The world is changing fast and to keep up you need local knowledge with global context.
It’s hard not to sit up and take notice when the usually DA-favouring writer, Andrew Kenny, picks up the hatchet and starts hacking away at what he sees as completely idiotic alternative electricity supply plans the party is hatching. While the Western Cape where he lives, enjoys unmatched service delivery in every area over which it has control (the debilitated, dysfunctional rail system not being one), the ruling local DA has ‘lost the plot’ in trying to outdo Eskom’s woeful performance. Writing in the Daily Friend, he unpacks the global data on wind and solar generation – the new go-to alternatives the DA is promoting – to thunderous applause from the green lobby – showing them up as complete and hugely costly unsustainable and unreliable alternatives. This piece simply cries out for a DA response – one which our readers can only eagerly await. Perhaps don’t jump on the Kenny bandwagon just yet – let’s see what the party whose ruling opponents keep gifting it with potent ammunition, has to say… – Chris Bateman
The DA wants to push up my electricity bills
By Andrew Kenny*
I am fortunate to live in Cape Town under the DA. I am happy with most things the DA does in this city but now it threatens to do something mad with my electricity supply. It wants to turn to the most expensive and unreliable sources of electricity there are, and so push up my electricity bills.
I now get my electricity through a pay meter in my kitchen. I am delighted with it. Paying for it online is easy and accurate. The progressive tariffs are fair and just: the more you use, the more you pay per unit (kilowatt-hour). I am on the lowest tariff and pay 240 cents/kWh, which seems reasonable.
Cape Town gets most of its electricity through Eskom but some from the city itself through its well-run 180 megawatt pumped storage scheme at Steenbras, near Elgin. It also gets a small amount from the Darling Wind Farm, an independent power producer (IPP), which has been running since 2008. Unfortunately it is very difficult to get production figures from this wind farm but best evidence suggests it has been a failure. Eskom has two big power stations near Cape Town: Koeberg Nuclear Power Station (1840 MW) and Palmiet Pumped Storage (400 MW), also near Elgin. Despite disgraceful incompetence recently, Koeberg has been well run and so has Palmiet.
Every now and then, the DA gets stupid ideas. It made a fool of itself over racial affirmative action appointments to its high offices. It mumbled about BEE rather than dismissing it outright. It was almost silly to think of having Mamphela Ramphele as its leader. It talks nonsense about climate change. And now it wants to embrace solar and wind for grid electricity.
For the umpteenth time, solar and wind are wonderful for off-grid applications but useless for grid electricity. They are worse than useless; their costs outweigh their benefits. We have seen this over and over again. Solar and wind are the most expensive sources of grid electricity, and have been a ruinous failure in every country that has tried them. This includes Denmark, Germany, the US, the UK and Australia. In every case, as more solar and wind is added to the grid, final electricity prices soar and electricity failures worsen. The fundamental reason for this lies with nature.
Electricity is only useful and only has value if it is reliable – if it comes on when you want it and stays on for as long as you want it. This is called dispatchable electricity. Wind and solar are not dispatchable and so are useless. (If you put only solar and wind onto the grid, the whole country would be in blackout in one minute.) In South Africa, wind has a load factor of less than 35% and solar less than 26%; this gives the power the plant produces compared with its capacity. Unreliability is worse than the low load factors. How much would you pay for brakes for your car that only worked 35% of the time, and you never knew when? I’d pay nothing. I’d pay to avoid them. To convert the unreliable, useless power coming off wind turbines and solar panels into reliable, useful power you have to incur huge system costs. These include storage, back-up generators, spinning reserve, compensation for lack of electrical inertia, generators running at below optimum efficiency to compensate for ramping up and down to match the fluctuations of wind and solar, and extra transmission. I estimate that the system costs for solar and wind are at least 200 cents/kWh. If a solar plant charges Eskom 40 cents/kWh, the true cost to Eskom is 240 cents/kWh. Eskom gets no compensation for these massive system costs.
The City of Cape Town has now gone out to tender for electricity supply from IPPs. I believe in a free market in electricity supply. I think any competent generators who pass technical regulation (correct frequency, voltage and synchronisation) should be allowed to sell as much electricity as they please to anyone they please. I welcome the idea of competition for power in Cape Town. However, there is no chance that any IPP will be able to compete against Eskom, even in the shambling mess it is in now. The City says that IPPs will “end load shedding and make electricity more affordable” and help it “to achieve its goal of reliable, affordable and clean energy for Capetonians”. Don’t make me laugh! Solar power, which seems the DA’s main interest, is unreliable, unaffordable and not very clean (it has a worse waste problem than nuclear with its deadly toxins that remain dangerous for thousands of millions of years).
