“For us as South Africans, this conference takes place as we reflect on the burning issues regarding South Africa’s energy future and it is apt that the thematic heading is ‘Attracting Investment into the African Energy Sector’,” began Radebe.
“Improved energy security, the diversification of our energy mix, increasing access to modern energy carriers, energy efficiency and lowering the cost of energy, are some of the topical issues on our ‘burning platform’, he continued, adding that he believed South Africa’s energy challenges were reflected in other SADC countries as well, albeit on a smaller or bigger scale.
Approximately three million South African households still do not have access to electricity, he said, adding that the subsidy-based electrification programme therefore forms a critical pillar of energy policy. “To date, we have managed to provide access to approximately eight million households since the advent of democracy in South Africa.
In defence of coal
In spite of our accession to the Paris Agreement on the environment, Radebe noted that “we cannot ignore the fact that we have abundant coal reserves and the price of local coal remains relatively low” and that “while a paradigm shift is required for these emission reduction targets to be realised, as government we cannot do this in a manner that is unjust relative to those that would be negatively affected by these adjustments.”
He says that vast coal deposits cannot be sterilised and the timing of the transition to a low carbon economy must not be insensitive to the potential impacts on jobs and local economies. “Carbon capture and storage, underground coal gasification, coal to liquids and other clean coal technologies are critical considerations that will enable us to continue using our coal resources in an environmentally responsible way,” he predicts.
Load shedding and investment
Talking about load shedding in South Africa during the second week of February, he said that Eskom found itself with a 40% deficit in generation capacity – and this at a time of suppressed demand. “We have to instil confidence in our ability to provide reliable power, lest we undermine the efforts of President Cyril Ramaphosa to entice investment into our country,” Radebe said.
“We need to arrest the steady decline in electricity demand over the past few years, and the lower economic activity coupled with rising electricity tariffs that has tended to put Eskom into an untenable situation, characterised by increasing debt and increasing tariffs,” said Radebe.
Citing the problems, he said that deteriorating Eskom plant performance driven by old generation infrastructure has “confirmed that we are now in need of more investment in new generation capacity to replace the old power plants, at a time when Eskom’s balance sheet is at its weakest in a long time. That is our reality in South Africa, and I am sure there are parallels in other African countries as well”
On the green economy
“The green economy is a game changer that we have been very successful in adopting through the Renewable Energy IPP Programme. Since the inception of the programme, government has been successful in increasing the contribution of clean energy from zero in 2010 to over 4.5% within five years. Investment in this sector will now exceed R250-billion, with the signing in 2018 of an additional 27 projects representing roughly 2 000 megawatts.
The high cost of renewable energy, he said, reflects a number of perceived or actual risks, including regulatory, financial and administrative barriers and the associated investment risks. “We need to address these issues so as to build infrastructure timeously to meet the energy demands required for our industrialisation.
“We cannot assume anymore that future power systems will be premised on large centralised power stations, delivering electricity over large distances to a captive consumer base at a load centre.
“As government we are forced to accept that the economic dynamics posed by distributed generation and smart grid systems affect the way we deliver power to municipalities and other key industrial customers. If we are to attract investment into Africa generally, a reliable, sustainable, competitive and secure electricity supply sector is crucial.
“It is therefore inevitable that we have to plan ahead and to coordinate our activities in a manner that improves our responsiveness…” and “We cannot afford the luxury of indecision.”
Citing the Integrated Energy Plan, the National Energy Efficiency Strategy and Action Plan, the Integrated Resource Plan, the Gas Utilisation Master Plan and the Liquid Fuels Master Plan he said that “Africa needs energy planning policies that facilitate the development of an appropriate energy mix that includes nuclear, coal, gas, renewables and cross-border hydropower,” said Radebe before pointing put that “energy efficiency and demand side management (EEDSM) are the cheapest and quickest interventions that could be deployed,” and that “Africa has not fully taken advantage …”
“We have adopted a number of objectives that inform our approach to meeting our energy needs in a developmental state,” he said. These are:-
Ensuring security of supply.
Pursuing economically available energy resources.
Affordability: driving universal access.
Improving social equity.
