Op-Ed: Coal or renewables? The answer is in the numbers

2020-09-03 03:39:00 PM
Op-Ed: Coal or renewables? The answer is in the numbers

Op-Ed: Coal or renewables? The answer is in the numbers

Op-Ed: Coal or renewables? The answer is in the numbers

Our current Integrated Resource Plan 2019 calls for significant (and yet wholly inadequate) new solar PV and wind build. By the time the solar and wind fleets have the same annual output as Medupi, the average cost per kWh for the renewables will be about 30% lower than that from Medupi.

Had the REIPPPP proceeded as originally intended, projects from bid window 6 would now be approaching full commercial operation, and we would be expecting bid window 7 projects to be completed in 2021, with bid window 8 preferred bidders already declared. The commissioning of the six units at the Medupi power station would more or less have coincided with the first six bid windows.

The 2020 capital cost to date, of about R160-billion, comes directly from Eskom, who promptly supplied the information on request. This represents the cumulative spend as of July 2020. Cumulative spend for the years prior to and post 2020 were estimated. The final figure of R220-billion excludes sulphur emissions control retrofits. This estimate does not come from Eskom.

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OP-ED: A global investment in public health is vital for the survival of future generationsEvery evening during the early days of the pandemic, people opened their windows at a set hour to applaud the heroic women and men who were putting their health on the line in the fight against Covid-19. In New York, London, Madrid and other cities, it became something of a ritual. For me, it was a daily reminder of those invisible workers, the public health professionals who battle the pandemic behind the scenes. It was also a reminder of how now, more than ever, we must invest in public health.

Save Purely by chance, the first unit at the Medupi coal-fired power station came on line in 2015, the same year that wind and solar from the renewable energy independent producers procurement programme (REIPPPP) bid window 1 came on line.More Whitehall and its civil servants have long been regarded as the guardians of probity and the checks and balances in Britain’s unwritten constitution.Save In a few short but seemingly endless months, an infinitesimal and invisible force has brought even the wealthiest and most resourced countries to their knees.Save Cyril Ramaphosa, South Africa’s walking president, set tongues wagging when he first took office thanks to his habit of taking a brisk morning walk.

Since 2015, additional units from Medupi have come on line at an average of one per year. The sixth and last unit is due to come on line in February 2021, five and a half years after the first unit. The mandarins of Whitehall are being portrayed by much of the media and the commentariat as victims as Boris Johnson and his amanuensis and chief aide, Dominic Cummings, tear up traditional conventions and appoint an administration of cronies. In 2016 and 2017, renewable energy projects from bid windows 2 and 3 achieved full commercial operation, and the cumulative wind and solar fleets grew in size. Did this catastrophe need to happen? The answer is no. It is well known that the signing of power purchase agreements from bid window 4 was stalled for over two years, and projects from bid window 4 that were meant to come on line in 2018, are only now coming on line in 2020, having been further delayed by Covid-19 lockdown restrictions. It has made itself an easy target. Had the REIPPPP proceeded as originally intended, projects from bid window 6 would now be approaching full commercial operation, and we would be expecting bid window 7 projects to be completed in 2021, with bid window 8 preferred bidders already declared. The fact that Ramaphosa’s daily ritual caused such a stir in South Africa is indicative of the closed nature of our high-walled suburbs and our segregated cities.

The commissioning of the six units at the Medupi power station would more or less have coincided with the first six bid windows. It has been more and more reluctant to speak truth to power, failing to warn ministers of the consequences of the disastrous and unlawful invasion of Iraq in 2003, for example, or of the ill-judged military intervention in Afghanistan, and, more recently, by ignoring the warnings from internal government discussions and exercises of a potential pandemic. Yet, many simply did not have the means to do so. Table 1 shows data for Medupi. It includes operational data such as how many megawatts worth of units were functioning each year, as well as annual electricity output in terawatt hours. And they have been protected by an arsenal of weapons whose effectiveness has been seriously underestimated. It also includes cumulative capital cost expenditure, as well as estimates of future capital costs. But the capacity of public health resources to meet the demands of the early critical containment phase was quickly overwhelmed. The 2020 capital cost to date, of about R160-billion, comes directly from Eskom, who promptly supplied the information on request. (Photo: EPA-EFE / Andy Rain) Language is one example. It should be the norm.

