FNB touts renewable energy as solution to Eskom woes
Big four bank First National Bank (FNB) is urging organisations to invest in renewable energy solutions if they are to survive the post-COVID-19 economy.
The bank says given the anticipated strain on business operations due to power interruptions over the period, coupled with the financial impact of the COVID-19 pandemic, businesses resuming activities, in line with the easing of lockdown restrictions and the new normal, cannot afford to be caught off-guard without a reliable alternative energy solution in place.
This as power utility Eskom, which provides over 90% of South Africa’s power needs, is failing to keep the lights on, leaving organisations, employees and learners working remotely in a fix.
Eskom heavily relies on coal-fired power stations to produce approximately 90% of its electricity. In a statement yesterday, the troubled power utility said it reduced load-shedding to stage one. Today, stage one load-shedding resumed at 08:00 and will last until 16:00.
According to Eskom, it will then escalate to stage two until 22:00, and this pattern will repeat on Tuesday, with a high likelihood for Wednesday as well.
Eskom had to implement load-shedding over the weekend to replenish the emergency generation reserves, which were depleted over the past week.
According to Eskom, unplanned breakdowns amount to 9 272MW of capacity, adding to the 6 314MW currently out on planned maintenance.
Keeping business alive
“Our customers and the economy, particularly the manufacturing sector and other sectors, will have to start looking at alternative energy again to ensure uninterrupted business. The cost of losing business time has never been more urgent than now as thousands of businesses start up again with the easing of the lockdown,” says Kyle Durham, head of alternative energy solutions at FNB Business.
“In addition to the prevailing challenges of power interruptions pre-COVID-19, energy experts were already forecasting an above inflation electricity price increase and there remains notable uncertainty regarding electricity price increases into the future.
“This means from an energy cost point of view, particularly in a depressed economy, businesses also need to be looking at every way they can save costs. COVID-19 has just highlighted the importance of having energy certainty and reducing costs wherever possible,” Durham says.
The big four bank believes the long-term benefits of implementing alternatives such as solar renewable energy solutions certainly outweigh the costs.
“For example, an average-sized retail property would require a solar plant with a size of approximately 500kWp costing approximately R4.7 million.
“However, the energy savings based on current electricity prices alone would amount to just over R1 million, with the cumulative savings over 10 years projected at R11.8 million. Moreover, the business would also benefit from the S12B tax allowance, which includes a 100% accelerated wear and tear deduction in the first year,” Durham explains.
He says one of the most effective solar solutions for most businesses would be a grid-tied solution. Grid-tied systems consist of two key components – solar panels and a dedicated grid-tied inverter. All the electric power generated by the solar panels feeds through a mains-synchronised inverter directly into a distribution board and offsets the power an organisation would normally consume from Eskom or the municipality.
“This means you are trying to use your solar plant in such a way that by noon on a sunny day, the plant is generating maximum electricity and as you go towards the evening and mornings, you revert to using municipality or Eskom electricity. You can save 30% to 50% on your electricity bill.”
Thrice the crisis
Meanwhile, local renewable energy industry body the South African Photovoltaic Industry Association (SAPVIA) says today SA is facing a crisis on three fronts.
“We face an energy crisis, an economic crisis and an unemployment crisis,” says Wido Schnabel, chairperson of SAPVIA.
“We urgently need to move away from our dependence on finite fossil fuels. That is not a question, but how we do so and how we alleviate the impact of the decommissioning of coal mines is up for discussion.”
Schnabel notes that the question on everyone's lips is where the jobs come from to replace the value chain created by the coal sector.
“We must ensure the transition is just and that no one gets left behind, and in this renewable energy represents not only a sustainable source, it also creates jobs right across the value chain.”
Take for example Solar PV, Schnabel explains; with some 11GW of coal to be decommissioned by 2030, renewable energy can step into the breach.
He adds that not only will the 16GW wind, 6GW solar PV utility and 6GW distributed generation more than compensate for the loss of coal, but will also create the much-needed increase in capacity SA needs to enable a functioning economy.
“More importantly, the jobs created by these energy sources are plentiful. SAPVIA has commissioned a jobs study which we anticipate will report that utility-scale solar PV projects can generate between seven and 14 jobs per MW capacity, commercial projects between 10 to 12 jobs, while residential projects could create up to 14 jobs per MW.
“These numbers are not to be sniffed at and we could use the current energy crisis as the impetus we need to make a step change and address the fundamental flaws in our infrastructure and economy.”
Wind for the win
Another industry body, the South African Wind Energy Association (SAWEA), says the power crisis that SA is in at the moment is a long-standing problem.
“Unless the country implements clear and decisive policy initiatives and implements the Integrated Resource Plan (IRP 2019), load-shedding will be here to stay and continue to drag down our economy,” says Ntombifuthi Ntuli, CEO of SAWEA.
“It is clear from the IRP2019 that the new generation capacity should come from low-cost and reliable renewable energy sources, such as wind.”
According to Ntuli, in December 2019, the country reached stage six load-shedding, in the middle of summer, which is something that shouldn’t happen considering the low energy demand in summer months.
“Eskom has admitted, on several occasions, that they have an ailing fleet of power stations, characterised by a maintenance backlog which has reduced their energy availability factor to below 65%.
“In order to address this long-term crisis, the country needs to think about long-term solutions. And we do have a long-term solution in the form of an approved Integrated Resource Plan that ushers the country into an energy transition from carbon-intensive generation technologies to clean energy.”
Ntuli says wind energy has a big role to play in that transition as it will contribute 18% to the total power system by 2030, according to the IRP2019.