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The chairperson of the South African Wind Energy Association (SAWEA) says the industry is well placed to take advantage of both the 100 MW reform and recent moves to release 36 000 ha of Eskom land in the grid-rich Mpumalanga province to accelerate renewables investments and facilitate a just energy transition from coal.

Mercia Grimbeek tells Engineering News that resource measurement campaigns have overturned earlier assessments suggestive of deficient wind resources in the region to show that “a sufficient resource exists in the province for the deployment of wind energy facilities”.

These assessments show that wind resources in Mpumalanga can reach between 6 m/s and 7 m/s, which is more than adequate for wind-farm development, using turbines that operate at those speeds.

Grimbeek reports that developers are already actively looking to facilitate projects for mining houses and energy intensive users that could “unlock gigawatts of wind deployment”.

Possible projects include sites in Mpumalanga, where a renewable-energy development zone has already been demarcated in eMalahleni.

Sasol, which has a large presence in the province, has also already committed to adding up to 1 200 MW of renewable energy by 2030.

“This is game-changing for a province that has historically been the centre of fossil-fuel electricity generation,” Grimbeek avers.

She is also confident that wind will secure a portion of the 3 900 MW of renewables projects being developed by Minerals Council South Africa members, despite most of the announcements to date pointing to the use of solar photovoltaics.

The outlook for the domestic wind sector, which has hitherto been driven by the large government procurement programme, is being buoyed by the fact that the regulatory environment has become less onerous for the conclusion of corporate power purchase agreements (PPAs).

“Investors and lenders require as much policy certainty as possible and positive market reforms, such as the generation of electricity up to 100 MW without the requirement of a generation licence, are the positive signals that investors need.

“With a supportive framework, specifically for wheeling and grid connectivity, wind energy can drive significant change in 2022,” Grimbeek argues, noting that shovel-ready wind projects can be built within 12 to 18 months.

Nevertheless, the government-led Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) remains a key focus area for the industry, which is set to invest in projects worth R50-billion in 2022 once the preferred bids from Bid Window 5 reach financial close.

It is anticipated that at least Bid Window 6 for the procurement of another 1 600 MW of wind will be initiated this year, and possibly Bid Window 7, and SAWEA is confident that the project pipeline is sufficiently developed to ensure that the 100 MW reform does not compete with the REIPPPPP.

“Thirty-nine onshore wind projects were bid during the Bid Window 5 procurement round, of which only 12 were selected as preferred bidders.

“So, this provides an indication that there are at least 27 shovel-ready projects for REIPPPP.”

However, the 100 MW reform should also promote a more consistent procurement profile than has been the case under REIPPPP, which only resumed in 2021 after a six-year disruption, precipitated by Eskom’s then refusal to sign new PPAs.

The utility’s new leadership is far more supportive of independent power producers and has also called for accelerated investment to close a supply gap that is currently estimated to be between 4 000 MW and 6 000 MW.

It is also keen to ensure that the first long-term lease of its Mpumalanga land is concluded by October this year as part of a renewed effort to ensure that the 100 MW reform gains traction, notwithstanding severe grid capacity constraints in regions with superior renewables resources, such as the Northern, Eastern and Western Cape provinces.

Consistent procurement is also seen by SAWEA and others as k...

Creamer Media's Chanel de Bruyn speaks to Engineering News Editor Terence Creamer about the highlights of Eskom's latest state of the system briefing, Eskom's maintenance backlogs and the outlook for load-shedding for this year.

Eskom CEO Andre de Ruyter reports that the tender evaluation for Phase 1 of the utility’s battery energy storage systems (BESS) project has been completed and that he expects the final approvals to be in place in February.

Speaking during a briefing on the state of the system on Thursday, De Ruyter expressed enthusiasm for the project, which he said would be the first large-scale deployment of grid-tied batteries in South Africa.

He added that he had been impressed by the quality of the bids and looked forward to the BESS systems being integrated into the network to help strengthen the grid “particularly for renewable energy” and to help the utility manage its “peaks and troughs”.

