South Africa’s electricity crisis and the future of supply

by Lucy Baker, University of Sussex (blog also published on SPRU’s website)

During his ‘State of the Nation address’ last week South Africa’s President Jacob Zuma promised to do “everything we can” to resolve the country’s energy challenge, including: to develop a large nuclear fleet; construct yet more coal-fired power plants; import hydro from the Democratic Republic of Congo; import gas from neighbouring countries; develop the country’s shale gas reserves; continue to develop a privately generated renewable energy sector; and undertake demand side management measures such as solar hot water heaters, and roof top solar PV. An impressive shopping list indeed, particularly given that coal-dependent South Africa is currently facing its worst electricity crisis in 40 years. With load shedding taking place most days, the country has been relying heavily on expensive diesel peaking plants to make up the short fall.

Load shedding, or planned outages which have been taking place regularly across the country since mid-2014 are now predicted to last until 2018. In addition to arguments over what the country’s electricity demand should be, national debates rage over which options are the quickest to construct, the most affordable, the most technically feasible. The country’s 20-year national electricity master plan, the ‘integrated resource plan’ for electricity first approved in 2011, has been under revision since late 2013. Decision-making over the ideal electricity mix often reflects deeper struggles over what gets supported by the state, who gets to build it and who gets to benefit.

The electricity crisis has contributed to lowering growth rates, discouraged private investment, exacerbated the country’s large current account deficit and pushed the cost of electricity way beyond the reach of the poorest households who are connected to the grid. Approximately 25 per cent of the population, 12.3 million people, lack access to electricity in a country where 40 per cent of the electricity is consumed by the country’s energy-intensive industrial users. The country’s historical dependence on cheap coal was, under apartheid coupled with cheap labour to generate cheap electricity for the primary benefit of export oriented industry and wealthy households. The monopoly utility Eskom which to date generates 90 per cent of the country’s coal-fired electricity, is cash strapped and crisis ridden. Since 2005 Eskom has been struggling to build an additional 17000 MW of generation capacity by 2018 whilst facing a funding crisis. Electricity tariffs have tripled in real terms since 2005 and will increase by a further 12.8% from April 2015. By January 2015, one third of Eskom’s installed capacity, approximately 15,000 MW was down and the country’s reserve margin on a knife edge.

The causes for the country’s current supply side crisis are complex and deep seated. They include: decades of mismanagement; a failure by government to approve the construction of new capacity in the early 1990s and disagreement over who should do this; inadequate maintenance of the utility’s older power stations; the recent collapse of the coal silo for the Majuba Power Station in November 2014; rising coal costs; increased international demands for the country’s coal; and climate change mitigation commitments pledged in 2009. A further R23 billion has been promised by government but this won’t last long, not least because the country has long exhausted its diesel budget for the financial year.

Big coal…

Delays in the construction of the 4,800 MW Medupi coal-fired power plant, the largest coal-fired power plant on the continent have exacerbated the crisis. A controversial World Bank loan for Medupi was approved in 2010, but the plant is now three years behind schedule and subject to significant cost overruns, technical glitches and labour unrest. By January 2015 Eskom had failed to meet all previous deadlines to synchronise Medupi’s first 794 MW unit with the grid, which was originally to have been carried out in 2011. Another power station of similar size and also delayed, Kusile, is anticipated to be one year behind Medupi.

An excellent report by the Energy Research Centre of the University of Cape Town details the significant planned expansion of South Africa’s coal mines, power plants and related infrastructure for both export and domestic purposes. Among other findings the report uncovers glaring inconsistencies between the country’s coal road map, a process driven and funded by the coal mining industry, and national climate change mitigation commitments. Planned investment in export infrastructure for coal is likely to be incompatible with required global reductions in fossil fuel combustion. In a potential illustration of ‘unburnable carbon’ this either risks new coal developments becoming stranded assets before too long, or the country becoming locked into a high-carbon emissions trajectory that prevents it from meeting its own mitigation imperatives.

…big networks, big nuclear

Reflecting what academic Anton Eberhard has referred to as a national paradigm of “big coal, big nuclear, big networks”, President Zuma reiterated the promise to construct a 9,600 MW nuclear fleet. It is estimated that this will cost the country R1 trillion ($85 billion) with a target to connect this fleet to the grid by 2023. The government has courted representatives from the ‘big five’ nuclear generating countries, China, France, Russia, the US and South Korea with whom it claims to have signed inter-governmental agreements. But according to Earthlife Africa, Russia is now being favoured based on an agreement designed to sidestep the constitutional requirement for open and competitive tendering. This would give Russia power of veto and prevent South Africa from entering into a contract with any other nuclear vendor.