This represents the cumulative spend as of July 2020. Cumulative spend for the years prior to and post 2020 were estimated. Ministers quickly learn from their official advisers. But a report in 2017 noted that public health represented only 2. The final figure of R220-billion excludes sulphur emissions control retrofits. This estimate does not come from Eskom. There is a refusal to commit — policies are always “kept under review”. Table 1. Unfortunately, the situation in other countries around the world, including in low- and middle-income countries, does not differ. This is, of course, ironic given that the vast majority of South Africans are walkers and should be accommodated.

Key operational and cost data for Medupi coal-fired power station. Such responses can be meaningless given that the crisis is itself “unprecedented” as ministers themselves keep on insisting. # Effective MW takes into account the month in which each new unit was commissioned in each particular year. Operational and cost data sourced from Eskom. “Half the picture can be true”, the then cabinet secretary, Sir Robin (now Lord) Butler, told the Scott enquiry into arms sales to Saddam Hussein’s Iraq in the 1990s. In the absence of a raging epidemic like Covid-19, this bulwark against such threats is rapidly forgotten. Some data has been smoothed over the period. Cumulative capex spend is estimated, but locked in to 2020 cost data as supplied by Eskom. Boris Johnson and Donald Trump would like that. A call for collective action The problem is that issues around urban planning, opposing the mushrooming of shopping malls and walled estates are far from being “sexy” topics.

Final cost estimates are by the author, not from Eskom. Even when there are no epidemics in sight, the benefits of a strong public health system are clear. The row showing cumulative effective MW installed, takes into account the timing of each new unit by factoring in the number of months per year that any specific unit was operational. “A lie is a straight untruth”, replied Armstrong. Figures on operations & maintenance costs (O&M) as well as fuel costs received from Eskom have been smoothed over the period, to equate to the same total amount as the actual figures. For example, in the data received from Eskom, 2015 had very little electricity output, but a large amount was spent on coal. Sir Patrick Nairne, a former senior MOD official had the honesty to admit: “The secrecy culture of Whitehall is essentially a product of British parliamentary democracy; economy with the truth is the essence of a professional reply to a parliamentary answer”.2%, diabetes deaths decrease 1. This reflects the building up of coal stockpiles, and may well have also included take-or-pay coal purchase penalties, as the startup of the first unit was well behind the contracted coal delivery schedule. Since the advent of settled civilisation, spaces for public interaction have been the very backbone of our society, manifesting as the agora in ancient Greece, the forum in ancient Rome, the Kgotla in southern Africa, marketplaces, streets, ceremonial squares and playgrounds in civilisations across the world.

As with any large coal-fired power station project with multiple generating units, the units are brought on line sequentially. The mandarins of Whitehall pay homage to parliamentary democracy but do their best quietly to subvert it. In the case of Medupi, an average of one additional unit was brought on line per year. A multitude of professional staff with different skill sets are required in an intermediate care isolation service —doctors, clinical associates, nurses (registered and cadres) and, very importantly, allied health professionals including physiotherapists, occupational therapists, dieticians and psychologists. Although the generating units come on line in sequence, much of the balance-of-plant needs to be in place before the first generating unit comes on line. Yet for years its incompetence has been abundantly clear, not least when it comes to negotiating contracts with the private sector and its shameful ignorance of technology. This includes coal stockpiles and handling facilities, water treatment plants, shared emissions stacks, and in fact everything else that is shared by the six generating units. The result of this is that the electricity output from the first of the generating units is very expensive on a cost per kWh basis; it has to shoulder the full capital cost of the shared balance of plant infrastructure on its own. The mandarins are now losing the bullet-proof job protection privileges they have enjoyed for so long. A recent study showed that three basic public health interventions – scaling up treatment of high blood pressure to 70%, reducing sodium intake by 30% and eliminating the intake of artificial trans fatty acids – could save 94-million lives in 25 years. Coupled to this should be a greater debate and reflection about the type of society we hope to see in the future.

