Abstracts

7 be a coal-reliant utility and make room for less costly and environmentally sustainable alternatives for generating electricity. In South Africa, the minerals-energy complex is the system of production and consumption based on the country’s historical dependence on coal to produce electricity for an export-oriented industry based on minerals (Baker, 2017). While the coal mining industry supplies coal for about 85% of generation (see Table 1), it also is among Eskom’s biggest customers for electricity. This generates a conflict of interest whereby the utility is reluctant to consider other forms of generation due to its own large fleet of coal-fired stations and interdependence with influential coal mining companies that are interested in continuing to supply its generation business. The minerals-energy complex no longer provides the cheapest electricity, even before considering the large externality costs of emissions from coal. South Africa’s least costly and most sustainable long-term electricity supply configuration is one that is diversified, distributed, and based mostly on renewable capacity. The country’s large coal resources coupled with the historical externalization of environmental costs have made coal-fired power stations the cheapest way to generate electricity in the past. However, Bischof-Niemz and Creamer (2019) highlight that over the last few decades, the cost of solar photovoltaic (PV) 6 and wind has fallen dramatically through innovations subsidized by first adopters, such as Germany, USA, and China. South Africa does not have to pay this price. In fact, a comparative analysis of data from South Africa’s own successful but limited Renewable Energy Independent Power Producer Program (REIPPP) shows that new solar PV and wind generation capacity in South Africa is 40% cheaper than new coal-fired capacity, with costs forecasted to fall even further in the future. This is in addition to the fact that South Africa has world-class solar and wind resources. For example, it has two times Germany’s solar resource, yet Germany already 6 PV technology converts sunlight into electricity directly, as opposed to concentrating solar technology, which converts sunlight to concentrated heat that then generates electricity. has 40 GW of solar PV installed compared to South Africa’s 1.8 GW. 7 Scientists in South Africa have demonstrated that solar PV and wind will be the least costly ways to supply 82% of South Africa’s electricity by 2050 (Bischof- Niemz & Creamer, 2019, pp. 45, 50, 65). Yet, current electricity sector policy clearly shows the government’s reluctance to move more aggressively in this direction. The latest Integrated Resource Plan (IRP) illustrates some of the government’s desire “to ensure that South African coal still plays an integral part of the energy mix” (DOE, 2019, p. 15). The IRP is an electricity infrastructure plan that lays out the South African government’s intentions for the electricity sector. The current IRP retains historical constrains on the annual addition of solar PV capacity to 1000 MW and wind capacity to 1600 MW for another decade, while continuing to allocate some new coal and even nuclear capacity. This may be a result of the politicization of the electricity sector, enabled by Eskom’s configuration as a state-owned entity. Eskom and the coal mines that supply it are large and visible employers of highly unionized and politically active labor. Broadly embracing renewables and rapidly transitioning away from coal for generation, therefore, would be politically inconvenient for any government that tries to do so in South Africa. However, should South Africa hold on to coal for too long, the country will soon be spending much more on electricity. The least costly option would be to decommission coal-fired power stations as scheduled and allocate all new capacity to solar PV and wind (Bischof-Niemz & Creamer, 2019). Although economically ideal, the least costly option cannot be implemented in the present environment; Eskom previously has obstructed renewable projects by refusing to sign contracts with the winning bidders in REIPPP auctions (Yelland, 2017). However, if generation were independent, competitive, and separate from Eskom, the utility would have no option but to purchase the cheapest electricity available from IPPs, which in a competitive generation market, would over time increasingly choose to generate electricity from solar and wind. 7 For perspective, South Africa’s entire coal fleet has an installed capacity of 38 GW (DOE, 2019, p. 14).