“We have received the bids, we have adjudicated the bids and we are now in the process of finalising the approval processes, which I expect to happen within the next month.”

Eskom called for bids for the design and construction of a BESS to be installed at the Skaapvlei substation at Vredendal, in the Western Cape, where the group’s 100 MW Sere wind farm is already located. The system should have a minimum power capacity of 80 MW and an energy capacity of 320 MWh.

The Skaapvlei project forms part of a larger 360 MW, or 1 440 MWh, BESS programme, conceived in 2017 as a replacement for the 100 MW Kiwano concentrated solar power project, initially approved, but later abandoned, as part of the World Bank’s $3.75-billion 2010 loan to the State-owned utility.

“This is quite exciting and were very impressed with the quality of the bids received and we look forward to switching those on,” De Ruyter enthused.

MPUMALANGA LAND RELEASE

Meanwhile, De Ruyter reported that progress was also being made to prepare a “package” through which Eskom would invite bids from private renewables developers to locate projects on portions of the 36 000 ha of Eskom land that is being made available in the grid-rich Mpumalanga province.

“We are delighted that [Public Enterprises] Minister Pravin Gordhan made this announcement, as we see it as an easy way to also make use of the 100 MW licensing dispensation announced by the President during the course of last year,” De Ruyter said.

Eskom's group executive for distribution Monde Bala, who is overseeing the initiative, said the first land leases should be approved by October, but that efforts were under way to expedite the timeline.

The land would be leased for renewable electricity generation by independent power producers.

The land release is intended to offer private generators immediate relief from the prevailing grid constraints and provide Eskom with more time to build new infrastructure to open up those areas of the country with the best wind and solar resources, including the Northern, Western and Eastern Cape provinces.

It is also designed to offer another platform to begin closing a 4 000 MW to 6 000 MW generation shortfall, which has made South Africa prone to load-shedding and left Eskom with little space to implement much-needed maintenance on its aged and increasingly unreliable coal fleet.

The Port of Maputo notched up a new handling record in 2021, registering 21% growth compared with the previous year.

The total volume handled in 2021 was 22.2-million tons, against the 18.3-million tons achieved in 2020.

The previous record was set in 2019, with 21-million tons handled at the Mozambican port.

This growth is a reflection of a market recovery post-Covid, but also of the efficient use of rehabilitated berths 7, 8 and 9, along with an expanded ferro-slab footprint and dedicated rail siding.

“Although still not concluded – the full rehabilitation including dredging is estimated to be delivered in April – the port has already reaped the fruits of this infrastructure development,” says Maputo Port Development Company (MPDC) CEO Osorio Lucas.

“The rehabilitation and reinforcement of the quays surface allowed berthing space for bigger vessels. Paired with the dredging performed in 2017 and other marine efficiency measures, the port successfully broke all its handling records, having registered a maximum of 145 545 t of magnetite loaded in one vessel (at the Matola Coal Terminal) and a record of 140 000 t of chrome ore loaded in an MPDC operation,” notes Lucas.

However, rail volumes for chrome and ferro-chrome registered a slight decrease of 4% compared with the previous year, he adds.

The rail-versus-road ratio also shrunk from 25%/75% in 2020, to 21%/79% in 2021.

“With the recent upgrades and investment in rail infrastructure inside the port, there is huge potential for growth in rail volumes,” says Lucas.

“In the past couple of years, the joint work between MPDC, CFM [the State-owned Mozambican rail operator] and Transnet Freight Rail has also paved the way for an improvement in rail efficiencies.

“We trust that the stakeholders will address the current challenges together so that we continue to work on more balanced volumes between rail and road cargo.”

The investment and implementation of automation solutions within the port, continued throughout 2021, with the completion and activation of the vessel arrival notification system; the rail arrival notification system; the automation of all port weighbridges; as well as the promotion and establishment of the integration between customs, single electronic window systems and port systems, to improve the efficiency in border crossing.

This last initiative is part of a larger action plan, conceived by a joint committee to address bottlenecks in the Maputo Corridor and thus improve the efficiency of cargo flow in and out of Mozambique.