Figure 1 shows how the output from Medupi ramps up over time as each additional generating unit is added. Medupi should achieve full expected capacity of approximately 30TWh/year by 2022. Sir Mark Sedwill, the cabinet secretary, left his post early by mutual agreement with Johnson, but after he became the butt of criticism by political aides in Downing Street, notably over the handling of the coronavirus crisis. Figure 1 also shows increased output from wind and solar PV additions over time.40 per person per year in low-income countries. In order for solar PV and wind annual output to equal that of a fully completed Medupi, 5. Earlier this year, Sir Philip Rutnam, “permanent secretary” at the Home Office, resigned, taking his case to an employment tribunal claiming constructive dismissal over home secretary Priti Patel’s alleged bullying of officials.5GW of solar PV and 3GW of wind will need to be added each year during 2021 and 2022. The psychology of this new world of work will bring with it unique challenges around social interaction.

In the case of solar PV, this quantum of build would be technically possible, whereas with wind it would only be possible by 2022 and 2023, allowing for a longer two-year build period. (Photo: EPA-EFE / Simon Dawson) Unsurprisingly, former top civil servants and (anonymous) serving ones, and their union, the First Division Association, attack the Johnson government saying civil servants are being blamed for the mistakes and incompetence of ministers. And when an infectious disease does spread widely, public health provides the tools to identify the epidemic and monitor it, as well as the means for reaching into communities. Although the required new solar PV and wind build is theoretical, the annual quantum recommended would result in an immediate end to load shedding, as well as a 10-fold reduction in the use of open cycle diesel turbines, which are extremely expensive to operate. Figure 1. Political connections The trouble is that Johnson is substituting the traditional Whitehall machine with something very different but equally bad. Ramping up of output for Medupi coal-fired power station. There is increasing evidence that mitigation measures put in place, such as movement restrictions, mask-wearing and physical distancing, have been making a difference in some epidemic hotspots. Annual output for PV and wind from 2015 to 2020 as per the first four REIPPPP bid windows. A company hired to work with Dominic Cummings on the Vote Leave campaign during the EU referendum has been awarded valuable government. As part of the human experience, this is an emerging trend which those tasked with planning our cities and our homes must consider.

In order for PV and wind output to equal Medupi output by 2022, 5.5GW of additional PV and 3GW of additional wind would be required in each of 2021 and 2022. At the same time, we must remain cognisant of the cost of these measures. Table 2 shows a comparison of the cost/kWh from Medupi, and from the REIPPPP for solar PV and wind. The data for Medupi is the same as in table 1 . In the case of solar PV and wind, annual pricing is as per each of the bid windows, with the tariff shown reflecting the average cost in that year. Having the systems in place to measure these effects at a population level and to inform interventions to mitigate them is of paramount importance. A prime example is how everyone from joggers to dog walkers has taken back the streets since Level 5 lockdown ended, creating a place of interaction and exercise both in the urban centres and the suburbs.

This factors in CPI inflation for tariffs from previous years. The tariff is thus a blended weighted average tariff for the year in question, and may be directly compared to the cost of production from Medupi. Note that annual average wind tariffs are always significantly lower than the costs of production from Medupi, and that those of solar PV are only higher than Medupi costs over the three-year period when the REIPPPP stalled. In addition, the current crisis has made evident that epidemics know no borders. Thereafter, average PV prices continue to drop to well below those of Medupi. Table 2. An age of excess.

