Roll on ‘expensive’ electricity
04-02-2009
The last scheduled electricity load-shedding may have happened as far back as April 2008, but we’re not yet out of the woods, considering the thin reserve margin of Eskom – not only now but for many years into the future. This margin is so thin that it puts a ceiling of about 3% annual growth on the South African economy for about seven years to come.
There are various ways that South Africa could attempt to address the conundrum. These apply to the medium and long term, as well as the demand and supply sides.
In the short to medium term, the sharp and sudden slowdown in the world economy will make a huge contribution to switching off mines and other heavy power users in South Africa. At Megawatt Park, champagne corks must be popping.
As for the longer-term demand, this should of course be managed by doing smart things – like retrofitting buildings. Initiatives such as the Central City of Cape Town’s own ‘Energy Efficiency Initiative’ (EEI) are prime examples, believes Erwin Rode of Rode & Associates. Hosted by the Cape Town Partnership, the EEI is the first South African city-level public-private partnership created to reduce energy consumption within commercial buildings.
Says Andrew Boraine, Chief Executive of Cape Town Partnership: ‘We want to ensure that new buildings are designed “green” from the start and that landlords look to retro-fit their existing buildings with more energy-efficient lighting, air-conditioning and hot-water heating systems. We’ve brought in the expertise of a reputable energy service company (Shared Energy Management) that specializes in reducing a building’s energy capacity by an average of 20% and in some case up to 50%. We’ve conducted a study comparing the electricity consumption of 20 commercial buildings in the Central City which shows that there is good scope for energy-efficiency savings.’
To date, the programme has already audited fourteen pilot buildings, and the first one to go ahead with a retrofit is the massive Media 24 head office situated in the Cape Town Foreshore area.
The trend has also now become a major selling-point in new residential projects with a “green” sales pitch. Says Rode: ‘Hopefully it’s just a matter of time before these nice-to-have selling points become legislated must-have requirements in all buildings.’ However, retrofitting – and even the “greening” of new buildings – is expensive, and it is unlikely that owners will do this on a large scale until electricity tariffs are sufficiently high to warrant the cost. ‘Price is an important arbiter between demand and supply, and pressure groups who resist drastically higher electricity tariffs are advocating a false economy’, says Rode. ‘This is so because realistic prices suppress demand and stimulate supply. So we could have cheap electricity, except that we wouldn’t have any in the end – as in Nigeria.’
As for the supply side, completing new base power stations takes seven years or even longer. “We haven’t got the time”, says Rode, “so one wonders why we haven’t heard of huge solar and wind farms being planned; surely their lead times should be shorter than those of coal-fired or nuclear base stations?” wonders Rode.
‘Once electricity tariffs reflect the cost of new (green) power plants, retrofitting existing houses with solar geysers and photovoltaic cells might make economic sense to the man in the street. In the mean time, heavier subsidies are the only alternative. Yes, all this will cost money, and the consumer or tax payer will have to foot the bill. But the alternative is a Nigeria situation’, says Rode. He adds: ‘We must never forget that the current tariffs are based on historic capital costs of about 30 years ago, and are, therefore, not sustainable.’
