What’s the future for IPPs in South Africa?

July 27th, 2016, Published in Articles: EE Publishers, Articles: Energize


It is most unfair that Eskom now wants to ditch the coal-fired IPPs, when in fact they will be much more useful than the renewables. Moreover, it would be illuminating to see how much cheaper and faster IPP-owned coal-fired power stations can be commissioned than Eskom’s efforts.

Chris Herold

Chris Herold

Coal IPPs should have been the first choice, rather than the last (which they now want to ditch!) Had we started with coal-fired IPP (plus importing from a similar station in Botswana, for example) instead of Eskom’s new (and much delayed and flabby) behemoths, we could have overcome the power crisis five years ago.

This could have been followed by Eskom’s own stations which could have been procured much more economically after the recession started and we no longer had our backs to the wall due to the crisis. But then, perhaps Eskom was (and still is) scared that the comparison with IPP coal-fired stations will put it in a very bad light. On that score, perhaps the renewable energy vendors find the huge cost over-runs and inexcusable delays at Medupi and Kusile great allies give their own grotesquely distorted, under-estimated costs.

The claims that the cost of renewable energy has dropped to as low as 60c/kWh is a serious untruth. The real cost is very much higher than that because a very high proportion of solar and wind generating capacity has to be duplicated by real base load stations to supply the generating capacity that renewables cannot guarantee.

In the case of solar photovoltaic (PV) this means everything has to be duplicated, since PV cannot provide anything at all during the highest winter peak power demand (i.e. after sunset). Hence, if coal is the cheapest base load generator, then the true cost of a PV-based generating station is the cost of the PV station plus the capital cost of equivalent power production by a coal fired plant.

Wind is a bit better, but relying on more than 20% is rather doubtful. Higher percentages have been claimed, but long-term averages do not help when the wind drops below average. This can be likened to saying that someone with one hand on the hot plate and the other in the fridge is comfortable on average.

On top of all that, the peak power demand also has to be met , but not by PV and 80% of the wind. Thus, high unit cost peaking stations (pumped storage, extra coal or gas-powered generating station spinning reserve, or the notorious, but useful diesel generators) has to be added to the cost of these renewable stations.

Put all that together, and we get a total cost of the order of three to four times the nominal nameplate price of renewables. The unit cost of concentrated solar power (CSP) to store energy so as to bridge the peak periods (storage plus the normal production during the day) is a truer reflection of the real cost of renewables. And that cost is horrific.

Something else the renewable power stations do not pay for is the grid. All they have to do is plug into the nearest existing power line. Eskom has to accept whatever these power stations produce (or fail to produce). This rapidly fluctuating generation creates further operating problems, which increases the risk of the grid supply becoming unstable, which could result in a system collapse – think blackout, of the worst possible kind.

Renewables should have been the last choice (being the most expensive). Hence they should have been the ones now facing the chop at the hands of Eskom.

Contact Chris Herold, Umfula Wempilo Consulting, Tel. 011 462-1517, chris@herold7.co.za


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