Regarding the year ahead, the MPDC remains optimistic about the prospect of continued growth.

“We believe that we will embrace the full potential of our investment both in infrastructure, technological solutions and human capital. In May, we will present the new masterplan for the Port of Maputo and introduce the future of the port of all Mozambicans,” says Lucas.

State-owned electricity group Eskom is warning that its use of the country’s diesel-fuelled open cycle gas turbines (OCGTs) is set to remain elevated in the coming months as the utility seeks to avoid load-shedding in a context of rising planned maintenance and the ongoing risk of unplanned breakdowns.

Eskom has already spent R5.5-billion for the year-to-date to run its own OCGT plants and a further R3-billion to purchase electricity from the private Avon and Dedisa plants, as the energy availability factor (EAF) from its coal fleet slumped to 62.9% against a target of 70%.

Despite operating the OCGTs at far higher capacity factors than planned, the utility has nevertheless been forced to implement record levels of load-shedding during the current financial year, with 51 days of cuts between April 1, 2021, and January 24, 2022, compared with 31 days in the prior period.

For 2021 as a whole, the picture is even bleaker with 1 150 hours having been affected by rotational cuts and 1 773 GWh not supplied to customers, representing the worst-ever performance for the level of energy shed.

Group executive for transmission Segomoco Scheppers said the outlook for the rest of summer, or until the end of March, pointed to a continued over reliance on the diesel plants.

The precise level of OCGT use would depend mainly on the level of unplanned losses, he explained during a briefing on the state of the system.

Should unplanned breakdowns remain below 12 000 MW until the end of summer, Eskom expects to spend R500-million more on diesel and avoid load-shedding.

Should breakdowns rise to 13 000 MW or 14 000 MW, the number of load-shedding days will rise to two and 29 respectively, while its diesel spend would climb to R1.7-billion and R4.1-billion respectively.

However, Scheppers warned that, in reality, there would have to be more load-shedding days at higher stages, as logistical constraints made it difficult for Eskom to spend more than R1.2-billion on diesel in a single month.

Similar sensitivities would prevail between April and August, but Eskom would only finalise its winter plan in March.

During recent hearings into the utility’s request for a 20.5% tariff hike, CFO Calib Cassim confirmed that Eskom was seeking R6.5-billion to operate its OCGTs in 2022/23, largely because of a material lowering in its coal EAF assumption for the year from 72% to 62%.

As a result, Eskom is expecting to operate its OCGT generators at a load factor of 7%, rather than the 1% initially assumed.

There was much debate during the hearings about the prudence of allowing Eskom to use the OCGTs other than as peaking plants, but the utility defended their use on the basis that load-shedding carried a cost to the economy (estimated at R9.53/kWh) that was three times that of producing OCGT electricity.

COO Jan Oberholzer said that, while Eskom would do what it could to limit load-shedding, it would not be at the expense of its reliability maintenance programme, which remained key to stabilising the performance of its unreliable coal fleet.

“We continue to drive our planned maintenance programme with a focus on the effectiveness of outages.

“This will contribute to the risk of load-shedding during times of capacity constraints,” Oberholzer said during the briefing.

While Eskom reported some progress in the implementation of its reliability maintenance programme, group executive for generation Phillip Dukashe warned that the backlogs remained large and would take time to address.

These backlogs were presenting primarily in the form of vacuum issues across many stations, delays to control and instrumentation refurbishment projects, persistent boiler tube leaks, overdue environmental projects and water treatment plants that were in a state of disrepair.

The programme also remained beset by skills and liquidity challenges, however, which had resulted in the deferral of 40 of the 84 outages initially planned for 2021/22.

“As of January 19, 2022, of the 84 outages pla...

Telecommunications group Telkom has assured stakeholders that it follows robust governance principles following President Cyril Ramaphosa’s green light for an investigation into possible maladministration in the sale or disposal of iWayAfrica, Africa Online Mauritius and Multi-Links Telecommunications.

