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Renewable energy is profitable in South Africa

28 August 2015

An independent study by the Council for Scientific and Industrial Research (CSIR) has found that renewable energy from South Africa’s first wind and solar (photovoltaic) projects created R 4 billion more financial benefits to the country than they cost during the first six months of 2015.

Photo: Anike Meyer

Photo: Anike Meyer

The study is an update and continuation of an initial study that was published in January this year, which covered the calendar year 2014. The benefits earned were two-fold.

The first benefit, derived from diesel and coal fuel cost savings, is pinned at R 3.6 billion.

This is because 2.0 TWh (terawatt-hours) of wind and solar energy replaced the electricity that would have otherwise been generated from diesel and coal (1.5 TWh from diesel-fired open-cycled gas turbines and 0.5 TWh from coal power stations).

The second benefit is the saving of R 4.6 billion to the economy derived from 203 hours of so-called ‘unserved energy’ that were avoided thanks to the contribution of the wind and solar projects.

During these hours the supply situation was so tight that some customers’ energy supply would have had to be curtailed (’unserved’) if it had not been for the renewables.

The avoidance of unserved energy cumulated into the effect that during 15 days from January to June 2015 load shedding was avoided entirely, delayed, or a higher stage of load shedding prevented thanks to the contribution of the wind and PV projects.

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These direct cash savings on fuel spending to Eskom and the macroeconomic benefits of having avoided “unserved energy” are countered by the tariff payments to the independent power producers of the first wind and photovoltaic (PV) projects. They amounted to R 4.3 billion from January to June 2015.

Therefore, renewables contributed a total net benefit of R 4 billion (or  R 2 per kWh of renewable energy) to the economy.

As for wind alone, these projects were cash positive for Eskom to the tune of R 300 million; saving R 1.5 billion in fuel payments while costing only R 1.2 billion in tariff payments to IPPs.

“The study was based on actual hourly production data for the different supply categories of the South African power system (e.g. coal, diesel, wind, PV).

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