Transmission now the stumbling block amid renewable energy surge – SAPVIA

Cape Chamber speaks to SAPVIA (South African Photovoltaic Industry Association) spokesperson Frank Spencer.
 

There's a huge quantum of renewable energy coming online over the next five years — 19GW.  Are you encouraged by this figure? Does it auger well for our energy future?

I am and it does! It continues to show the strong development and investor interest to see private, clean, affordable power come on to the grid. The challenge may be how we deliver this new power to all users of electricity equitably. Most of this energy will be “wheeled” to private corporate customers, reducing their costs. However, the perverse outcome of this is that Eskom ends up selling less electricity, and thus their revenue goes down. This requires them to increase the tariffs further to cover their costs, which then promotes even more private power – this is the so-called classic utility death spiral. The challenge is these increased Eskom costs will typically fall on those who cannot procure their own cheaper renewable power, and thus will be particularly burdensome for the indigent.
 

Is the grid — and Eskom — ready to integrate this new energy and more to come? Is Eskom keeping pace?  

At the transmission level, definitely not. Once the new 24GW of renewables generation, storage and perhaps gas is built, that is more or less the end of the available transmission level grid for new projects. The Independent Transmission Plan (ITP), which is mean to enable the private sector to build grid for Eskom, is already a year behind schedule, and likely to be more delayed. In addition, Eskom Generation has significant excess generation capacity at the moment, with a number of coal stations in cold storage. This will worsen with the income 19GW of renewables, as new load demand is not likely to grow anywhere near as fast. Thus Eskom as a whole is not incentivised to enable new private power at all, especially when it takes away significantly from their bottom line, and thus they are perversely incentivised not to see the new transmission grid built.

Having said that, significant opportunities remain in the distribution networks and municipalities, but there are still many policy and skill hurdles to enable more renewables here.
 

A few years back there was a sense that Eskom (and government generally) lacked political will to accelerate renewable generation. Are those days behind us, so far as you can see?

I think many parts of government have got behind renewables, like the Presidency for example. I think the Department of Energy remains torn between protecting coal and gas interests, vs seeing new renewables come online. Eskom was very supportive of renewables during the loadshedding tragedy days, out of sheer desperation, but now due to the impact on their core business, I dare say is, in many ways, looking to stall all new private power (which is mostly Renewables).
 

What about the phasing out of coal? Is enough being done to help affected communities with the transition? How big a challenge is this?

This is a key challenge. Not enough is being done here. The renewables sector cannot absorb all the coal jobs, especially not solely in Mpumalanga. But the solution lies in creating new mining, manufacturing and agriculture jobs off the back of low cost, clean renewables. This is where policy still needs to change.
 

In your commentary you've pointed out that SA would be ill advised to try and compete with the Chinese in terms of manufacturing solar panels. Does the same go for other equipment such as wind turbines?  Or do you see the huge opportunity in maintenance and other services?  

There are few jobs created these days in the manufacturing of solar panels and wind turbines. Many solar factories in China are now “dark factories”, completely run by robots, so they turn the lights off. The jobs are created in installation and O&M. And then of course the real volume of jobs are created downstream, through the provision of lower-cost, clean, reliable power. This is a crucial missing part of the narrative.
 

How do the figures stack up — coal mining vs renewable energy?  Or is this a false equivalent in the sense that phasing out fossil fuels is non-negotiable?  

You just have to look at the skies of Mpumalanga to know what a tragedy the coal industry is on the local communities. The health issues and deaths have been well researched. And that is not to meant to the climate challenges that are growing. So we have got beyond the non-negotiable. Renewables, are cleaner, cheaper, create more downstream jobs, and address health and climate issues. What they don’t do is make money for the vested interests wanting to carry on with fossil fuels.
 

Small-scale embedded. The narrative seems to be shifting towards battery storage, and evening out that evening peak you spoke of. Can you briefly outline where things stand in terms of battery technology? Does storage present a technical challenge to our power supply, or does the challenge lie more with policy and legislation?

There are no real technical challenges – technical issues (and health and safety) are generally red herrings, although to some extent technical issues do exist, and there are very straight forward standard ways to handle this. The issues are policy, legislation, and enabling environments. Battery tech has got to the point that in many instances it is cheaper to go off-grid. For example, if you are an Eskom land rate tariff customer, it is an absolute no brainer to build a solar PV-battery-genset solution and cancel your Eskom account – it would be way, way more cost effective. Indeed, many farmers on this tariff are doing this. And this is becoming true for many other tariffs too, especially if you have a mostly daytime, consistent load.
 

The budget is coming up next month. If you were Finance Minister, would you be still bail out Eskom or what in your view would be the best way forward in terms of our energy security /growth?

Unfortunately, Eskom’s balance sheet is shot, and they are too big to fail. If Eskom is not bailed out by the taxpayer, then more and more customers will seek to replace Eskom with their own generation (or buy wheeled power), leading to the death spiral I described below. I personally do not see any solution other than for the taxpayer to take the hit and bail Eskom out completely. But this should only come against policy that looks to phase out Eskom coal, forces a proper split of Eskom into separate companies of Generation, Transmission and Distribution, enables municipal private generation to scale, and allow the private sector to carry on delivering low cost solar and wind power, and to enable all customers to access this cheaper power, especially the indigent and low usage pre-paid customers.