In a Government Gazette, signed off on January 14 and published on January 25, the Special Investigating Unit (SIU) has been given authority to investigate several matters as far back as 2006, including contracting and possible maladministration regarding the disposals.

According to the Gazette, the terms of reference of the SIU are to investigate any alleged serious maladministration in connection with the affairs of Telkom; any alleged improper or unlawful conduct by employees, officials or agents of Telkom; any alleged unlawful appropriation or expenditure of public money or property; and any alleged unlawful, irregular or unapproved acquisitive act, transaction, measure or practice having a bearing upon State property; as well as any alleged intentional or negligent loss of public money or damage to public property, besides others.

In the Gazette, Ramaphosa states that Telkom or the State may have suffered losses that can be recovered and civil proceedings could follow.

“All matters relating to these transactions are on the public record. Telkom’s own investigation flagged possible cases of wrongdoing by two employees in one of these transactions and declared this in terms of the Prevention and Combatting of Corrupt Activities Act. Telkom issued civil summons against an employee with an eye to recovering losses amounting to $5-million relating to activities incidental to the transaction,” Telkom said in an update.

With the SIU investigation now pending, Telkom expects to receive further clarity on the scope of the investigation.

“Telkom will deal with the investigation on its merits in the appropriate forum, in the appropriate manner, at the appropriate time,” the company continued, pointing out that it follows robust corporate governance principles and has done so in executing the Telkom strategy to consolidate its operations in South Africa.

Producing carbon-free primary iron in South Africa using green hydrogen direct reduced iron (GHDRI) technology could create a new globally competitive green export industry that could help offset the losses associated with the eventual decline in coal exports, a new study shows.

Such exports would also reduce the cost of decarbonising global steel production, owing to the relative cost advantages of producing renewable energy in South Africa and, therefore, green hydrogen. Producing GHDRI involves a type of furnace that uses hydrogen for the direct reduction of the iron-ore, as opposed to the traditional route that uses coke.

Titled ‘How green primary iron production in South Africa could help global decarbonization’, the paper has been co-authored by Hilton Trollip, Bryce Mccall and Chris Bataille and was published earlier this month.

It concludes that South Africa could competitively export near-zero embodied greenhouse-gas primary iron to steelmakers in leading decarbonising markets, such as the European Union (EU), while simultaneously increasing the value added from local iron-ore and solar energy resources.

Without pelletisation costs, the study estimates that GHDRI could be produced at a cost of $395/t in South Africa in 2030 using hydrogen produced from low-cost solar photovoltaic electricity. These costs would fall in future as electrolyser costs declined and South Africa’s grid decarbonised over time.

The exports would help steelmakers in other territories reduce the cost of their overall decarbonisation and increase the competitiveness of steel product manufacturing. “Using the EU as an example, steelmakers could use imported green primary iron to increase utilisation of electric arc furnaces while reducing total EU demand for clean electricity (i.e. for hydrogen for reduction needs) and thereby lower total system costs of decarbonisation.”

This new South African export commodity would also not be vulnerable to trade measures such as a looming EU carbon border adjustments mechanism and could, thus, help offset revenue losses that will arise as global demand for coal, a major South African export earner, tapers.

The authors calculate that a GHDRI plant able to produce at a yearly rate of one-million tons, could yield export earnings of between $300-million and $500-million a year.

“Coal exports of some 70-million tons per annum (mtpa) earn some $5-billion per year.

“Thus, each 1 mtpa GHDRI plant could replace export revenue losses from 7 Mt of coal.

“Using these assumptions, it would take ten such plants to replace the entire value of lost coal export earnings and associated tax revenue,” the study asserts.

It would also underpin the decarbonisation of the domestic steel industry, which accounts for 12.5% of exports and 50 000 jobs and supports a steel value chain that contributed about 5% of gross domestic product in 2019.

“This industrial complex is facing an existential threat from reduced local demand, disinvestment, and relatively cheap imports.

