The need for power has never been greater in South Africa, as evidenced by the fact that electricity is known to constitute the second biggest operating cost for the majority of mines in the country. In fact, following a period of above-inflation increases in the cost of energy, some mines now find that some 30% of their operating costs are energy-related.
Currently, the country relies heavily on coal to provide for its energy needs, with a little nuclear and renewables thrown in. However, the high costs, huge carbon footprint and forthcoming end-of-life of several power stations have led to a desire to change up the local energy mix.
Mix it up
According to Noddy McGeorge, principal mining engineer at SRK Consulting, a country’s energy mix should aim, first, to provide a security of supply, then should consider the cost of the supply, and then should examine the contribution of the supply to other trade commitments.
“The questions to be asked should include not just those specifically related to electricity generation. The design of the energy mix also needs to include sources such as oil and gas, and should consider the mobility side of the country’s gross domestic product – in other words, the energy consumed by transportation,” he says.
“If a country has its own energy resources, this makes the decision easier in terms of security of supply – but may be at the expense of cost or international commitments. A good example is how some of the Asian nations, such as Japan and South Korea, dealt with rapid growth in the early 1970s, without having access to large supplies of their own energy sources.”
McGeorge explains that, with these countries, their approach was security first, then cost, and they ended up with multiple sources that have been performing reasonably well over the last 30 years, with a good degree of success against their original objectives.
“If we consider ourselves similar to those types of nations, namely wanting economic growth, backed by energy supply, then we should look at the experience of others who have already had to make this choice and learn from them.
“Allied to this question is the regulatory regime for energy and the skills in the economy to manage the development of the various energy sources. A fuel mix that makes us reliant on imported skills and engineering will not do much for developing the country and its people.”
This concern over imported skills is one of the potential challenges with government’s plans to implement a large nuclear build programme.
While much has been written and said about government’s desire to push through its planned nuclear build, many citizens still appear concerned about what this might mean for the country.
The need for new power sources is being driven by the fact that a large number of South Africa’s coal power stations will come to the end of their lives at a similar time, somewhere around 2035. This will lead to much larger gaps in the supply-demand balance than can be managed by small-scale extensions to the system, which means that a decision has to be made to focus on either nuclear or coal-fired power stations.
Chris Yelland, a respected energy analyst and managing director of EE Publishers, states in an article in his company’s magazine, Energize, that the first issue with the proposed nuclear programme is the public perceptions of political motives, political interference and corruption associated with such mega-project procurements.
“In addition to the fears around corruption, there is an issue related to the high upfront capital costs, associated financing and affordability of such mega-projects, which is one of the big drawbacks of nuclear,” he adds.
“Remember that nuclear power stations take a long time to build – up to 10 to 12 years per reactor – and mega-projects are prone to high cost and time overruns. These realities cannot simply be ignored. It is clear that our country needs flexibility in an uncertain and unpredictable world, where electricity demand is difficult to predict in the years ahead, and disruptive technologies are on the horizon.”
Yelland indicates that technologies such as wind, solar photovoltaic (PV) and energy storage may soon change the rules of the game. Because of this, he asks, would it be prudent to commit to a single technology, vendor country and vendor for a fleet of long-lead-time mega-power projects for the next 80 to 100 years? Or would it be better to proceed with multiple, smaller projects with short and reliable lead times, and lower price tags, which can be ordered and built flexibly to meet changing demand, economic circumstances and technologies?
“The real energy question is not so much one of nuclear versus renewables, but rather one that is focused on inflexible mega-projects versus smaller, more flexible projects. It is certainly not about being anti-nuclear or pro-renewables as much as it is a question of giving oneself enough flexibility to deal with the real world in the decades and century ahead.
“After all, just a few years ago, nuclear was the least-cost non-carbon-emitting technology available for South Africa. However, this has now changed, as a tipping point has been reached that has seen the price of wind and solar PV energy come crashing down. All of a sudden there are now lower-cost alternatives to new nuclear and new coal power, as a blend of wind, solar PV, gas and pumped storage can deliver reliable, dispatchable base-load power at lower cost than new nuclear and even new coal power.”
A renewable path
McGeorge points out that renewable energy definitely has an important part to play in providing cheaper, long-term sustainable energy in a distributed fashion. It is well suited to domestic consumers, who can manage the variability of output with other means, such as battery usage or rescheduling consumption.
“Based on volume and developing technology, the cost of this form of energy is reducing to the point where it is competitive with other fossil fuels that provide large centralised energy, typically required by industrial consumers,” he states.
“The renewables industry also supports the objectives of security of supply and some of the commitments towards global climate agreements, and hence will not disappear. If there were a free market for energy in South Africa, this would probably become the main energy source for domestic power supply. Nonetheless, the smaller-scale renewables – such as home solar – will still have an impact on the cross-subsidisation of energy between consumers,as people withdraw from conventional supply methods.”
With regard to mines, McGeorge suggests that the challenge for renewables is that they cannot drive the production and beneficiation process, because of the supply variability, meaning this option is best employed for domestic, non-production processes. For mines in remote areas, diesel appears still to be the energy source of choice.
At the coalface
And as for the country’s existing coal-fired power-generation facilities? Yelland believes the decline of the coal sector is inevitable as the world moves away from coal to a cleaner, low-carbon future.
“We live in a global village, and South Africa simply cannot continue to burn coal regardless of the consequences to water use, pollution, health and climate change. The world is expecting us to move to cleaner options, and South Africa has made international commitments to do just this. We need to plan ahead and address these matters going forward.”
He adds that job losses in the coal-mining and coal road-transport sectors are inevitable as aging coal plants are decommissioned and replaced, hopefully, with cleaner technologies such as renewable energy, gas, hydro and/or nuclear.
“So, the question should be: how do we deal with the socio-economic consequences, and the need to develop a competitive, inclusive and growing overall economy, and to replace smoke-stack industry jobs with better, higher-value-adding jobs in a new, modern and clean economy?
“There can and will be a blend of all of the above. When deciding on the optimal mix, what is important is that there should be a rational, scientifically based, transparent integrated resource planning (IRP) process, involving all relevant stakeholders and the public. The IRP process is widely used throughout the world, and presents a rational approach to a complex problem. And this is the crux of the matter: it’s not about what government wants or what ‘greenies’ would prefer – what counts is that we do this whole thing in a rational, scientific and properly planned way,” concludes Yelland.