Page 44 - Energize July 2022

VIEWS AND OPINION

Resolving South Africa’s power crisis

From a report by Meridian Economics

mpirical evidence demonstrates that Confirmed by two separate modelling platforms, the results are startling – an additional 5
an additional 5 GW of renewable GW of wind and solar (the approximate capacity of two REIPPPP bidding rounds) in the same
Eenergy would have essentially solved proportion as the currently installed capacity, would have allowed Eskom to eliminate 96,5% of
load shedding in 2021 whilst enabling load shedding in 2021.
better and more efficient operation of Further to this, the additional wind and solar capacity would have reduced the amount
our power system, all at a cost saving to of diesel burnt in the open cycle gas turbine (OCGT) peakers by more than 70%, simply by
Eskom. Load shedding in 2021 was the generating power at the time that these were running. More optimal use of Eskom’s pumped
worst on record, spanning 1165 hours storage assets, enabled by the additional energy on the system, could have created further
with a total of 1,8 TWh of energy unserved diesel savings – exceeding 80% in all.
– uncomfortably close to 1% of total The study finds that the remaining (3,5%) fraction of load shedding could have been
electricity demand. eliminated by a modest expansion of Eskom’s ILS demand response programme or other
aggregated Demand Response intervention, and the very last few hours by 2 GW of one-hour
This is an abridged version of the Executive batteries.
Summary of a study report by Meridian This outcome is counterintuitive. Rather than increasing system risk as many observers
Economics, published on 13 June 2022. expect, the analysis based on the empirical data shows unequivocally that adding variable
renewable generators to the existing distressed South African power system will result in a
The report is in two parts. disproportionate reduction in load shedding and increase in system reliability.
• Click here for Part A: insights from 2021 This insight is critical for mapping the way forward and avoiding expensive pitfalls and
- SA’s worst load shedding year so far delays in doing so.
• Click here for Part B: An achievable Analysis of the cost impact of adding 5 GW of renewable energy capacity to the system is
game plan to end load shedding equally surprising.
Based on Eskom’s 2020/21 Financial Year dispatch cost of OCGTs (R3,04/kWh) and coal
The broader economic costs due to daily power (R0,42/kWh) and assuming renewables prices around R0,68/kWh, the additional 5 GW
disruptions are difficult to quantify, but of wind and solar would have created a net annual saving of R2,5-billion for Eskom.
include lost production, lost investments, This takes no account of the economic benefit of avoiding load shedding, but is merely the
de-industrialisation, greater unemployment net cash saving to Eskom, driven primarily by reduction in the quantity of diesel burned.
and declining livelihoods. The saving is after provision for a hypothetical R6,08/kWh incentive for participating
As the reliability of the existing fleet customers to reduce load under a demand response programme (equating to a 100%
of generators continues to decline, and premium over the cost of running existing OCGTs), and after provision of the cost of 2 GW of
delays with procuring and connecting new batteries.
capacity to the grid continue to mount,
South Africa now faces the very real
prospect of a return to Level 6 or even
Level 8 load shedding in the foreseeable
future. This situation is arguably the central
manifestation of South Africa’s economic
crisis, and a pathway to resolving it our
greatest economic opportunity.
This Study Report is Part A of a two-
part series exploring a feasible strategy to
resolve load shedding and aims to provide a
proper empirical basis for the development
of such a strategy.
For this study, Eskom’s actual data
is used to investigate the impact that
additional generation capacity would
have had on load shedding if it had been
operational last year, focusing on the
shortest lead-time and cheapest sources of Figure 1: Summary of results: 5 GW Additional renewables would have reduced load shedding by 96.5%
power generation – wind and solar. in 2021

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