“In the medium to longer term, green primary iron offers the first step onto a sustainable and potentially prosperous pathway for primary iron and steel production in South Africa, away from its current path of decline.”

The authors conclude that three conditions will be necessary to unlock new global business models involving the locating of green primary iron production in renewables-rich South Africa, including:

a steelmaker with access to a hydrogen reduction technology appropriate for South African ores and also willing to invest in a GHDRI plant;

access to a bankable lead market for that plant’s production; and

international trade rules and emissions accounting related to the carbon content of commodities that enable the reconfiguration of supply chains to reduce global decarbonisation costs.

The authors conclude that demonstrating GHDRI in South Africa could pave the way for collaborative, global industrial sector decarbonisation with general economic benefits,...

Fitch Solutions expects growth in South Africa to slow to only 2.1% in 2022, having expanded by an estimated 4.8% last year, as the base effects of 2021 fade and longstanding constraints come to the fore once again.

Lacklustre economic activity in South Africa would also weigh on the performance of the Southern African region, which Fitch Solutions expects to expand by 2.8%, down from 3.9% in 2021.

Steady growth of 3.6% is expected for sub-Saharan Africa (SSA) as a whole.

Head of SSA country risk Jane Morley indicated that South Africa’s unemployment rate, which reached an all-time high of 34.9% in the third quarter of 2021, was also likely to remain elevated this year.

There might be limited progress, however, in recreating some of the 325 000 jobs lost in KwaZulu-Natal and Gauteng as a result of the political violence, looting and destruction of property that took place in July last year.

Joblessness is expected to remain elevated at around 31.3% in 2022 and act as a substantial constraint on private consumption.

Despite government’s commitment to fiscal consolidation and a target of cutting the deficit in 2021/22 to 7.8% of gross domestic product, from 10% in 2020/21, spending would remain elevated in order to sustain the R350-a-month social relief grant, implement repairs following the July riots and to create 440 000 short-term work opportunities.

This spending would be supported from increased revenue as a result of surging commodity prices and strong income tax collections from corporates.

However, Fitch Solutions expects commodity prices to moderate during 2022, but it is also forecasting the rand to trade at an average of R15.20 to the dollar, down from its 2021 average of R14.70.

“Positive policy initiatives, including an increased focus on public-private partnerships, will provide some support for investment and we also expect some modest progress in tackling long-standing power supply constraints, given an increased role for private generators.

“However, business sentiment remains fragile and constraints in South Africa’s operating environment, as well as high borrowing costs will see the South African Reserve Bank expected to hike its repo rate by 100 basis points to 4.75% this year, which will weigh on private investment,” Morley said.

Electric vehicle (EV) batteries are designed to withstand high charge and discharge rates, as well as extreme operating conditions.

However, the current elephant in the room in the EV industry is what happens to the battery when it needs to be replaced, says Revov MD Lance Dickerson.

Revov supplies batteries for the renewable energy and uninterrupted power supply (UPS) market in sub-Saharan Africa that are repurposed from the cells of EV batteries.

Dickerson says Revov plays an important role in the circular economy, a concept that is not yet mainstream but gaining momentum.

He says that after a few years of operation in an EV, the weight of the then older-technology battery – with batteries fast becoming smaller and lighter – no longer justifies its output, which means it is replaced with newer technology.

In the absence of a viable recycling value chain, these batteries often end up in landfills – the opposite of what saving the planet should look like, says Dickerson.

“However, the individual cells in these EV batteries still have many years’ life – up to 10 or 15 years – if they are repurposed and built into batteries that are designed for stationary storage where weight doesn’t matter.

“These are called second life (2nd LiFe) batteries.”

He explains that ‘LiFe’ is a play on the periodic table symbols for lithium and iron.

“Sure, there are brand-new lithium batteries that are built to go into the storage market, but when you consider that there is a trivial difference in performance, and in some instances superior performance from the EV cells used in 2nd LiFe batteries, it becomes a no-brainer,” adds Dickerson.

“Why add additional strain to the lithium supply chain when we can solve a massive problem for the EV industry?