Comparative table for the six stages of Medupi to four actual and two hypothetical bid windows for wind and PV. Increasingly, there is a greater understanding of the distinction between public health and healthcare, recognising the importance of both. Note that there were no bid windows for delivery of PV and wind in 2018 and 2019. By 2022, annual TWh is equal for Medupi, PV and wind at 30TWh/year. The average wind and PV tariffs increased at CPI in 2018 and 2019 when there were no new additions of wind or PV. El-Sadr, MD, MPH, MPA, is founder and director of ICAP, a global health centre based at the Columbia University Mailman School of Public Health working extensively in sub-Saharan Africa, and a professor of epidemiology and medicine. The large additions of PV and wind in 2021 and 2022, required to match the output from Medupi by 2022, have a far lower PPA price tag. This evolution can, and should, be a guided and collaborative process – one in which architects have an important role to play in ensuring that presidents and prime ministers can continue to enjoy a space to roam.

In the case of PV, R0.70/kWh and R0.60/kWh were used for 2021 and 2022 respectively. These PPA tariffs are regarded as conservative. In the case of wind, the tariffs used were R0.

70/kWh and R0.65/kWh for 2021 and 2022 respectively: likewise on the conservative side. The reduction in the cost/kWh for Medupi over time is directly related to the sequential additions of generating units against a backdrop of already sunk balance-of-system capital expenditure. On the other hand, the reduction in cost/kWh over time for PV and wind is a reflection of growing fleets, with incremental additions having significantly reduced prices. By 2022, Medupi will have stabilised at R1.

32/kWh, solar PV at R0.95/kWh, and wind at R0.90/kWh. All three of these tariffs will increase at CPI in the future. However, coal price increases have tended to exceed CPI, exposing Medupi to additional cost increase risk as compared to the envisaged PV and wind fleets.

The declining cost/kWh for Medupi and the envisaged PV and wind fleets are shown in Figure 2 . The effect of the stalled programme on average tariffs in 2018 and 2019 is clear, especially in the case of PV. Figure 2. Estimated R/kWh for Medupi. Actual R/kWh for wind and solar PV up to 2019, estimated for 2020 to 2022.

Much has been made of the expensive early rounds of the REIPPPP. There are ongoing discussions and negotiations to lower the impact by way of restructuring or refinancing early round PPAs. This analysis shows that the high-cost early rounds can best be dealt with by additional procurement at much lower PPA pricing. These need not necessarily be via the same REIPPPP vehicle. For example, greater cognisance of full system costs and requirements could be factored in, resulting in enhanced overall value.

The fact of the matter is that the costs per kWh from Medupi were similarly much higher in the early stages when only one unit – equated to bid window 1 – was operational. These costs decreased over time, as more units came on line, sharing in balance-of-system costs. Our current IRP 2019 calls for significant (and yet wholly inadequate) new PV and wind build. As shown by this analysis, by the time the PV and wind fleet has the same annual output as Medupi, the average cost per kWh will be about 30% lower than that from Medupi. As wind and solar make up more and more of the future generation, it will become necessary to ensure that additional flexible generation is constructed in tandem.

This can be achieved by a combination of gas (mainly hydrogen) and energy storage systems. At current costs of generating electricity from wind and PV, and storing electricity, it is possible to ensure adequate security of supply in South Africa for very high levels of renewable penetration (> 70%) for a wholesale “factory gate” price of less than R0.95/kWh. This price is set to reduce in future in line with ongoing technology improvements and economies of scale, thereby stabilising the electricity price trajectory in South Africa. DM Clyde Mallinson is a geologist who has previously lectured on Earth history.

Over the past decade, he has focused more on Earth future. He spends an inordinate amount of time estimating things in his head, and most of the rest of his time testing his estimates with computer simulations. He plays bridge in an attempt to relax. This article was first published in magazine and is republished with their permission. Clyde Mallinson .