Africa's 'Dirty Man' Starts Clean-Up Act: South Africa, Called the 'Dirty Man' of Africa Because of Its Use of Pollution-Emitting Coal-Based Energy Is Set to Clean Up Its Act. There Is State Support on Offer for Alternative, Renewable Sources of Cheap Power and, as Neil Ford Reports, They Are Plenty of Takers
Ford, Neil, African Business
Global efforts to cut emissions of green-house gases generally focus on the industrialised world and the large, rapidly growing economies of Asia. The debate centres on whether there is any point in Western Europe and North America cutting their emissions while car ownership rockets and new coal-fired power plants are developed in India and China.
Yet some parts of Africa are also taking steps to cut greenhouse gas emissions. Major wind farms are being developed in Tunisia and Egypt; and now South Africa is introducing measures that could have long-term implications for the country's power sector.
Electricity generated by renewable means is usually more expensive than that produced by thermal power plants. Nowhere is this fact of more relevance than in South Africa, where state power company Eskom is reputed to generate the world's cheapest electricity, mainly via its string of large coal-fired plants. The coal is mined locally and so prices are held down but the country suffers from atmospheric pollution and produces large volumes of greenhouse gases.
With massive coal deposits still to be exploited, the coal industry could continue to provide feedstock for the domestic power sector for centuries to come. However, the government is now keen to inject a greater element of diversification into the sector.
The Kudu gas field off the coast of Namibia is being developed to supply an 800 MW power plant (see African Business October 2005 issue) that will help to quench South Africa's growing thirst for electricity and this is also triggering the development of South Africa's own modest gas reserves for the same purpose.
However, as Table 1 demonstrates, even gas-fired plants that employ the latest technology produce large emissions of carbon dioxide. On the other hand, they are generally more efficient than coal-fired plants and also produce far lower emissions of sulphur and other dangerous substances.
In an attempt to rein in South Africa's emissions, the government has introduced a target to generate 5% of all electricity from renewable sources by 2012. This could be very difficult to achieve, given that Eskom now operates as a commercial entity and its tariffs of 16 cents per kilowatt hour (kWh) are far cheaper than the 37 cents per kWh charged by South Africa's first wind farm. However, the government is banking on a combination of financial incentives and local support for renewable energy to enable such schemes to make a profit.
Eskom should make a contribution towards achieving the 5% target, probably through its solar and wind power trial projects, but independent power producers (IPPs) are likely to drive progress, at least in the short term.
In addition, Amatola Green Power launched a renewable energy trading scheme in April that allows commercial customers to source a fixed proportion of their requirements from renewable sources. In effect, the company will act as an interface between renewable energy schemes and customers, with electricity still transmitted and distributed by Eskom's grid.
Given that the government backs such initiatives and Eskom is a state owned company, is it perhaps not surprising that the power firm has signed a contract with Amatola to ensure security of supply as well as quantity of supply. Amatola's most high profile customers to date include the African Union parliament and energy giant Sasol.
Potential customers can try out the scheme on a one-year trial basis before signing a 10-year contract for a fixed proportion of their electricity requirements. As a result, Amatola will be able to purchase a guaranteed amount of electricity from any wind or solar power scheme that is connected to the national grid. This should give potential renewable energy scheme entrepreneurs the confidence to proceed with development.
Green power products openly traded
Whether this will help make a real contribution to meeting the 5% goal, which was outlined in the government's white paper on renewable energy in November last year, remains to be seen. …