Save fuel and money with renewables in the midst of an energy crisis

February 27th, 2015, Published in Articles: EE Publishers, Articles: Energize


The national media has seen a flood of reports on the performance of the new renewable energy systems installed under the REIPPP, based on a press release issued by the CSIR. The release reports a savings in both fuel and costs, giving a net savings of R800-million in 2014. This article is a summary of the study report behind the press release, and examines the methods and data used to reach the conclusions.

The study was conducted by the CSIR energy centre using a methodology developed by the CSIR and actual production data from the renewable energy (RE) sources and from the conventional fleet, and was aimed at determining fuel and cost savings achieved by the RE fleet. 2014 saw the completion and connection to the grid of the first REIPPP projects, and the number of projects delivering energy to the grid has grown to state where by the end of 2014 there were approximately 1600 MW of baseplate capacity (1000 MW PV, and 600 MW wind) connected.

RE sources have had a positive impact on the electricity generation sector, in areas of fuel saving and avoided unserved energy demand, and the CSIR report quantifies these impacts. No account is taken of the impact of private generation (rooftop PV), which at this point constitutes a small percentage of the total RE fleet (approximately 21 MW).

All figures and tables are taken from the report [1] with permission, except where otherwise indicated.

Data sources

Data used in the study was obtained from Eskom and comprises hourly averaged generation and demand figures for the network for the complete 2014 year. Data was aggregated and categorised according to technology. CSIR received only the aggregate figures for each technology, and no information on the actual units in service or the loading of units for the reporting hour, was available or used, according to Dr. Tobias Bischof-Niemz, head of the CSIR Energy Centre, who was responsible for the report.. Neither was information on planned and unplanned outages during the reporting hour given or used.

The data used comprised the hourly aggregated energy records and the figures can thus be taken as the average power generated or consumed during that hour.


In South Africa renewable energy (RE) sources operate on a self-dispatchable/non dispatchable basis, i.e. the decision to despatch is taken by the unit operator and not by the system operator. Self-dispatchable units take precedence over dispatchable units, which are controlled by the system operator [2]. The result is that under conditions where capacity exceeds demand, the output of conventional power stations will be reduced to accommodate the output of RE units. This has both advantages and disadvantages:

  • Advantages are that the output of expensive peaking plant can be reduced under peak demand conditions. Under normal conditions, the use of higher cost mid-merit plant can be reduced. This results in fuel savings.
  • Disadvantages are that the operational requirements may require the ramp-down or shut-down of plant and subsequent start-up/ramp-up, or alternatively running in spinning reserve mode, both of which require additional fuel, which reduces the fuel savings. Additional cycling of conventional plant also increases maintenance costs and risk of failure. This was found to be insignificant for this low penetration of RE and was not taken into account in the study.

Savings on three areas are considered:

  • Coal-reduction in the use of fuel by coal fired stations during unconstrained generation.  Availability of RE reduces the power generated by coal fired stations and hence saves fuel. No attempt to estimate increased coal usage due to running CFS in damped down state. Also no attempt to estimate the “constrainedness” of the power system during such hours, which would lead to the need to switch on the OCGTs in the first place if one takes wind/PV away. Only coal savings were taken into account in these presumably “unconstrained” hours. This is the much more relevant assumption than the neglected change in efficiency of the coal fleet.
  • Diesel-reduction in fuel use by the OCGTs during unconstrained generation.
  • Unserved energy costs – reduction in projected costs of unserved energy during constrained generation.

There is however a generation cost associated with the purchase of RE and this has to be taken into account when considering the impact of RE (total savings have to be reduced by the purchase cost of renewable energy.

Fuel costs and savings

Costs of conventional fuels (coal and diesel) comes from publicly available sources from Eskom, in form of the company’s interim integrated report and its interim financials 2014.

