Discussion of the latest draft Integrated Resource plan for electricity (IRP 2018) is now well underway. The debate however will rage on for many months and possibly years. Hopefully, the authorities will listen to the realities that have been expressed by a number of interested parties. It is well known that the renewable lobby with powerful vested foreign, idealistic, financial interests and media lobbyists behind them have dominated public debate. Contrary to comments by some observers, the IRP 2018 has quite rightly not been well received by many recognised bodies such as the Nuclear Industry Association of SA, the Fossil Fuel Foundation and the Coal Transporters Forum. It is quite true that they represent vested interests but then the renewable lobby is led by those with substantial vested interests. However, the protest against the IRP 2018 is also strongly supported by the metalworkers union Numsa and NUM, and advocacy groups such as the Free Market Foundation, Transform SA and the SA Energy Forum. Interestingly, the latter representing the workers and the forgotten poorer people in South Africa.
These bodies recognise the true realities of renewables. Basically, these groups recognise that renewables are costly, do not create employment, in fact they destroy jobs and, in the end, these additional costs are paid for by the poor. These representative bodies recognise the realities emerging from overseas economies that renewables are an economic and social failure and that together with the carbon tax are known to be a tax on the poor. They have recognised that energy poverty is increasing in all countries with high penetration renewables. These protesting bodies are supported by a number of energy economic and environmental specialists and professionals who are aware of the facts in the real world. Namely, that the so-called benefits of renewables are myths and a distortion of the truth. The hard facts and the economic realities of the real world reveal a very different picture to that painted by the renewable lobby.
The real world confirms that wind and solar are intermittent, variable and largely unpredictable resulting in electricity supply generated by these sources being non-dispatchable. In other words, it cannot be supplied on demand when needed. As a result, they require 100% back up from a dispatchable electricity generating source. This as can be anticipated is costly and expensive.
Renewables put additional demands on the grid and systems controlling the grid. The experience domestically and internationally is that they require to be subsidised. These subsidies take many forms but basically the additional costs required to turn the variable intermittent electricity supply of renewables to a supply of dispatchable power are absorbed by Eskom and are not paid by the Independent Power Producer (IPP) responsible for supplying their intermittent non-dispatchable renewable electricity.
Furthermore, the electricity supplied must be paid for whether it is required or not. Together with the additional costs set out above they are ultimately passed on to the customer and ultimately, in whatever the form they take, they are paid for by the poorer communities.
Renewables do not create permanent jobs on the scale that nuclear or coal provide. In addition, any jobs created are lower level jobs as opposed to the highly skilled engineers, mining engineers, nuclear engineers, architects, geologists require by the generation of electricity by coal and nuclear power. Studies indicate that the decline in mining and coal mining alone could cost the country some 150000 jobs and will result in ghost towns being formed in once prosperous communities. Together with the carbon tax, a study by Econometrix in 2015 for the Davis Tax Commission found that over 15 years it could well slow economic GDP growth by more than R1 trillion and reduce employment growth by more than 5 million jobs. It was submitted that renewables and carbon tax should not be introduced at that time because of the economic conditions in the country. It is submitted that economic conditions today are worse and the country should not be experimenting with either carbon tax or renewables when they have been proven to have failed elsewhere.
The facts of the real world and real economies must be faced. Renewables have failed in Germany Australia and Ontario. In many other countries they have led to increasing prices of electricity. In fact, they have led to changes of government in Australia and Ontario. Both these governments are cancelling the previous renewable growth plans. The lobby groups for renewables cannot point to any country or state in the world where electricity generation from solar and wind has resulted in lower electricity prices or where economic growth and employment has increased. This is because they do not exist. The figures from around the world show clearly that increasing penetration of solar and wind results in higher electricity prices. Prices In Germany and Denmark are over 60% higher than France (nuclear) and over70% higher than Poland (coal). It should be pointed out that India, China and the ASEAN countries are expanding their High Efficiency Low Emissions (HELE) or clean coal generation. Nuclear is also experiencing a resurgence with Global nuclear power capacity expected to grow at 2.4% per annum to reach 536GW by 2030. Some commentators argue that several countries draw almost all of their electricity from renewable power sources including Costa Rica, Iceland, Norway and Paraguay. This is like false advertising it is an illusion. These countries are dependent on Hydropower known to of dispatchable power. South Africa does not have this resource. It is no point to say later that South Africa has a lot of sunshine, and its coastline and escarpment offer superb sites for wind farms. Ultimately, South Africa according to models and forecasts put out by renewable lobbyist talk of 100000MW of wind. This will cover more than 60000 sq. km. In other words, 3000 km of coast and escarpment 20 km deep smothered in windfarms. Capetonians would not be happy to see Table Mountain swathed in a bandage of windmills. Not for nothing are they known as prayer wheels.
The real fact is that if all the subsidies, economic costs and economic risk costs are included wind and solar work out to be more than 50% more expensive per kWh than nuclear and more than 70% more expensive than coal per kWh. These calculations bear close resemblance to the real world as set out above.
It is to be hoped that the authorities do not listen to the blatant propaganda and false information distributed by the renewable lobby. In summary South Africa cannot afford expensive renewables and not use the cheaper dispatchable power offered by HELE coal and nuclear. The real world shows clearly that it will result in South Africa heading down a road of total socio-economic destruction, where economic progress will be set back for a generation. It is time to stop experimenting based on models and myths. It is time to make decisions based on reality.
Rob Jeffrey is an independent economic risk consultant. He is the former MD of Econometrix and continues to consult for them. Areas of specialisation expertise include global and domestic economic trends and strategies to foster economic growth, the development of several important sectors of the economy including industry, mining, agriculture, financial services and electricity in South Africa. One of Rob’s major areas of expertise is the South African electricity and energy crisis. He is highly involved in analysing the energy requirements of the South African economy and the economic impact of alternative electricity generating sources. He is the author or co-author of numerous reports, papers, presentations and articles on matters relating to national, industrial, energy, and economic policy development.
Rob has wide practical experience and expertise in the industrial construction, and engineering sectors. He was MD of Dorbyl Structural Engineering, Chairperson of the Constructional Engineers Association (CEA), the CEA representative on SEIFSA, and an executive member of the Association of Steel Merchant Stockholders. He sat on numerous councils and advisory panels. Rob graduated with a B.Sc. in Mathematical Statistics and Applied Mathematics at the University of the Witwatersrand and has Masters Degrees in Economics from Cambridge University and Business Leadership from the University of South Africa.