Amidst blackouts, rampant electricity tariff hikes, and the mounting economic costs of air pollution, South Africa urgently needs to begin cutting its ties with fossil fuels and speed the transition to renewable energy to secure a better future for the country, says Alumo Energy Managing Director Rein Snoeck Henkemans.
“Despite President Ramaphosa’s commitment to new energy alternatives during the State of the Nation Address, the reality is that coal power remains a central component of South Africa’s energy plans. His emphasis on gas further ignored the reality that gas is still a fossil fuel that contributes to greenhouse gas emissions,” he argues.
“The national power grid’s dependence on coal, gas and diesel also risks continuously driving the price of electricity higher. As consumers and businesses, transitioning to renewable energy sources needs to be a top priority if we are to achieve affordable, sustainable power, and bypass the issues created by underdeveloped grid capacity.”
Notably, coal and liquefied natural gas (LNG) prices both surged to record highs last year, and market analysts have predicted that both may reach new highs again in 2022 as global economies recover from the pandemic. Likewise, skyrocketing fuel prices have further driven Eskom’s input costs higher given the state-owned entity’s reliance on open cycle gas turbines fuelled by diesel to keep the lights on in case of emergency.
Fossil fuel costs rise as renewables continue to fall
Meanwhile, Eskom recently applied to the National Energy Regulator of South Africa (NERSA) for double-digit annual price increases for the next three years of 20.5%, 15.07% and 10% respectively. If granted, this means that the average standard tariff would increase from R1.34 to R1.61 per kWh this year alone.
By contrast, as the most popular renewable energy alternative in the world, the price of solar photovoltaic (PV) systems has continued to fall as its technology has evolved. For example, estimates from GreenCape show that the average cost of small-scale solar PV installations is less than R1.00 in kilowatts at peak power (kWp).
“Solar rooftop solutions and power storage technology are rapidly becoming more cost-effective, offering potentially significant savings as a long-term investment in both the residential and commercial sectors,” says Snoeck Henkemans.
“Additionally, innovations such as Alumo’s rent-to-own systems and the option of financing solar systems through bank mortgages have made solar more affordable and accessible than ever before. So, as population growth and economic development stimulate power demand, renewable solutions will become increasingly critical to plugging the energy gap and ensuring more reliable supply.”
The cost of air pollution
According to Carbon Brief, South Africa’s continued reliance on coal power means that it currently ranks as the 14th worst emitter of greenhouse gas (GHG) in the world. However, this does not only carry significant implications for the environment but for the economy as well, especially as the country seeks to shake off its economic malaise and reignite inclusive growth.
Conservative estimates from the International Institute for Sustainable Development (IISD) show that air pollution and greenhouse gas emissions from fossil fuels cost the South African economy as much as R550 billion each year. This results from the impacts of mortality; morbidity or diseases related to poor air quality; as well as the cost of damages to businesses and households resulting from climate change.
“Ultimately, a lack of urgency in the transition to renewable energy will not only inhibit South Africa’s economic recovery but will also impact the country’s competitiveness in a global clean energy future,” concludes Snoeck Henkemans.
“As a society, it’s time that we started exploiting sustainable resources such as our country’s natural abundance of sunlight to play our part in tackling climate change and safeguarding the environment. This will also have the effect of securing more reliable and more affordable power supply to run households, conduct business, and play a role in growing the economy – a win-win for all.”