Gas turbines (diesel-fired OCGTs)

According to Eskom’s interim integrated report 2014 , OCGTs produced 1,164 TWh of electricity from April 2014 to September 2014 at operating cost of R3,623-billion. The avoided fuel cost of not running the OCGTs is therefore R3,623-billion/1,164 TWh = R3,11 /kWh.

Coal fired power stations

Eskom’s combined coal/nuclear fleet produced 112,6 TWh of electricity from April to September 2014, at a combined fuel cost of R24 792-billion. This gives an average fuel cost for the coal/nuclear fleet of R0,22/kWh. Nuclear fuel costs are generally lower than coal fuel costs. The average fuel costs of the coal fleet alone are therefore at least R0,23/kWh.

Since coal costs vary widely from station to station, it is considered to be a conservative assumption that R0,35/kWh is the fuel cost for the marginal, most expensive coal-fired power station during the day, while the average R0,23/kWh is the fuel cost for the marginal, most expensive coal-fired power station at night.

Table 1 shows the average fuel costs.

Table 1: Fuel costs.
Fuel source Cost ( R/kWh)
Coal (night time) 0,23
Coal (daytime) 0,35
Diesel fuel 3,11

Cost of Renewables

The cost of renewables to the power system are measured in terms of the tariffs that Eskom as the off-taker pays to the IPPs per kWh of renewable energy that is fed into the grid.[4]. The average tariffs and capacities for wind and PV as per the DoE’s publication are shown in Table 2.

Table 2: Average tariffs for renewables.
Source Average tariff ( R/kWh)
Wind 1,35
PV 2,75

For wind projects, the costs in 2014 are the average tariff of bid window 1, escalated to 2014 values. For PV projects, the costs in 2014 are assumed to be the capacity-weighted average of bid window 1 and bid window 2 tariffs, escalated to 2014 values

Cost of unserved energy

The cost of unserved energy is a macroeconomic cost per kWh to the South African economy of not being able to serve customers’ electricity demand. The macroeconomic value is taken from the IRP in its updated version (IRP Update).[3]  The cost of unserved energy is estimated at R87/kWh.


The presence of wind/PV during a recording period can have one of two effects:

  • Wind/PV replace a conventional power generator and therefore save fuel costs
    – Wind/PV displace coal-fired power stations in that hour and therefore save coal fuel (which is cheapest at approx. R0,23 to R0,35/kWh)
    – Wind/PV displace diesel-fired OCGTs in that hour and therefore save diesel fuel (which is the most expensive fuel at R3,11/kWh)
  • Wind/PV avoid so-called “unserved energy” (curtailment of customers) in that hour and therefore prevent macroeconomic losses
  • The assumed effect of wind and PV on the operation of the conventional fleet, and subsequent fuel savings and avoided unserved energy, is defined as follows:

It is assumed that the only two power generator categories that changed their operating regime due to wind and PV in 2014 are coal and OCGTs (i.e. it is assumed that the operations of all other generators were not affected by wind and PV)

For each recording period, the following logic was applied:

  • If the OCGTs were not operational, it was assumed that energy generated from wind/PV in this hour displaced coal-fired power stations. (from 06h00 to 22h00 it was assumed more expensive “daytime” coal to be displaced, whereas between 22h00 and 06h00 it was assumed that less expensive “night-time” coal was displaced).
  • If the OCGTs were operational, it was assumed that the coal fleet already was at its limits in that particular hour, and energy generated from wind and PV in this hour therefore displaced OCGTs and saved diesel fuel.
  • If the OCGTs were operational and the sum of wind and PV energy was greater than the combined reserve of OCGTs and pumped hydro, it was assumed that the existence of wind and PV prevented unserved energy in this hour. In other words, had wind/PV not been available in this particular hour, the remaining reserves of OCGTs and pumped hydro together would not have been sufficient to meet the demand in that hour, and the wind/PV energy exceeding the remaining reserves of OCGTs and pumped hydro is considered to be avoided unserved energy. It is also assumed that under these conditions that all other options, such as demand management and load shifting/reduction, had already been used to the maximum.


