Nuclear and coal cheaper and more reliable than renewables
When variables are taken into consideration, including resultant unemployment from shutting down mines, wind and solar energy do not shine brightly, writes Rob Jeffrey
There is a critically important debate taking place about future power-generating sources as set out in the Integrated Resource Plan (IRP) 2016.
The outcome will determine whether SA faces a dark future of slow economic growth and rising unemployment or the potential of achieving high, sustainable economic growth that helps in reducing poverty, inequality and unemployment.
The differences between the IRP’s supporters and those with a contrary view arise over whether the country selects a reliable, secure and stable source of electricity at the lowest possible price or not.
Electricity growth is necessary but not a sufficient condition for economic growth. High and sustainable economic growth can only be achieved if supported by other economic, social and political policies.
Unfortunately, this appears to have become a debate between fact and fiction. The facts are simple truths and logical argument, which are often deliberately not mentioned or insufficiently emphasised.
It is perfectly true that wind is one of the cheapest sources of generating electricity. Wind and solar energy sources are relatively free and the cost to harvest this free energy is falling.
It is also true that wind and solar are variable, unreliable and unpredictable. They require extensive back-up by way of storage or reliable alternative electricity-generating sources. Importantly, neither of them can generate electricity for immediate use and for storage at the same time.
What is not said, and certainly not emphasised, is the truth that wind only supplies electricity at best on average 34% of the time. It is highly variable, unreliable and unpredictable.
Solar is only available to generate electricity on average 26% of the time. It has considerable advantages over wind because it is more predictable. It is only able to generate during daylight hours, during which it, on average, generates electricity 52% of the time.
All energy is derived from the sun and earlier periods as stars form and collapse in terms of their nuclear life. At that time, heavier elements were formed, such as nuclear material and carbon, the essential basis for all human existence.
The most efficient useable energy storage systems are natural and stored underground. Nuclear is the most efficient, formed by earlier nuclear processes, followed closely by fossil fuels, primarily coal, gas and oil from plant growth driven by the sun. Thereafter comes energy from current solar activity, namely biomass, wind, tidal, hydropower and, of course, solar and wind.
In the real economic world, SA is still in an industrial phase of its economic development. It is an emerging economy with a natural comparative advantage in its mineral resources, abundant labour force and agricultural potential.
The engine rooms of economic growth and employment are mining, manufacturing and agriculture and sectors that beneficiate their output. They require secure dispatchable electricity at the lowest price.
The electricity supplied by wind and solar is not dispatchable. Nuclear and coal are the cheapest sources of sustainable dispatchable electricity.
The expensive storage required for renewable electricity makes their delivery costs higher, or marginally lower at best. Due to the variability of wind and solar, there are significant periods when electricity cannot be supplied. As a result, there is an economic cost to the economy, called the cost of unserved electricity.
The back-up assumptions to the IRP 2016 estimate this cost at R77.30 per kWh.
When the full costs arising from the variability are included, the cost of wind exceeds the costs of coal and nuclear.
It has been estimated that since the electricity crisis of 2008, the cost of unserved electricity has reduced GDP by more than R300bn.
The cost of virtually destroying the coal-mining industry and its associated exports could, by 2050, reduce GDP by 3% or more and increase unemployment by more than 150,000 as these policies drive mining investment, and investment in general, away from SA.
The proposed policies will also reduce opportunities for junior miners and local beneficiation drastically.
These facts are studiously avoided by those with vested financial and idealistic interests favouring renewables.
"Energiewende", the German policy to eliminate nuclear and coal-based electricity and make the country virtually completely dependent on renewables — primarily wind — is now considered to be a total failure. Germany has put a cap on further wind development and has withdrawn all subsidies associated with wind.
Electricity prices in Germany and Denmark are more than 65% higher than nuclear France and the highest in Europe. The policy is chasing industry out of Germany and has resulted in rising levels of energy poverty in a rich country.
The effect of the current cold winter is considered by many to be the final nail in the coffin for "energiewende".
South Australia is another example of the spectacular failure of the policy of increasing wind-based electricity. The price of electricity in south Australia has increased significantly and is about 50% higher than in coal-dependent Queensland.
Experts Condemn Wind
Political, financial, economic and environmental experts in Germany, Australia and elsewhere strongly condemn any major use of wind.
It is not surprising, under these circumstances, that German wind energy manufacturers are targeting new markets, particularly in Africa and SA.
Base load electricity should be supplied by proven technologies — coal and nuclear. New, clean coal-fired power stations should be built and old power stations should be refurbished with clean coal technology as an urgent priority in SA.
Solar and gas must support these plans. These technologies could become major industrial drivers. Gas, however, must be found in significant quantities in SA in the form of shale gas, coal bed methane, new offshore or onshore gas discoveries.
If this is not possible, our country will become a major energy importer instead of continuing to enjoy its position as an energy exporter.
The full socioeconomic effect of changing from a coal-based energy country has not been fully or realistically considered.
The high-growth economies of the world — India and Southeast Asian countries such as Indonesia and Vietnam — are increasing their use of coal. US President Donald Trump has clearly indicated that he favours increasing the use of fossil fuels including coal, because closing coal plants in the Midwest resulted in rising unemployment among the lower middle classes and the poor.
Poverty is the world’s biggest social and health problem and energy poverty is rising where there is excessive use of wind and reductions in coal use.
Germany has been forced to export surplus electricity at a loss, and when there has been a shortage of electricity, it has imported the shortfall at a considerable cost. Effectively, this amounts to a subsidy of their wind energy industry.
Eskom has a legal and moral obligation to "supply secure electricity at the lowest possible cost" to business in order to foster economic development and to the public
In SA, the same occurs, except it is not possible to import electricity when there is a shortage. The cost to Eskom is a straight subsidy to the wind industry paid by electricity users. Renewables and the carbon tax are regressive taxes as they hit the poor hardest.
In terms of its mandate, Eskom has a legal and moral obligation to "supply secure electricity at the lowest possible cost" to business in order to foster economic development and to the public.
The utility is being criticised unfairly for doing exactly that — executing its mandate.
Domestic and foreign financial interests and idealists are driving the country in a direction that, in time, will prove to be a social and economic disaster.
The correct decision, supported by the facts, is that SA needs to foster proven competitive technologies — clean coal, nuclear, solar and gas — provided the contracts are awarded in terms of public, fair and competitive legal tenders.
Energy, electricity and employment growth are the keys to SA’s future economic, social and political prosperity, sustainability and stability.
If SA follows the path of increasing the use of renewables and cutting the use of coal and nuclear, it is heading for a dark future.
• Jeffrey is an independent economic consultant