Renewables are better than large coal and nuclear deals. Here’s why

2018-11-14 00:30

Your recent article of November 9 by Leon Louw, executive director of the Free Market Foundation, titled SA’s daft electricity policy: 7 myths debunked, including ‘green power’, refers.

This article is more polemic than fact in which the author derides the draft Integrated Resource Plan (IRP) for being the worst ever.

The IRP has come a long way: the 2010 version was outdated and the updated version was to have been released in 2013.

The failure of the energy department to release a new version timeously was simply because proponents of nuclear and coal did not like the new facts on the ground: renewables were getting cheaper.

They wanted a least-cost option for coal and nuclear by trying to get the modellers to fudge the numbers.

And state capture elements wanted to push South Africa along a path of more bulk baseload power that would undoubtedly have led to both a fiscal and coal supply cliff.

Louw hints little at these shenanigans behind the scenes in the development of the draft IRP and how state capture elements sought to disparage modelling work done by the likes of the Council for Scientific and Industrial Research (CSIR) that proposed a high penetration of renewables and gas that would make future electricity generation more flexible and cost effective.

He also hides the fact that the history of bulk infrastructure in South Africa – and elsewhere in the world – suffers from recurrent cost overruns and there is the niggly fact of corruption in many of these projects.

In the case of cost overruns we need not look too far as we have Medupi and Kusile as a noose around the taxpayers’ neck.

These two coal plants suck valuable scarce fiscal resources and are already generating electricity at a cost that far exceeds the much more competitive prices for wind and solar photovoltaic projects that have been procured from the Renewables Independent Power Producers Programme.

If Louw does not want to accept prevailing facts on the basis of the renewables programme process, he should at least consult authoritative figures from the International Energy Agency, Bloomberg and the International Renewable Agency.

They keep track of global prices and regularly update generation costs trends for renewables all around the world against other types of energy technologies.

For a foundation rooted in its belief in free markets it is confounding that Louw should discard evidence from the markets. Is he being disingenuous?

If, anything renewables on a modular scale make them better suited to competitive market prices than large coal and nuclear deals which often lack transparency and accountability.

The flexibility renewables offer is that we can build as we need and also on time without the danger of cost overruns.

This is where the real savings will come from and all the more reason to go for modular power technologies than large power plants.

Price destruction is also evident from the silent revolution that is happening in distributed generation and storage technologies.

This is one of the reasons why the IRP has widened the policy space for embedded generation in its latest iteration.

This uptake of distributed generation combined with demand-side management technologies, like smart meters and the use of artificial intelligence, is the “invisible hand” of technology shifts and markets forcing a paradigm shift in how we will have to think of energy services in the future.

In addition, capabilities and know-how built from the renewables programme is an unacknowledged economic dividend, as these services are tradable on the rest of the continent and indeed the world.

Saliem Fakir is head of the policy futures unit, WWF-SA

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