For some environmentalists, nuclear energy has become the preferred option as a techno-fix to prevent runaway climate change. But I have never come across a satisfactory response to fundamental questions of finance, governance and accountability such as: who will build it, how much will it cost, who will pay for it, who will take liability for accidents, how will the R&D will be shared, where will the waste be stored and how do you avoid the corruption and cost and time overruns that often go hand in hand with large infrastructure projects? Rather than a simple case of coal v nuclear, to which pro-nuclear arguments are often reduced, there are other issues at stake here relating to democratic decision-making in energy, bargaining power within contractual agreements, allocation of risk and how limited public subsidy for energy development should be distributed. Philip Johnstone, from the Science Policy Research Unit at the University of Sussex has explored some of these arguments in relation to the UK’s Hinkley C.

Renewable

More positively, in the last three years South Africa has become one of the leading destinations for renewable energy investment. According to UNEP/BNEF investment went from a few hundred million dollars in 2011 to $5.7 billion in 2012 and $4.8 billion in 2013, of which $1.9 billion for wind and $3 billion for solar. This investment is largely due to the take off of the country’s Renewable Energy Independent Power Producers’ Programme (RE IPPPP), launched in August 2011. RE IPPPP is a tender system based on competitive bidding which means that potential project developers bid for a renewable energy contract below a certain cap and must meet potentially progressive socio-economic criteria in order to qualify. Successful projects sell electricity to Eskom’s grid under a 20 year local currency denominated, government-backed power purchase agreement (PPA). Just under 4,000 MW have thus far been approved and by December 2014, 21 projects had been connected.

As Holle Wlokas from the University of Cape Town and I discussed in a working paper last year, while the programme has brought a diversity of new players and investment to the country, the ownership of this new sector could become dominated by international companies rather than national players who are struggling to retain a share in the market. Moreover fundamental tensions have been identified between the demands of finance and investment for ‘bankability’ and the progressive socio-economic criteria of the programme that include minimum requirements for community ownership, job creation and participation of historically disadvantaged individuals.

So technology choice is about a lot more than just technology. There is no panacea, and without discussing the other various options Zuma has so confidently promised the country, disagreement, uncertainty and speculation over the country’s electricity are reflected in competing political and economic interests at the national level and beyond.

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The solar mini-grid system in Chinhambuzi

Chinhambuzi

22 August

Solar mini-grid system at Chinhambuze

Solar mini-grid system at Chinhambuzi

The Durham-Practical Action team visited the village of Chinhambuzi for several hours while on route from Manica town to Zambezia province. Neto brought a group of student community surveyors here on the same day that we visited a different project in Chua. Neto reported back that it was an interesting project and worth a visit, but that it faces some challenges.

In March 2013, FUNAE inaugurated a solar PV mini-grid with financial support from the Belgium government in the village of Chinhambuzi, in Manica province. The Belgian Technical Cooperation (BTC), which has been cooperating with FUNAE for several years, installed the mini-grid system in Chinhambuzi. The solar mini-grid supplies power to a primary school, clinic, police station, 6 teachers’ residences, the local authority’s residence, and 10 bancas fixtas (small shops). But ordinary residents in the main village (Chinhambuzi sede) and nearby settlements were not connected.

Many residents wish to be connected, but capacity constraints have prevented it so far. The system has only 3.6kWp of capacity, or up to 5 kW, insufficient for linking local households to the network, which extends 3 km. The majority of local households rely on burning wood or charcoal for cooking and heating. The teachers’ houses have two to three lamps and a refrigerator, and electricity is normally provided until about 8:00 PM.

The shopkeepers told us that they pay MT 70 per month (about US$2.50) for electricity, a fee used to support a security guard to watch over the system at night. The tariff appears symbolic and does not cover operations and maintenance costs. Payments are made to the village chief (chefe do posto). Later, we wondered if the chief gives all of the money to the security guard. Meanwhile, the teachers and local authority’s staff choose not to pay any tariff for their electricity, while the shopkeepers’ usage is unmetered.

Given their lack of access, some residents might try to connect in an improvised manner, or illegally, causing stress to the system and outages for shopkeepers, who use large deep freezers that require lots of power. The load will likely increase, as shopkeepers acquire TVs, stoves and other appliances. The system is managed in the provincial capital, Chimoio; there is no means to locally monitor the system’s capacity for community energy planning. Despite these challenges, it was still quite pleasurable to purchase a few chilled bottles of coke from a shopkeeper. Themba interviewed the shopkeeper in Shona.

