The nuclear reactors are still a plan on paper. But already the noxious debate over their future has made nuclear energy a dirty word in South Africa. To build or not to build – the stalemate over the proposed nuclear reactors to power the continent’s most advanced economy shows no sign of being resolved. The sharp divisions over a nuclear-powered future are now beginning to hurt South Africa’s nascent renewables industry.
State power utility Eskom is dragging its feet on honoring government-brokered deals with private renewables companies. Its refusal to purchase 250 megawatts of power from wind and solar projects has left its Irish and Saudi Arabian suppliers fuming and in limbo. More than scuppering the deals, Eskom’s actions, critically, threaten to undermine the gains made by the country’s green energy program, which many have come to hail as the shining beacon of a renewables-based future . On the Fieldstone Africa Renewable Index or FARI, South Africa’s ranking has plummeted off the charts entirely, prompting concerns amongst investors over green energy’s future in the country. Its decline is ironic given the rainbow nation had topped the continent-wide list just four months ago.
With a cluster of over 100 solar and wind projects South Africa is still currently home to the world’s fastest growing renewables program, generating 2.2 gigawatts of energy. According to FARI the country’s program has delivered enormous economic value for South Africa, attracting R196.4 billion ($14.4billion) in investments and created 20,000 jobs.
The program was started in 2010 in response to incessant power cuts South Africans endured day after day. They blamed the cuts for not only blighting their private and social life but also disrupting health, education and small scale industries.
Touching another small yet unique milestone the country’s first independent landfill gas-to-power project began operating in capital Johannesburg last week. The largest project of its kind in South Africa the plant at Robinson Deep landfill is the first of the five planned sites and has the capacity to generate 3 megawatts of clean energy – enough to power more than 5000 homes.
But Eskom’s snub just when the green energy industry is beginning to thrive in South Africa is not without reason. The state utility remains adamant that green energy from renewables is unreliable during peak times. Defending its position to not sign off 20-year Power Purchase Agreements (PPAs) with the contracted companies the agency claims it’s protecting the consumers from higher tariffs because current arrangements make it ‘very expensive’ to buy power from renewable producers.
Eskom’s stance, however, is openly questionable, particularly in view of its staunch support to the nuclear power plant proposals. While green energy suppliers have accused the agency of abusing its power, the environmental groups and civic rights organization have challenged its rigidity and claims over the matter. Another reason for dismally low faith in Eskom’s capability and judgement on future energy policy is its failure to finish the construction and commission of Medupi and Kusile coal-powered power plants. Both projects have missed their deadlines and are woefully overbudget now.
The ire directed at Eskom and department of energy has at its root legitimate concerns over the way energy future debate in South Africa is being shaped. Despite overwhelming evidence in support and expansion of existing renewables infrastructure the government machinery, going right up to President Jacob Zuma himself, has been leaning heavily towards constructing nuclear power plants to meet future demands. The plant, according to the official Integrated Resource Plan, will cost R100 billion ($7.3 billion) a year every year from 2040 when they are proposed to be built. The proponents of renewable energy believe it is not only wholly unnecessary but will also spell doom for the South African economy.
Drop in the cost of producing energy from solar and wind has been dramatic over the past few years all across the globe. South Africa’s own premier research agency Council for Scientific and Industrial Research (CSIR) has backed the case for an energy mix where 75% of the supply comes from renewable sources. Currently, only 2% of the energy is supplied by solar and wind projects.
Zuma administration’s reluctance to consider the case in favor of renewables combined with Eskom’s inflexibility with private energy producers is already shaking investor confidence in doing business with South Africa.
Earlier in August SMA Solar Technology folded its business in Cape Town to move to Germany and China citing ‘lack of commitment’ towards the renewable energy program. The current standoff between Eskom and green power companies is now threatening to risk billions of dollars of investment already pumped into the country.
This could be the beginning of the end of world’s most promising green energy initiative. The Zuma government needs to rethink its strategy if it still wants a clean and cost-efficient energy future for the country.
By Nishtha Chugh. Source: Forbes