“The whole point of introducing 2nd LiFe into the energy storage sector in South Africa and other African countries is to lighten the carbon load on our planet. It’s absolutely in all our best interests that South Africa embraces the circular economy.”

With South Africa’s EV market set to gather momentum over the coming years, Dickerson believes that local carmakers will find that they, too, will be faced with the dilemma EV manufacturers are finding in more mature EV markets such as China.

Growing lithium shortages are also likely to add pressure to the 1st LiFe battery market, not least on supplier margins, notes Dickerson.

“I predict that 2nd LiFe batteries will become the dominant battery type providing energy backup to power installations and UPS systems in sub-Saharan Africa.”

Against a backdrop of travel bans, higher inflationary pressures, high unemployment figures, lower vaccination rates and electricity supply constraints, analytics company GlobalData believes South Africa’s immediate economic growth prospects are grim.

The company has revised its 2022 gross domestic product (GDP) growth rate forecast for South Africa to 2.1%, down from a forecast of 2.5% made in December 2021.

Economic research analyst Gargi Rao explains that, despite recording four consecutive quarters of growth between the third quarter of 2020 and the second quarter of 2021, civil unrest in July, tighter Covid-19 restrictions at times and persistent supply chain disruptions triggered a contraction in South Africa’s economic growth in the third quarter of 2021.

According to Statistics South Africa (Stats SA), real GDP growth contracted by 1.5% quarter-on-quarter in the third quarter of 2021, compared with 1.2% in the second quarter of 2021.

This year, the country’s economy is being impacted by tightening restrictions and constraints, GlobalData says.

South Africa has been hit by even more travel restrictions this year – around 91 countries currently have a ban on travel to South Africa, compared with the 60 that first applied travel restrictions in mid-2021.

“Such tight restrictions continue to deter growth prospects for the travel and tourism industry,” comments GlobalData.

Travel and tourism analyst Ralph Hollister remarks that international tourism provided a solid contribution to South Africa's GDP, prior to the pandemic. “We predict that international arrivals won't reach pre-pandemic levels until 2024 in South Africa, further slowing economic recovery.”

Moreover, African countries continue to have low vaccination rates when compared to other regions. As of January 24, South Africa has only fully vaccinated 27.9% of its population, compared with Brazil (70.4%), China (87.6%) and India (49.8%).

Epidemiologist Bishal Bhandari notes that, historically, vaccine hesitancy was always very high in South Africa and this is not unique to the Covid-19 vaccine.

“Low uptake of this vaccine is thus unfortunate, but not unexpected. Now, the low vaccination rate has made South Africa vulnerable to Covid-19 and its multiple variants,” he adds.

COST PRESSURE

Stats SA noted a manufacturing activity plunge of 8.9% year-on-year in October 2021, compared with October 2020.

Rao comments that input prices for manufacturers rose steeply, versus output prices, which resulted in downward pressure on production.

The South African government’s decision to increase the national minimum wage also added to production costs for businesses.

Owing to weaker sentiment among investors and firms amid power shortages, rising input costs and low vaccination rates, business confidence has dwindled since August 2021.

Moreover, with subdued demand, retail trade growth slipped from 3.5% in September 2021 to 1.5% in October 2021. Looting and closure of retailers in KwaZulu-Natal during the civil unrest also resulted in food shortages, which led to a decline in household consumption expenditure in the third quarter of 2021.

Soaring fuel prices and transportation costs have been squeezing the overall profits of South African firms.

As of October 2021, the consumer price index shot up to 5.5%, the highest in more than four-and-a-half years, according to Stats SA. Higher production costs and slowing economic growth could increase the risk of stagflation in the short term.

Rao says borrowing costs for businesses and consumers are likely to increase as a result of inflationary pressures in the short term.

With the reserve bank hiking policy rates to tame inflation, growth prospects could slow down for businesses this year.

“South Africa needs to critically formulate and implement policies that aid inclusive economic growth and job creation.

“While short-term disruption owing to supply chain issues and travel bans are inevitable, governments need to ramp up the vaccin...