Our research points to the importance of conducting preliminary market research and needs assessments, which appear lacking in many of the projects we visited. The local demand for solar energy in Chinhambuzi clearly outpaces the system’s capacity, and the mini-grid system is unlikely to accommodate future growth.

Later, while driving to Quelimane, I asked Neto about the lack of village cooperatives as an ownership structure in Mozambique. He said that cooperatives are unpopular in Mozambique, given histories of forced collectivisation during Frelimo’s Marxist-Leninist period in the late 1970s and early 1980s. Mozambicans often have negative memories associated with cooperatives, Neto said. “No one trusts that now. If you come to a community and start talking about that, people will say ‘thank you, see you later.’ The experience in the past has destroyed this kind of thing.”

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The mini-hydro system at Majaua-Maia, Milange district, Zambézia province

Majaua-Maia

25 August 2014

View of powerhouse at Majaua

View of powerhouse at Majaua

I recently spent four weeks observing several small-scale renewable energy projects in Mozambique. As part of the Rising Powers project, I accompanied two consultants from the Harare office of the NGO Practical Action and the director of a local NGO in central Mozambique, Kwaedza Simukai Manica (KSM). One of the most interesting projects we visited was the rehabilitation of a small-scale hydro system in Zambézia province, in the central region of the country.

In Majaua-Maia, a village in Milange district, Zambézia, Mozambique’s National Energy Fund (Fundo de Energia, FUNAE) has set up a 767 kV mini hydro scheme. Inaugurated in 2013, the project is funded by the European Union at a cost of €2.5 million. Once fully operational, FUNAE claims it will be the largest decentralised mini-grid in southern Africa. FUNAE and the EU awarded the tender for this project to CANAS, a Portuguese contracting firm.

The project broadly aims to improve the living conditions of Majaua residents by offering access to electricity, which was previously lacking in the village. Specifically, the project involved rehabilitating a mini-hydro scheme that was used to power a small fazenda (farm and mill) beginning in the mid-1960s, owned by a Portuguese man named Maia (the nearby village is partly named for him). Senhor Maia reportedly abandoned the fazenda in 1980 due to the strife from Mozambique’s 16-year civil war. The main house (casa grande)—a concrete and blue-tiled Portuguese-style country villa—fell into ruin. The mini-hydro system was not maintained, and villagers were left without any source of electricity.

Abandoned casa grande at Majaua-Maia

Abandoned casa grande at Majaua-Maia

Amid growing interest in the potential of small-scale hydro systems to offer renewable and low carbon sources of energy in off-grid sites, FUNAE’s project in Majaua-Maia intends to benefit 20,000 residents (or 5,000 households) in six surrounding villages, including three primary schools, one health clinic and six grinding mills. Majaua-Maia was a good three-hour drive from the district capital, Milange, on rutted dirt roads.

Technical specifications

The Majaua-Maia mini-hydro scheme is located on the Ruo River, a tributary of the Shire River, which forms a border with Malawi. The ‘net head’ is 15 metres and the flow rate is 4m3/min. Canas installed a cross-flow turbine made by Ossberger, a German company. The generator is Portuguese, made by Effacek. In a previous conversation with Canas director, Walter Canas, in Maputo, I learned that the turbine sat in a customs terminal at the Beira port for over a year before they were allowed to bring it into the country. The expected annual power production is 3,500 MWh/year. The first phase of the project has set up a 4km high voltage line, and the next phase will extend this network out to 40 km; this second phase is currently under construction.

All houses, schools, health centre and several small shops along the 4 km line are now connected. Each household has one light bulb and one point for power connection. Households and shopkeepers are not currently paying for electricity, as the project is in a ‘test phase,’ according to local residents and FUNAE’s director for Zambézia province, Senhor Jose Quelhes. As yet, there is no metering or billing system for electricity consumption.

The start of the mini-grid from the FUNAE Majaua mini-hydro mini-grid

The start of the mini-grid from Majaua’s rehabilitated mini-hydro system

Ownership, energy access and local participation

Senhor Qhelhes explained the mini-hydro scheme at Majaua-Maia is owned and operated by FUNAE. During the construction phase, most of the engineering inputs were sourced from Portugal, with limited involvement from Mozambicans. The contractors employed workers from Maputo, along with some local labourers in constructing the powerhouse and setting up the mini-grid. Technically, the system is very advanced, with state-of-the-art, imported equipment. The powerhouse is a large, sturdy and imposing structure, painted bright orange.