Fig. 1: Average daily energy production for 2014.

Fig. 1: Average daily energy production for 2014.

Fig. 2: Contribution of wind and solar for Dec 2104.

Fig. 2: Contribution of wind and solar for Dec 2104.

Fig. 1 shows the impact of renewable energy generation on the daily profile for 2014. Wind makes a significant contribution during the evening while PV is prominent during the day Fig. 2 shows the contribution of wind and solar for Dec. 2014 Wind projects generated 1,07 TWh of electricity, which displaced 0,56 TWh of electricity from coal, 0,49 TWh of electricity from diesel and it avoided 9 GWh (~ 0,01 TWh) of unserved energy. PV projects generated 1,12 TWh of electricity, which displaced 0,56 TWh of electricity from coal, 0,56 TWh of electricity from diesel and it avoided 10 GWh of unserved energy. The value per category of derived benefits from renewables is summarised in Table 3.

Table 3: Conventional generation displaced by renewables.
Total energy(TWh) Coal displaced   Diesel displaced Unserved energy Total
Wind 0,56 0,49 0,01 1,07
PV 0,56 0,56 0,01 1,12
Total 1,12 1,05 0,02 2,19

The resulting value of fuel savings and unserved energy is given in table 4.

Table 4: Savings from wind and PV.
Total savings (R-million) Coal displaced Diesel displaced Sub-total fuel Unserved energy Total
Wind 165 1541 1705 794 2499
PV 194 1736 1930 876 2806
Total 359 3276 3635 1670 5305

The total payments to RE  IPPs  is shown in Table 5.

Table 5: Cost of RE generation.
Technology 2014 costs ( R-million)
Wind 1444
PV 3084
Total 4529

This results in a net saving of R776-million, as shown in Fig. 3.

Fig. 3: Overall benefit of RE for 2014.

Fig. 3: Overall benefit of RE for 2014.

Impact of renewable energy on unserved energy demand

The recorded impact indicates that RE could have a significant impact on energy availability in future, as more wind and PV connects to the grid. Unserved energy was avoided on 43 days in 2014 with a total of 117 hour slots.

Fig.4: Unserved energy avoided- 12 highest days.

Fig.4: Unserved energy avoided- 12 highest days.

Fig.4 shows the amount of avoided unserved energy for the 12 highest days.

Fig. 5: Distribution of event sizes.

Fig. 5: Distribution of event sizes.

Fig. 5 shows the distribution of event sizes.

  • Two events exceeded 600 MW .
  • Nine events exceeded 400 MW
  • Seventeen events exceeded 300 MW
  • Thirty eight events exceeded 200 MW
  • Seventy three events exceeded 100 MW

These figures are interesting as any level above 300 MW average is the equivalent of a gas turbine, and any event over 500 MW represents a possible coal fired unit. Not having RE would in many cases have required operation of a conventional plant for a short period at partial load, even if the plant was available.

Fig. 6: Performance for Dec 2104.

Fig. 6: Performance for Dec 2104.

Fig. 6 shows the performance for the month of December 2014 in graphical format for hourly performance.

Fig. 7: Daily performance for December.

Fig. 7: Daily performance for December.

Fig 7 shows the daily performance for December 2014

Ignoring weekends and holidays

December showed the highest savings although it is a month marked by holidays and industry shutdowns. It will be interesting to see how the network performed when industry and commerce return to normal levels.

Fig. 8 : Performance for two highest days.

Fig. 8 : Performance for two highest days.

Fig 8 shows the events for the two highest recorded days. ( 16 dec is a holiday- may have influenced the figures) Both days show a consistent pattern of PV wind contribution increasing and decreasing around the morning and evening peaks.


[1]    Dr T Bischof-Niemz: “Financial benefits of renewables in South Africa in 2014”, CSIR energy centre. February 2015
[2]    NERSA: “Self dispatch of independent power producers”
[3]    DoE: “IRP Update”:
[4]    DoE: “list of preferred bidders window 3”,

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