Financial benefits of renewables in South Africa in 2014

Abstract

South Africa’s power system is currently under severe constraints, with power generators meant to be the “barely-ever-used” safety net for the system (diesel-fired gas turbines) running at > 15% average annual load factor, and with one controlled load shedding in early March 2014, and several more in late 2014. At the same time, the Department of Energy is running a procurement programme to expand the generation capacity in the country. It has already procured close to 4 000 MW of renewable capacity (mainly wind and solar) from Independent Power Producers (IPPs). The Power Purchase Agreements (PPAs) of all 4 000 MW have been signed between the IPPs and Eskom, South Africa’s state-owned power company, as the off-taker/buyer. By end 2014, approximately 1 600 MW of wind (600 MW) & PV (1 000 MW) projects had been commissioned and are feeding energy into the grid. This study addressed the questions how much fuel costs the first 1 600 MW of wind & PV have saved during the year 2014 (by reducing utilisation of diesel-fired gas turbines & of the expensive part of the coal fleet) & how much of “unserved energy” they have avoided that would have been necessary without them.