I have yet to find any papers on clean energy trends in South Africa for the last year. The biggest news for last year was the finalization of the 3rd round of the REIPPP . As part of the Integrated Resource Plan of reaching 10 000GWh of renewable energy, the Department of Energy has called on private investors to bid for the tariffs and socio-economic development objectives for the sites identified. There has been a flurry of activity with many international and local EPC and design companies getting involved in this new industry.
So back to the trends. The trends hitting the US now will reach us soon, so I will comment on them and on how they will and should affect South Africa:
1. Renewables become cheapest option
The current cost of energy from coal powered stations in South Africa is 97c/KwH while the cost per KwH from renewables so far is around the 89c/KwH mark. So does this mean that we citizens will be paying less soon? I hope the industries who consume the most power will also partner with renewable ventures and start producing their own energy or use a great deal more of renewable power ie: aluminium smelters, mines etc. The Green Energy Efficiency Fund (GEEF) which falls under the IDC is encouraging local industry to pursue this agenda and with legislation hopefully being enforced and monitored more closely, this will become the status quo.
2. Utilities look toward new business models
The paper Disruptive Challenges by Peter Kind of the Edison Electrical Institute (EEI) which forecasts the change of business models of utilities from the old fossil fuel paradigm to renewable energy service providers is happening already. In Europe, one of the largest utilities - RWE has changed its old business model to a being a 'prosumer' with a distributed renewables model stating that “Based on funds sourced largely from third parties, we will position ourselves as a project enabler, operator and system integrator of renewables.”
For South Africa, we only have a single utility (at the moment). Eskom's business model incorporates all the power generation types, from coal to nuclear and renewables. So there has definitely been a slight change to the model but still not to the point where a larger proportion of renewables are involved.
3. Energy storage goes mainstream
In 2013, the state of California in the US passed an energy storage mandate (AB 2514), a first-of-its-kind legislation that will give a significant push to the renewable storage market. I am not that familiar with the technology to do this (not being an Electrical engineer) but the procurement targets are 700MW at transmission level, 425MW at distribution level and 200MW at customer sites. The state of Maryland also joined the storage craze by installing its first commercial, islandable solar-PV-and-battery microgrid. And solar PV companies are adding storage to their offerings by incorporating batteries into their residential systems.
The energy storage landscape in South Africa has progressed substantially in the last year. Anglo American Platinum has partnered with Ballard Power to produce a domestic fuel cell system, a methanol-fueled product designed for use in off-grid residential applications. Ian Curry, from Basil Read Energy, gave a very insightful presentation at the 2013 African Utility week on the need for the inclusion of efficient energy storage systems into the current IRP 2 plan which will open the door for new energy opportunities. And one of the industry players is AEG, which has recently developed BESS (Battery Energy Storage System) which consists of lead acid and lithium ion technologies and can be connected to any grid to mitigate risks associated with renewables such as peak shaving, peak demand shifting, frequency regulation and load leveling.
4. Electric Vehicles have bumper year
Internationally the EV industry has boomed. Worldwide EV car sales were up 300% from 2012, while in Norway electric cars were the top-selling cars two months in a row. Tesla stocks surged as the Tesla Model S received a rare near-perfect score from Consumer Reports, after the fire hazard issue experienced earlier in the year. And EVs became more affordable as automakers slashed prices for plug-in hybrid and electric vehicles such as the plug-in Prius, Chevy Volt, and Ford Focus. Sadly, this has not been the case in SA. With the fuel price reaching record levels this February (R14/litre) one should see a drastic decline in petrol cars but the entry price of these EV's will mean slow sales growth. The Nissan Leaf was launched last November in SA at a retail price of R446,000, and throughout the lifecycle of the car, it is actually cheaper than a petrol or hybrid at R487,000 compared to R484,000 and R505,000 respectively. Makes sense, but the initial input costs are quite high if you look at entry level vehicles starting at around R100,000. And the culture of our country, where bigger and faster with that characteristic petrol engine roar is preferred, will also be a stumbling block.
5. Transportation apps are on the rise
This trend has hit SA and is growing. Generally, people who drive a car also have a smart phone. This means transport apps are used daily to assist us to get through the traffic and get us on the shortest routes. Waze is a very popular app in SA and it looks as if Ridescout is taking off in the US. These apps are also moving towards searching and comparing transport options from buses, taxis, car pools and biking. This move will also push South Africans to use more public transport options like the very popular and safe (crime is a big issue here!) Gautrain in Gauteng and the BRT (Bus Rapid Transit) system being rolled out in Cape Town, Pretoria and Johannesburg.
6. Cities get serious about building efficiency
Many states in the US now have legislation which requires bench marking and energy disclosure of large buildings. This is the first step to improve a buildings efficiency. Here, no legislation has been passed but we do have the Green Building Council (GBCSA) which is a big advocator for change in the building industry and has many rating and bench marking tools such as the Green Star SA rating. And new tools are being developed for existing buildings which is being rolled out this year. So watch this space, as legislation should be on the horizon!
7. The emergence of deep energy retrofits
A deep energy retrofit is a multi-pronged approach of a whole building analysis and construction process that achieves much larger energy cost savings than that of a simpler or traditional energy retrofit. This was a hot topic in the US last year and will be spreading soon to other countries (obviously also depending on legislation). So far, the only building in South Africa which has undergone a deep energy retrofit is the V&A Waterfront in Cape Town. This partnership with the World Green Building Council has led the property to make annual operational savings of R7,680,000 in energy costs and R744,000 and R1,200,000 in water consumption and waste management costs respectively.
8. China tackles air pollution
From the article on which this blog is based (see above), China has made great moves to counteract the deadly air pollution affecting it's cities. From new legislation to curb emissions to the construction of a Nissan Leaf production facility in Beijing which will bring down the price of EV for locals and the announcement in Beijing that 40% of all new vehicles must be electric (EV) or PHEV (Plug in Hybrid Electric Vehicle). In South Africa we certainly do not have the levels of air pollution as in China but our environmental legislation is very comprehensive. We have in place The National Environmental Management: Air Quality Act, Act No. 39 of 2004 which is comparable to other international norms and standards. The Vaal Triangle, which faces complex and pressing air pollution challenges, has been designated as the first ‘priority area’ under the Air Quality Act. The National department of Environmental Affairs and Toursim has since 2009 implemented quite a few interventions to improve the air quality but the progress made in this area has so far not been made available.
9. Companies put a price on carbon
Large public companies and even oil companies in the US are now setting internal prices on their carbon pollution. To name a few are Walt Disney and Delta airlines. This will become a trend as 27 US companies and 2 foreign companies have joined this move in the last year as stated by the Carbon Disclosure Project (CDP). As of now, no carbon pricing strategy as yet been implemented in any South African companies. The concept of carbon pricing and carbon tax is still being discussed in order to incorporate into Energy Policy.
10. Industry gets efficient
The move to get industry to become more energy efficient and reduce energy intensity is underway in the US and currently 123 companies constituting 1750 plants have joined this program. In December last year the South African Department of Energy tabled a tax incentive program for industries that make measurable improvements in their energy usage and greenhouse gas emissions. The regulations for this incentive are due to be published soon which means a great opportunity for the ailing manufacturing and resource sector to up profits. Anglo American Platinum is leading the way with their ECO2MAN programme which includes the measuring, monitoring, reporting and target-setting for energy and emissions management.
I am excited about these developments and with all the opportunities these trends present, I should hopefully become involved in this industry soon. Let's see what the trends are in 2014 and watch this space for a similar article this time next year!
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