What should be South Africa’s optimum energy security and sustainability mix in the future is a difficult question. Political agendas in favour of nuclear power, while recognizing renewable energy generation through wind, concentrated solar power (CSP), and solar PV, as part of the mix, continue to ignore consumer renewables, being solar water heaters, rooftop solar PV, and other new technologies, as a significant part of the equation.
At mid 2015 consumer renewables have achieved less than 2% market penetration. Only 130,000 high pressure solar water heaters in a market of over 6m electric domestic geysers have been installed. Rooftop solar PV is less than 10,000 units.
Such low take up in a country that enjoys almost double the solar radiation of Germany, where over 40GW of rooftop solar PV has been installed is attributable to historically low electricity prices, lack of support by government to go renewable and a public with little interest in energy awareness.
Project forward by 15 years. As the price of electricity continues to rise, all consumer renewables become progressively more attractive. The payback point on consumer capital expenditure on solar thermal and solar electricity generation drops, and the returns on investment are increasingly higher.
By 2030 it is probable that 80% or more of the domestic middle and upper income sectors will have embraced consumer renewables because the financial arguments to do so is overwhelming. A similar story will exist in businesses that substitute or supplement their power requirements with solar electricity generation and through removal of existing kWh in water heating.
Collectively 25% to 30% of existing consumption could be removed off the existing grid by 2030 through consumer renewables. With solar and other renewable generation at least 50% of power of today’s power requirements could be renewable. The combination of renewables completely changes the requirement for nuclear as part of the equation.
Skeptics of such projections may point to the existing limited success of consumer renewables in South Africa. Reference to the utility scale renewable energy generation program (REIPPP’s) with wind, solar PV farms and concentrated solar power (CSP), and in particular the prices that fell by some 70% from Round 1 to Round 3, is evidence that renewable energy generation has already become cost competitive with fossil fuel generation let alone the cost of nuclear.
Consumer renewables are not competing with electricity generation kWh prices, fossil fuel, gas, renewable or nuclear. They compete with the much higher prices paid by consumers for power per kWh from Eskom and the municipalities as resellers.
For small users the payback on solar thermal is already viable in 2015 at 2-4 years, and rooftop solar without batteries 5-7 years. Even for larger users on much lower rates than domestic users for example on Eskom ‘Megaflex’, the payback periods are falling to as little as 4-6 years. Every year as kWh prices from Eskom and municipalities increase the financial equation moves in favour of consumer renewables.
What will it cost the government to remove this power consumption off the grid? Nothing if the consumer pays. If, however government truly recognized the benefits of consumer renewables, they could accelerate the roll out through a combination of incentives and tax credits. Such cost would probably be exceeded through increased tax revenues derived from business greater efficiency, and a more reliable electricity supply from Eskom to industry.
Are the government deliberately ignoring consumer renewables? Almost certainly, as saving kWh’s is not the same as generating them from renewable generation. Why would Eskom or municipalities as sellers of power, including kWh from renewable generation, have any interest in reducing their income from electricity sales. Not only do consumer renewables reduce dependency on government, they remove the power both literally and physically from those who want to retain it.
Estimates on nuclear for 9,600MW are $1 trillion or more, and transparency on budget pricing is promised. However for comparative purposes when consumer renewables have been embraced by 2030, over 30% of GWH daily output of a 9,600MW nuclear plant can have been removed off the grid. In monetary terms the reduction in the planned nuclear output is 3 to 4 times the cost of Medupi and Kusile or over R300 billion.
Other options for new generation of electricity include gas and cogeneration. Although costs from such approaches are yet to be confirmed, they will definitely be cheaper than the nuclear option.
Nuclear of course is arguably green energy, no pollution per kWh, but not as green as renewables. Additional factors such as nuclear fuel, spent nuclear fuel, do represent environmental risks. The PR that nuclear technology is far safer today than historically (Chernobyl, 3 Mile Island, Fukushima) is a further consideration. In the hideous and hopefully unlikely event of a nuclear disaster from a new nuclear program, who is going to end up paying for it, or even for the insurance premiums to cover such an event, or the consequential long term losses.
However nuclear still does not add up when compared with the opportunities from consumer renewables. Job creation over 15-20 years in the installation of solar water heaters, both in domestic and business environment, combined with rooftop solar PV, will far more easily exceed one of government’s primary goals of job creation than nuclear will ever create.
Of course if the nuclear option goes ahead, the funding costs will almost certainly result in even greater consumer per kWh price increases, and this can only make consumer renewables even more attractive.
Surely South Africa should capitalize on the resources it already has in abundance of which solar energy is one. It is safe, cheaper than nuclear and the power source is free.