capital to sustain the industries.
Given the scale of their emissions, oil companies understand better than anyone the significance of developing the carbon capture industries at an impactful scale. What this means is carbon emitters are developing immense capacities to mitigate against climate change. It is therefore too early to write off oil and coal. In another development, Saudi oil giant Saudi Aramco has joined other private players to invest more than $80 million (R1.5 billion) in Los Angeles-based entity Carbon Capture.
This was part of the latest capital raise by Carbon Capture described by Reuters, which quoted industry tracker Pitch Book as the largest investment into direct air capture technology.
The company aims to start small, capturing 5 million tonnes of carbon dioxide annually at its Project Bison in Wyoming, US, and then scale up.A new path for fossil fuels is in the making.
This does not mean that decarbonisation technologies favoured now will be irrelevant.
Ultimately, the battle for technological supremacy will be won in the scientific and innovation lab; not on who holds the loudest megaphone backed by a well-oiled lobby infrastructure.
Vuslat Bayoglu, the managing director at Menar.
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