Ironically, at the 4th South African Investment Conference last week, President Ramaphosa, speaking about our present electricity fiasco, used almost exactly the same words as the DA when he promised that the ANC was “moving with pace and determination to bring new generation capacity online in the shortest possible time. We are doing so while undertaking the far-reaching reforms that will secure a reliable, affordable and sustainable supply of electricity …” This is nonsense of course. The solar and wind projects that the ANC wants to force upon us will secure nothing but higher electricity prices for the consumers and even more blackouts. They will reduce our chances of ever having a successful industrial economy.
In Cape Town, the greatest demand for electricity is on winter weekdays at 19h00 in the evening. This is also the worst time for load-shedding. Could the DA please explain how a solar IPP can meet this demand after sunset during a rainy week? It would have to have back-up generators running on fossil fuels, or storage, which is staggeringly expensive. The best storage is pumped water storage, but this requires suitable sites, which seem to be exhausted around Cape Town, and massive capital expenditure. Batteries are useless for storing grid electricity; they are very expensive and can only store small amounts of electricity. Battery technology has made only slow advances in the last hundred years and shows little promise of doing better. After the electricity grid in Southern Australia crashed in July 2016 thanks to wind power, Elon Musk sold them the world’s biggest battery at a huge price. It proved useless for storing grid electricity, despite the small grid there.
If on the other hand, the solar IPP promises only to provide electricity in the middle of the day if the sun is shining, then it is worse than useless. However, in the DA’s tender document there is this interesting passage:
The maximum R/kWh rate the City will pay for electricity under the PPA will be limited to the equivalent of the prevailing Eskom Transmission local authority tariff applicable to the City at the time of award, including all kWh based levies.
Well now! If this means that the DA will only buy from an IPP that can at all times provide reliable electricity at lower than Eskom’s tariffs, that really would be something. I’d thoroughly approve that. But I don’t believe any IPP can. Eskom’s present average selling price is 111 cents/kWh. It sells it at about this price to municipalities, who mark it up to their customers. No IPP so far comes close to matching this price. The renewable energy IPPs charge double this for unreliable electricity. The only reliable (dispatchable) electricity from solar and wind comes from concentrated solar plants with storage (storing the heat of molten salts). The latest such plant in the Northern Cape, in about the world’s best solar conditions, charges over 500 cents/kWh at peak times.
If the City of Cape Town chose to buy unreliable solar power only during the middle of the day when the sun was shining, then Eskom would have to revise its tariffs. Otherwise Eskom would lose revenue when it was easy to supply power. So it would then make sense for Eskom to have a very low tariff (say 20 cents/kWh) in the middle of the day, a very high tariff at peak times and a high standing charge. The City could choose: stay with the present Eskom tariffs and don’t buy from IPPs, or do buy from IPPs and get a different tariff structure from Eskom. Choose. Or maybe the City would like to disconnect from Eskom altogether, in which case we’d go back to candles.
The ANC has crippled Eskom with corruption, incompetence and racial ideology. The country’s electricity supply is in a terrible mess and we face at least ten more years of load-shedding whatever happens. By far the best new electricity is nuclear, which is safe, clean, reliable and affordable, but it will take at least ten years for new nuclear to come on stream. Gas would be nice if we could get lots of it at a good price, which seems unlikely for a long time at least. Solar and wind are useless. Coal is dirty but does deliver affordable electricity if we could stop our coal stations from falling to pieces. The despised Turkish powerships are probably our best option for new power in the short term. There are no magic solutions.
The new DA Mayor of Cape Town, Geordin Hill-Lewis, has got off to a good start. His publicised display of taking up a broom and cleaning up the filthy streets of the poor areas is a very good political gesture. Compare it with the first gesture of new ANC mayors, which is to drive disdainfully past the poor in a shiny black Mercedes, with blue light flashing to show their contempt for them. But the proposal to save Cape Town from load-shedding by solar electricity is a ridiculous gesture – and a potentially damaging one.
- Andrew Kenny is a writer, an engineer and a classical liberal.
- The views of the writer are not necessarily the views of the Daily Friend or the IRR. If you like what you have just read, support the Daily Friend.
Right of reply: Cape Town’s plans to end load-shedding over time involve more than just renewables
Cape Town Mayor Geordin Hill-Lewis responds to Daily Friend columnist Andrew Kenny
I was pleased to read Andrew Kenny’s critique of Cape Town’s response to the national energy crisis. Andrew is an expert energy commentator whose opinion I take seriously. In this response I aim to explain why I disagree with some of his premises. And more importantly, why I simply cannot agree to accepting another ten years of load-shedding that he says is inevitable.