In addition to focusing on energy access, as FUNAE does, our research pointed to the importance of an energy supply option that is geared to the community’s current and long-term needs. The Majau-Maia project, however, showed signs that a community-focused needs assessment was lacking and local participation was minimal. The most glaring instance of this was that several local grinding mills were not connected to the decentralised mini-grid during our visit. Powering these mills for grinding cornmeal is a major priority, especially for local women. The cornmeal is used for making xima, a staple food in the region. As noted above, Majaua-Maia sits on the Ruo, a river forming a border with Malawi. Local women must cross the river into Malawi to grind their corn at a mill powered by diesel generator. There is no bridge, and they must wade across, often with children in tow. FUNAE intends to connect the local mill to the mini-grid, but this had not yet happened at the time of our visit, raising questions about whose needs were being prioritised.

Furthermore, the project fiscal (supervisor) who we spoke to, Senhor Sala, was from Beira, and his two young assistants were from Nampula and Quelimane (regional urban centres). As Lasten Mika observed, this was perhaps a missed opportunity to train local youth to take up such positions, fostering local involvement. Local youth might be more invested in the project than those from regional centres, who might not stay in Majaua for long. There is a high likelihood that the operators will be recruited from Maputo, Beira and Quelimane, which might not be sustainable, as it will be difficult to attract skilled personnel to this isolated community with poor roads.

In terms of local uses of the electricity, we observed three video clubs in the village showing movies, mainly Jackie Chan films dubbed in Chichewa (the predominant language in Malawi and also spoken in Majaua-Maia village). None was charging any admission fee. They were mostly frequented by young kids, boys and girls. We also heard several sound systems vying for attention where several small shops were clustered. Here we ate lunch in a small thatched hut, where a woman served bowls of xima with goat meat and sliced greens (for about 50 cents a plate). We had to change some Mozambican meticais into Malawi kwacha to pay for this meal, suggesting the cultural proximity to Malawi. Returning to the shops, I noticed only one had a refrigerator. I bought a bottle of coke to wash down lunch, and saw that the shopkeeper had a desktop computer and was in the midst of burning music CDs or videos.

Video club at Majaua

Video club at Majaua

In this project, as in others we observed, FUNAE has provided access to electricity to people who previously didn’t have it. But there seems to be little capacity-building offered for new users regarding what they could do with the power. Emphasis is placed on lighting and phone charging, but less on productive activities, such as supporting new enterprises and developing skills. It seems important to consider economic opportunities opened up by the new energy source, such as milling, welding of tools, or vehicle repair. One household was distilling liquor from corn and sugarcane, but this did not require electricity. During the visit, we saw very small houses with just one incandescent light bulb. According to our interviews, most households continue to cook with charcoal and firewood, as they lack appliances to cook with electricity or gas.

As noted above, the electricity consumers in Majaua do not have meters installed in their houses or shops, so they currently experience free electricity. It may be difficult for FUNAE to introduce a tariff system at some stage, raising the issue of willingness and ability to pay. Payment mechanisms, such as electricity metres, had not been tested. It is unclear if FUNAE conducted a market study, and if those who cannot pay will be disconnected.

View of the powerhouse at Majaua-Maia

View of the powerhouse at Majaua-Maia

When successfully commissioned, the mini-hydro power plant at Majaua-Maia will claim to be one of the leading decentralized mini grid system within the southern African region. The project clearly has a lot of potential, but it would help if local people had a better understanding of it and more ways to communicate their needs and aspirations for uses of the technology.

 

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Phase Two field research in Mozambique – August and Sept 2014

 

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Phase Two field research in Mozambique – Joshua Kirshner (Durham University), Lasten Mika (Practical Action), Themba Nyathi (Practical Action), and Domingoes Neto (Kwaedza Simukai, Manica)

Projects/sites visited:

1. Clean Star ethanol fuel and cooking stoves (small enterprise)

Location: Maputo city

2. FUNAE solar panel manufacturing plant (Indian financing; Indian developer – Angelique)

Location: Beluluane Industrial Park, Boane, Maputo province

3. Informal vending of solar panels

Location: Xipamanine market, Maputo city

4. FUNAE solar stand-alone systems (World Bank financing)

Location: Mavonde, Manica district, Manica province

5. GIZ-AMES micro-hydro systems

Location: Chua, Manica district, Manica province

6. FUNAE solar mini-grid (Belgian financing and developer – Belgian Technical Cooperation)

Location: Chinhambuzi, Manica district, Manica province

7. FUNAE mini-hydro system (EU financing; Portuguese developer – Canas)

Location: Majaua-Maia, Milange district, Zambézia province

8. FUNAE solar stand-alone systems (Gov. of India financing; Indian developer – Angelique)

Location: Têngua and Paquete schools and health clinic, Milange district, Zambézia province

9. Shopkeepers with solar panels

Location: Milange market, Milange, Zambézia province

Details to follow!

 

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