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The energy transition – A threat or an opportunity?

Nov 19 2017 06:07
Davin Chown and Mike Levington

When the long-awaited Integrated Resource Plan (IRP) is released for public comment next week, the primary focus will be on whether or not ­– and how much – nuclear energy is included in South Africa’s energy mix.

This is understandable given the financial and other concerns related to a proposed nuclear deal.

However, there is a risk that a far more pressing energy debate will be ignored, specifically one about South Africa’s energy transition. 

Whatever the outcome, two facts are undisputable from the IRP 2016 update: firstly, a least cost scenario for the IRP cannot include nuclear and, secondly, Eskom will need to decommission some 27.5 gigawatts of coal-fired power stations by 2040.

The idea of an energy transition may be relatively new to the national discourse, but it is one that we can no longer afford to overlook.

For the communities who have for decades been dependent on coal-fired energy for their livelihoods, the energy transition is a spectre that threatens the very reason for their existence.

For government, the energy transition is an amorphous term for a shift away from state control and a threat to a reliable income stream. 

Anti-renewable sentiment 

The result has been a rise in protests and the sowing of anti-renewable sentiment within certain sectors of government.

In March, thousands of coal truck drivers brought traffic to a standstill in Pretoria to protest against Eskom’s signing new renewable energy contracts.

Shortly afterwards, the newly established Coal Transportation Forum (CTF) approached the High Court in Pretoria in an attempt to interdict Eskom from entering into any new contracts with renewable energy Independent Power Producers (IPPs). 

The fact that they chose to target renewable energy and not the nuclear or gas sectors gives an indication of where their political allegiances lie, but it doesn’t make their concerns any less legitimate.

The CTF argues that the adoption of more renewables into South Africa’s the energy mix will result in massive job losses in coal mining and related sectors - and it is hard to disagree with them.

The problem is that preventing the signing of new contracts with IPPs is not going to save their jobs. 

The cost of new-build solar and wind energy in South Africa is now comfortably below that of new-build coal and nuclear, making it increasingly difficult for Eskom to make a rational argument for choosing coal or nuclear over renewables.

Add to this that many coal-fired plants are due to reach the end of their lifecycle in the next three to five years (and were earmarked for decommissioning several years ago), and it is clear that renewables have to be part of our energy future.

The private sector finds itself in a similar position.

The drastic reduction in the cost of solar panels coupled with rising electricity tariffs and uncertainty of supply has made it both affordable and economically justifiable to adopt renewables – reducing Eskom’s already dwindling revenue stream.

What this shows is that the energy transition is already well underway in South Africa – irrespective of whether we, or Eskom, give it our consent.

The recent revisions to the Electricity Regulation Act, which were meant to have managed the entry of the private sector into the embedded generation sector, have again shown our policy makers’ predilection for using regulation as a blocking rather than a facilitation mechanism.

This is why the debate about energy transition can no longer wait. 

Need for agreement 

One of the biggest obstacles to a constructive debate around managing the energy transition in South Africa is a lack of agreement on desired outcomes.

Depending on whether our goal is the achievement of low carbon emissions, economic growth and job creation, or the transformation and development of local communities, the solutions will vary widely.

However we define the energy transition, there is one unavoidable truth: once-lively mining communities are slowly sliding into decay and this will accelerate over the coming years, unless there is some sort of targeted intervention to arrest it. 

To this end, two questions need to be asked: to what extent can jobs lost in the coal and related sectors be replaced by jobs in the renewables sector, and how best can we manage this process?

The answer to the first question is fairly straightforward.

Without an energy transition plan in place, there is no reason to assume that jobs lost in the coal sector will automatically be replaced by new jobs in the renewable sector.

As much as we might wish that they could be, we cannot directly substitute a coal miner for a solar panel installer, or a rock blaster for a turbine technician. 

On an aggregate level, the number of new jobs created in the renewable sector may outnumber the number of jobs lost in the coal sector, but on an individual level it will be catastrophic without some form of intervention.

It is for this reason that the answer to the second question is so important.

If we are to adequately manage South Africa’s energy transition, government and industry need to work together to develop policy that will not only assist in reskilling labour, but also in developing alternative industries that are geographically and structurally matched.

This can be achieved through various means, but primarily through the targeted provision of training and investment in areas that will be most affected by the closing of coal mines and coal-fired power plants, and through incentive structures that encourage the local production and development of renewable energy technologies.

None of this is possible without policy certainty.

If the success of the Renewable Energy Independent Power Producer Procurement Programme has shown us anything, it is that there is huge appetite for investment in the renewable energy sector.

However, without policy certainty and buy-in from the private sector, the energy transition will remain more of a threat than a promise.

Davin Chown is the chairperson of the SA Photovoltaic Industry Association (Sapvia)

Mike Levington is the chairman of Sapvia’s green economy subcommittee

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eskom  |  coal  |  irp  |  energy  |  nuclear
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