Learnable Lessons for Sustainability from the Provision

of Electricity in South Africa

M.K. Heun Calvin College

J.L. van Niekerk, M. Swilling, A.J. Meyer, A. Brent, T.P. Fluri Stellenbosch University

Presentation to ES2010 Conference, Phoenix, AZ, USA 2:00 PM, Thursday 20 May 2010

About South Africa

Images courtesy of Google Earth

Where in the World is South Africa?

Things You Probably Know About South Africa

http://www.southafrica.to/history/Apartheid/apartheid.htm

Apartheid

Nelson Mandela http://en.wikipedia.org/wiki/

File:Nelson_Mandela-2008.jpg

http://en.wikipedia.org/wiki/File:HumanFactorInvictus.jpg

Invictus

http://www.open2.net/blogs/media/blogs/39197167_gold.jpg

Gold

http://soccertv.wordpress.com/2008/10/24/fifa-2010-world-cup-list-of-

referees/

Things You May Not Know about South Africa

•  Poverty is a pressing issue

•  Extremely interesting energy situation

•  Environmental sustainability issues are urgent

Beautiful

Largest Economy (in Africa)

http://maps.howstuffworks.com/africa-gdp-map.htm

The Polycrisis

Polycrisis

•  World economic recession (scarcity of financial resources)

•  Persistent poverty (worsening with recession) •  Natural resource limits (peak oil, clean water) •  Ecosystem impacts (pollution, climate change) •  Population growth (increases ecosystem

demands) •  Accelerating urbanism (localizes ecosystem

demands)

Global Grand Challenge: National Research Plan South Africa. 2009. http://www.info.gov.za/view/DownloadFileAction?id=104227

Polycrisis

•  World economic recession (scarcity of financial resources)

•  Persistent poverty (worsening with recession) •  Natural resource limits (peak oil, clean water) •  Ecosystem impacts (pollution, climate change) •  Population growth (increases ecosystem

demands) •  Accelerating urbanism (localizes ecosystem

demands)

Global Grand Challenge: National Research Plan South Africa. 2009. http://www.info.gov.za/view/DownloadFileAction?id=104227

Poverty in South Africa

http://www.sarpn.org.za/documents/d0000990/P1096-Fact_Sheet_No_1_Poverty.pdf

ASGI-SA

•  Accelerated and Shared Growth Initiative for South Africa (ASGI-SA)

•  Goal: halving poverty over the 2004–2014 timeframe •  Means: economic growth (GDP) of 6%/yr from

2010–2014 http://www.info.gov.za/asgisa/asgisa.htm

•  Two key enabling areas of government expenditure •  Bulk water infrastructure and water supply networks •  Energy production and distribution

Poverty Alleviation

Economic Development

Water Energy

Poverty Alleviation

Economic Development

Climate Change

Health

South Africa and the 2009 Recession

•  First recession in 17 years

•  Economic contraction due to export slump

•  253,000 formal-sector jobs shed in 1st half of 2009

http://www.southafrica.info/news/business/33972.htm http://www.mywage.co.za/main/news/mywage-south_african-

news/recession-destroys-thousands-of-sa-jobs

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South African Annualized GDP Growth Rate

http://liberta.co.za/blog/gdp-growth-rate-in-south-africa-current-and-historical/

1993

2009

Water is Scarce

•  Steep gradients •  Global average (860 mm/yr) •  South Africa (497 mm/yr) •  South Africa has allocated

98% of its water resource at a "high assurance of supply"

•  South Africa has no more surplus water

•  Water may be a constraint on economic growth!

Source: CSIR Report No. CSIR/NRE/WR/EXP/2008/0160/A

Energy Use is Linked to Economic Growth

Koeberg Nuclear Power Station

Cape Town

Koeberg

Water inlet

Water outlet

South Africa’s Strategic Options to Climate Change

Source: 07Scenario_team-LTMS_Scenarios.pdf

Mt = megatons

South Africa’s Past and Present Energy Situation

South Africa’s Current Energy Situation

•  Massive coal reserves (5th largest producer in world)

•  Coal to liquids for transportation fuels (SASOL, Fischer-Tropsch process)

•  Coal to electricity for industry (mining) and households

Electrification Programmes

B. Bekker et al. “South Africa’s rapid electrification programme.” Energy Policy 36 (2008). pp.3115–3127.

Shrinking Coal Supplies

•  Coal burn rate grew at 4.5%/yr while supply rate grew at 1.4%/yr from 1999–2007 (http://www.tradeinvestsa.co.za/feature_articles/276980.htm)

•  Coal stockpiles reduced from 61 days to 3 days from 2000–2007

•  Why? •  Profit motive in newly-corporatized Eskom •  Reliance small, less-reliable coal suppliers

•  Black Economic Empowerment (BEE) initiatives •  More road traffic compared to rail traffic •  Serious road surface degradation at power stations •  Suppliers didn’t want to damage their trucks

•  Consultants warned as early as 2005 of potential coal supply problems

Shrinking Reserve Margins

http://www.info.gov.za/otherdocs/2008/nationalresponse_sa_electricity1.pdf

The Result: Load Shedding

•  In late 2007/early 2008, entire southern African electricity grid almost collapsed

•  Major industrial customers were shut down

Load Shedding Fallout

Economic Effects

5.40%

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http://liberta.co.za/blog/gdp-growth-rate-in-south-africa-current-and-historical/

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Fallout at Eskom

•  2008: Board chair Valli Moosa quits due to stress, Godsell appointed

•  Nov 2009 •  CEO Maroga forced to resign by board chairman Godsell,

because he failed to heed coal supply warnings. Maroga showed up for work anyway.

