The independent study found that the country’s first wind and solar PV projects have created 8 million Rand more than they cost to build during 2014. The study was conducted against the backdrop of the Department of Energy’s procurement programme which aims to expand the generation capacity in South Africa. So far it has already procured close to 4,000 MW of renewable capacity, mainly from wind and solar, generated by independent power producers (IPPs).
According to Dr Tobias Bischof-Niemz, the chief engineer at the Integrated Energy Research Centre at CSIR, the study was based on the actual hourly production date for the different supply categories of the power system.
“The benefits earned were two-fold” said Dr Bischof-Niemz. “The first benefit, derived from diesel and coal fuel cost savings, is pinned at R3.7 billion. This is because 2.2 terawatt-hours of wind and solar energy replaced the electricity that would have otherwise been generated from diesel and coal.”
Dr Tobias Bischof-Niemz added that the second benefit of R1.6 billion has been derived from almost 120 hours of ‘unserved energy’ avoided due to the contribution of wind and solar projects. The supply situation has been so tight that customers energy supplies may have had to have been cut (‘unserved’) if had not been for the energy generated by the renewables projects. This means that renewables in South Africa contributed benefits of R5.3 billion in total or R2.42 per kWh of renewable energy, compared to the tariff payments to the independent power producers of the first wind and PV projects which were only R4.5 billion or R2.08 per kWh of renewable energy. This left a net benefit of R0.8 billion.
CSIR have developed a methodology at the CSIR Energy Centre to determine whether at any given hour of the year renewables have replaced coal or diesel generators, or whether they have prevented ‘unserved energy’. This methodology was fed with cost assumptions from publicly available sources, such as power utility Eskom’s interim financial results 2014 for coal and diesel costs, or the Department of Energy’s publications on the average tariffs of the first renewables projects, or the Integrated Resource Plan on the cost of unserved energy.
The study shows that in 2014, renewable energy provided a net financial benefit to South Africa, without which it would have had to spend significant additional amounts on diesel, with energy ‘unserved’ during around 120 additional hours in 2014. Furthermore, the cost per kWh of renewable energy for new projects is now well below R1 for solar PV and between 60 cents to 80 cents for wind projects.