I’m by no means an expert at his level, but I’ve poured myself into reading on this topic over the last year, primarily because I am outraged at the economic self-immolation South Africa is committing through continued load-shedding.
As he acknowledges further down in his piece, Cape Town’s recently released tender for new sources of independent power makes it clear that we will only consider bids that meet or beat Eskom’s current price. So the risk of higher tariffs does not arise.
He welcomes this, but questions whether it is possible. We believe it is, and time will soon tell, since the bid period will soon close and the competitive prices will be in. The strength of early interest in the bid process is a very encouraging sign.
This also doesn’t take account of Eskom’s steeply rising prices – over 400% over the past decade, and showing no signs of slowing down – while we are procuring new power that beats Eskom’s current price.
This also does two important things for the country, which I’m confident he supports: we’re the first municipality to buy new power at significant scale, in doing so helping to cut through the regulatory thicket that has strangled the market; and we’re helping usher in a more competitive market for power pricing. While the rest of the country is moving this way too, continents and glaciers drift faster.
We must end load-shedding
My point of departure is that we must end load-shedding in Cape Town. This is the single most important thing we can do for the Cape economy – as close as we may come to a single-issue economic stimulus. Ending load-shedding here would attract investment to Cape Town, help get more people into work, help keep people safer, and would protect residents from the failing national state.
I am not prepared (and I don’t think any South African should be) to wait around for Eskom to solve load-shedding. There is no credible plan at national level and no money in Eskom’s coffers to fix this. Indeed, as a country, we are quite likely to become even more energy insecure in the coming years. Fifteen years on, and having just had the worst year of load-shedding ever, we need to get on and do something ourselves.
“Doing something” to end it ourselves is going to require a careful choreography of several complex projects, only one of which is bringing on line more independent renewable power. We have started with this tender first, simply because much preparatory work had already been done, and so was most advanced. But there is much more to look forward to.
Cape Town’s ‘end load-shedding’ symphony (in ‘DA major’) will also require a major dispatchable power (power available as and when you need it) tender in the months ahead – this is the kind of power Kenny wants to see, and which is very much a part of our plan. While it is premature to commit to a view about what form this will take (whether it be gas turbines, gas plus storage or a gas-renewables hybrid) the very reason for this investment will be to ensure that we are able to beat load-shedding at peak times.
Also, a detailed analysis and costing of storage options is already underway, including battery, expanding Steenbras, and decentralised storage. We are about to spend R1.2 billion on upgrading and refurbishing Steenbras, which will deliver more storage capacity. And finally there’s ‘contracted demand management’, technology that allows remote management of load demand, and which could offer protection from an entire extra stage of load-shedding.
I now turn to pricing. Prices in the latest renewables procurement round have been as low as 47c/kWh — a fraction of what Eskom charges. Even when there is no load-shedding, when the sun is shining and the wind is blowing, they are able to provide us with electricity at a rate substantially lower than Eskom’s. The more we are able to replace Eskom-supplied power with cheaper sources, the more we are able to lower the overall input costs for electricity, and the more we are able to pass the resultant savings on to the consumer. In the absence of storage costs, renewables will reduce the amount residents are paying for electricity.
With the unacceptably high (and still rising) tariffs charged by Eskom, we are confident that when these projects are brought online, the power they produce will undercut Eskom’s substantially, leaving pricing margin available to address storage costs.
In Cape Town, we have decided to be bold and do something about energy insecurity, instead of just waiting around for the national government to fix our problems. We are constantly looking for the best possible ways to do this.
Bearing in mind the constraints in which the City operates — building a second Koeberg is not possible legally or without our having to borrow hundreds of billions of Rand —what is the alternative Mr Kenny proposes for ending loadshedding in Cape Town? He implies we have no choice but to accept it for the next decade. That is not an option. The mix of renewables, dispatchables, storage, and demand tech that I’ve sketched above, is the only plan any city in the country has put on the table.
The best way forward is to start moving forward, and this is exactly what we’re doing.
- No more loadshedding for Cape Town – DA Mayor candidate Geordin Hill-Lewis explains how
- Eskom – cough up for your children’s future – Andrew Kenny
- DA crashes on energy debate – Kane-Berman
Cyril Ramaphosa: The Audio Biography
Listen to the story of Cyril Ramaphosa's rise to presidential power, narrated by our very own Alec Hogg.