Honouring our international commitments.
When the State of the Nation Address was delivered last month, President Cyril Ramaphosa enjoined the private sector to collaborate with government as it strives to increase investment in the country, and a target of US$100-billion has been set. “The power sector is very well positioned to leverage investment into our country,” said Ramaphosa.
With the increasing availability of gas in Southern Africa we will be able to expand electricity generation through the use of gas. There is enormous potential and opportunity in this respect and mid-February we excitedly learned about the Brulpadda gas resource discovery in the Outeniqua Basin of South Africa.
“Imported liquefied natural gas (or LNG), piped natural gas, imported liquefied petroleum gas (or LPG), indigenous gas such as coal-bed methane and ultimately shale gas, are part of our strategy for regional economic integration within the Southern African Development Community,” said Radebe.
Also, SADC has recognised the strategic need for a regional Gas Master Plan. “Mozambique and Tanzania’s gas resources are well positioned for crossboundary development of gas pipeline infrastructure. It is important that gas demand in the region is serviced from regional gas resources, so as to increase the opportunity for intra-African trade and economic collaboration. The planned gas pipeline from Rovuma Basin in Mozambique through South Africa and possibly beyond, are supported,” he noted.
“Interconnection with our neighbouring countries also gives us an opportunity to improve our energy mix by harnessing the hydro-potential in these countries. The department is leading discussions with our regional neighbours on hydroelectricity, notably from the Democratic Republic of the Congo (DRC) in terms of the Treaty on the Grand Inga Hydropower Project.
Since the granting of a concession to the Sino-Spanish consortium developing the hydropower project, commercial negotiations will commence to procure power from Phase 1 of the Grand Inga Hydropower project. The project has the potential to provide up to 13 000 MW of clean energy within the SADC, including South Africa.
The potential is huge for various economic spin-offs to be harnessed from the project, including industrialisation due to supplying goods and services, skills development relating to various aspects of hydropower development, and job creation. The Treaty makes provision for a preferential dispensation regarding the procurement of goods and services from SADC-domiciled enterprises.
“The so-called last mile for the delivery of electricity occurs at municipalities. The municipal electricity business model has invariably come under severe financial pressure as wholesale tariffs increase, residents fail to pay for services, and municipal revenue collection systems prove inadequate,” he said
In the residential sector, he said we can expect more rooftop PV systems, biogas, waste to energy, and wind turbines to be installed at municipal level.
Embedded generation systems based on solar and wind technologies are tricky to manage given the variability of their energy production. Across the world storage technologies have seen billions of dollars of investment in research and development. South Africa’s specific focus is more on the hydrogen economy rather than battery storage technology, and the progress achieved through this effort is epitomised by the hydrogen initiative (or Hy-SA) based at the University of the Western Cape.
In November 2017 we promulgated amendments to Schedule 2 of the Electricity Regulation Act, relating to circumstances under which a generation licence may not be required. The Schedule 2 amendments address the constraints related to licensing of potentially hundreds of thousands of rooftop PV systems, biogas and other small scale embedded generators.
This provides the policy and regulatory framework for municipalities to develop their own generation and enables the orderly development of alternative energy systems.
On the Fourth Industrial Revolution
“As this programme unfolds, one has to reflect on the future energy infrastructure we are likely to have, and how this is likely to be managed by technology.
“This brings me to the subject of the 4th Industrial Revolution. It is inevitable that more and more, the traditional energy delivery system will not be insulated from technological disruptions. Instead of resisting this change and engaging on the basis of fear, we should take the opportunity and prepare our youth for this future.
“The World Population Review (2015) confirmed the African median age at 19.5 years, when compared to the world median of 30 years. We should turn this to our advantage, by preparing our youth to become active participants in the future world economy.”
In conclusion, Radebe said the provision of a reliable, efficient and continuous supply of electricity is the missing link that is essential for African economies to develop and flourish.
During the ministerial panel discussion after his speech, when asked to comment on priorities for the next three to five years, Radebe said: “StatsSA has put unemployment at 27.2% at its last count, with over 50% of these being young people. So the real question is how do we take 400 000 young people from unemployment into jobs.”