This is an abridged version of the Executive Summary of Part A of a Study Report by Meridian Economics, prepared by EE Business Intelligence.
- Empirical evidence demonstrates that an additional 5 GW of renewable energy would have essentially solved load shedding in 2021 whilst enabling better and more efficient operation of our power system, all at a cost saving to Eskom.
Load shedding in 2021 was the worst on record, spanning 1165 hours with a total of 1.8 TWh of energy unserved – uncomfortably close to one percent of total electricity demand.
The broader economic costs due to daily disruptions are difficult to quantify, but include lost production, lost investments, de-industrialisation, greater unemployment and declining livelihoods.
As the reliability of the existing fleet of generators continues to decline, and delays with procuring and connecting new 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 power generation – wind and solar.
Confirmed by two separate modelling platforms, the results are startling – an additional 5 GW of wind and solar (the approximate capacity of two REIPPPP bidding rounds) in the same proportion as the currently installed capacity, would have allowed Eskom to eliminate 96.5% of load shedding in 2021.
Further to this, the additional wind and solar capacity would have reduced the amount of diesel burnt in the open cycle gas turbine (OCGT) peakers by more than 70%, simply by generating power at the time that these were running. More optimal use of Eskom’s pumped storage assets, enabled by the additional energy on the system, could have created further diesel savings – exceeding 80% in all.
The study finds that the remaining (3.5%) fraction of load shedding could have been 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 batteries.
This outcome is counterintuitive. Rather than increasing system risk as many observers 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 disproportionate reduction in load shedding and increase in system reliability.
This insight is critical for mapping the way forward and avoiding expensive pitfalls and delays in doing so.
Analysis of the cost impact of adding 5 GW of renewable energy capacity to the system is equally surprising.
Based on Eskom’s 2020/21 Financial Year dispatch cost of OCGTs (R3.04/kWh) and coal power (R0.42/kWh) and assuming renewables prices around R0.68/kWh, the additional 5 GW of wind and solar would have created a net annual saving of R2.5bn for Eskom.
This takes no account of the economic benefit of avoiding load shedding, but is merely the net cash saving to Eskom, driven primarily by reduction in the quantity of diesel burned.
The saving is after provision for a hypothetical R6.08/kWh incentive for participating customers to reduce load under a demand response programme (equating to a 100% premium over the cost of running existing OCGTs), and after provision of the cost of 2 GW of batteries.
The analysis in Part A of the Study Report demonstrates how avoidable the current load shedding crisis has been, and how cost-effectively it can be resolved based on hard evidence from the actual 2021 data.
Insights from this analysis also demonstrate that by taking adequate steps (starting immediately), solutions to resolving load shedding are within reach.
Download the full Executive Summary and Study Report: Part A – HERE
Author: GBA News Desk
Source: EE Business Intelligence
