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CSIR study: financial benefits from renewable energy

CSIR renewable energy study
The CSIR reported that the benefits earned from renewable energy projects were two-fold.

In South Africa this week, the Council for Scientific and Industrial Research (CSIR) released a second independent study on the country’s first wind and solar photovoltaic projects.

The CSIR study found that renewable energy from the country’s first wind and solar photovoltaic projects created ZAR4 billion ($308.7 million) more financial benefits to the country than they cost during the first six months of 2015.

Dr Tobias Bischof-Niemz, who heads up the CSIR’s Energy Centre, explained: “We’ve developed a methodology at the CSIR Energy Centre to determine whether at any given hour of the year, renewables have replaced coal or diesel generators, or whether they have even prevented so-called ‘unserved’ energy.

“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).”

CSIR study: diesel and coal fuel savings

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 CSIR reported that the benefits earned were two-fold.

The first benefit, derived from diesel and coal fuel cost savings, is pinned at ZAR3.6 billion ($277.7 million).

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. That being, 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 ZAR4.6 billion ($354.8 million) 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.

Avoidance due to wind and solar

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.

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 ZAR4.3 billion ($311.8 million) from January to June 2015.

Therefore, renewables contributed a total net benefit of ZAR4 billion ($308.7 million) to the economy – or ZAR2 per kWh ($0.155 per kWh) of renewable energy.

Wind energy cash positive

As for wind alone, these projects were cash positive for Eskom to the tune of ZAR300 million ($23.1 million); saving ZAR1.5 billion ($115.7 million) in fuel payments while costing only ZAR1.2 billion (92.5 million) in tariff payments to independent power producers.

This CSIR methodology was fed with cost assumptions from publicly available sources, such as Eskom’s 2015 financial results for coal and diesel costs, or the Department of Energy’s publications on the average tariffs of the first renewables projects, or the Integrated Resource Plan on the cost of unserved energy.

Nicolette Pombo-van Zyl
As the Editor of ESI Africa, my passion is on sustainability and placing African countries on the international stage. I take a keen interest in the trends shaping the power & water utility market along with the projects and local innovations making headline news. Watch my short weekly video on our YouTube channel ESIAfricaTV and speak with me on what has your attention.