•  ANC Youth League accuses Godsell of racism •  Godsell voluntarily resigned. Minister of Public

Enterprises asked him to return as chair. Godsell refused. •  Eskom (political) power vacuum •  Mpho Makwana selected as acting Board Chair

•  Searches now underway to reconstruct top management

http://www.engineeringnews.co.za/article/eskom-rethinks-funding-plans-as-financial-turmoil-bites-2008-10-09

http://www.mg.co.za/article/2008-08-03-could-he-be-eskoms-godsend

http://www.eskom.co.za/annreport06/boardofdirectors.htm

http://www.lereko.co.za/our_team.php

Re-thinking Parastatals

http://www.mg.co.za/zapiro/fullcartoon/2331

2 New Coal-fired Power Stations

Medupi 4,800 MW

Kusile 4,800 MW

http://www.engineeringnews.co.za/article/power-stations-on-schedule-2009-04-17 http://gallery.iol.co.za/v/busrep/newsmakers+of+the+day+22_10_2009/br+medupi+power+station.jpg.html

Electricity Rate Increases

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Oct 2009 Proposal

Dec 2009 Proposal 35.0 35.0 35.0

Feb 2010 NERSA Ruling

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Eskom’s Conundrum

•  Caught among three significant economic dynamics •  Export-led growth requires

•  Inexpensive raw materials and manufactured goods •  Inexpensive labor (not an option: strong unions) •  Low resource and energy prices

•  Privatization of energy sector requires •  Investment in new power generation capacity •  High energy prices

•  Renewable energy development requires •  REFIT •  High energy prices

Swilling, Mark. 2010. “Intelligent Power: South Africa is Throwing It All Away.” Cape Times editorial, 7 April

World Bank Loan

•  South Africa’s first world bank loan, $3.75 billion •  Counter to WB’s policy to not fund fossil fuel projects •  US abstained from vote (http://www.mg.co.za/article/2010-04-08-us-abstains-from-eskom-loan-vote)

http://www.washingtonpost.com/wp-dyn/content/article/2010/04/07/AR2010040703421_pf.html

What Hasn’t Happened

•  A serious review of energy situation

•  A concerted, sustained, and real drive for energy efficiency and renewable energy

•  A serious consideration of sustainability issues

•  A meaningful, coordinated effort to address the polycrisis

Looking Ahead

There is an Opportunity to Develop New Industries and

Value Chains

•  Strategy: use resource and environmental constraints to catalyze innovation

•  Develop technologies, techniques, and ways of being that decouple energy use from environmental effects and economic growth

•  Develop regulatory policies that favor and catalyze renewable energy industry growth

Solar Resources

•  Potential: 3.3x to 5.4x projected electricity requirement for 2025 •  < 20 km from

existing lines •  <1% slope •  Irradiation > 7

kW-hr/m2-day

Heun, M.K., et.al. “Learnable Lessons on Sustainability from the Provision of Electricity in South Africa. ES2010-90071. 4th ASME Energy Sustainability Conference. 17–22 May

2010, Phoenix, Arizona.

Wind Resources

•  10 m avg. wind speed

•  MM5 regional meso-scale climate model

•  20–157 TW-hr/yr potential

•  Wind resource map under development

http://www.crses.sun.ac.za/pdfs/Hagemann.pdf

REFIT

•  Phase I (Mar 2009) •  Wind R1.25/kW-hr $0.167/kW-hr •  Small Hydro R0.94/kW-hr $0.126/kW-hr •  Landfill Gas R0.90/kW-hr $0.121/kW-hr •  Concentrated Solar R2.10/kW-hr $0.281/kW-hr

•  Phase II (Oct 2009) •  CSP Trough* R3.132/kW-hr $0.420/kW-hr •  PV (> 1 MW) R4.488/kW-hr $0.601/kW-hr •  Biomass R1.181/kW-hr $0.158/kW-hr •  Biogas R0.962/kW-hr $0.129/kW-hr •  Concentrating PV* R5.481/kW-hr $0.734/kW-hr •  CSP Tower† R2.308/kW-hr $0.309/kW-hr

*No storage, †6-hour storage Exchange Rate: 7.465 R/$ as of 13 May 2010

Key Questions Remain

•  Will the government accept and address the urgency of the polycrisis in integrated planning?

•  Will appropriate regulations be formulated to implement policies such as REFIT?

•  Will Eskom remain private and be re-capitalized? •  Will Eskom control the grid going forward? •  Will the “single-buyer office” be housed at Eskom

going forward?

Learnable Lessons

Canary in a Coal Mine

•  South Africa may be about to become one of the largest economies in the world to be significantly constrained by natural resource limitations •  Natural resource supply (water) •  Energy supply

•  Implicit assumptions (among economic planners) that environmental services are intact and functional

•  South Africa’s problems were caused not by too little coal in the ground, but by too little coal at the plants

•  Will the world’s response to energy supply issues (e.g. peak oil) be any different from South Africa’s response to coal shortages?

Learnable Lessons •  When they bite, energy resource constraints

have very painful and unsettling consequences

•  Sustainability challenges are REAL and growing

•  Ecological resource constraints can’t be ignored

•  Ecological constraints, if seized, could provide framework for new forms of economic growth •  Innovation for sustainability (CSP, for example) •  Focus on decoupling poverty alleviation from resource

depletion and environmental impacts

Acknowledgements

Questions/Comments?

All photos by Matthew Kuperus Heun, unless otherwise specified.