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Five energy trends to watch this year.
By Zwelakhe Mabece 4 Feb 2023 00:02
Solar and wind will not solve SA’s energy problems, other than on a very localised level. Image: Luke Sharrett/BloombergSolar and wind will not solve SA’s energy problems, other than on a very localised level. Image: Luke Sharrett/Bloomberg
As South Africa’s sclerotic electricity grid lurches the country into darkness, energy security is going to be the preoccupying national theme of 2023.
Without energy, nothing moves. Businesses that have not already adopted a Plan B for energy are now doing so out of necessity. Generator and solar panel sales are booming.
Read all our Eskom coverage here.
Based on Eskom’s track record, we can probably safely dismiss any happy talk that the grid can be stabilised within six months or even two years. The neglect of our electricity infrastructure is so inter-generational, the very best engineers we have are telling us that a full rescue is at least a decade away. In the meantime, Eskom customers who can afford it are weaning themselves off eight hours-a-day load shedding by adopting alternative power generation solutions.
Solar and wind will not solve SA’s energy problems, other than on a very localised level.
The supply is too intermittent to feed a grid that demands constant baseload power. Like it or not, power generation from oil and gas will boom in 2023 and beyond. The Petroleum Agency SA (Pasa) reckons the country has 27 billion barrels of oil and 60 trillion cubic feet of gas off our coast. Some promising gas and condensate finds have been made off the south coast of SA by TotalEnergies, while Tetra 4, owned by US-based Renergen, tapped a decent-sized reserve of natural gas and helium in the Free State and last year started supplying liquefied natural gas (LNG) to the local market.
That’s all very encouraging, but where do we go from here? These are five energy trends to watch in 2023:
Power generation from oil and gas will be forced back onto the national agenda, and that will delay any hopes of meeting SA’s carbon reduction targets, so eagerly agreed upon less than two years ago. There’s talk of Eskom applying for a fuel import licence to access diesel from abroad to keep its auxiliary plants going, but whether it gets the nod from Treasury for the billions of rands required remains moot. Last year Transnet issued a tender for the development of an LNG terminal at Richards Bay by 2024, with plans to supply Johannesburg and Durban. The Western Cape government is considering a similar LNG plant to supplement the province’s energy needs and replace dirtier fuels such as coal, diesel and heavy fuels.
The hydrogen economy is coming. Expect to see large-scale mobilisation of investment into solar and wind power, which could be transformed into hydrogen to plug the country’s energy deficit and boost export revenues. SA could become a world leader in the coming hydrogen economy, with President Cyril Ramaphosa throwing his weight behind the Green Hydrogen National Programme. The potential here is huge – and not particularly tied to Eskom’s waning fortunes. This would require substantial investment in renewable energy, sufficient to produce between 140 GW and 300 GW, which dwarfs the 1 GW of wind and solar procured since 2011.
Nuclear won’t go into that dark night. Though SA has coign of vantage on nuclear energy production in Africa, much of the skills and engineering capacity have been squandered due to political meddling and special interest groups opposed to nuclear for whatever reason, some of them ill-informed. There was a time when SA was the world leader in small-scale modular reactors, but while we dithered, the Americans have overtaken us. Even in Africa, we are left stranded as the US State Department and Japan last year announced a partnership with Ghana for the deployment of small-scale modular reactors. Our advantage in nuclear is being frittered away by sometimes dubious interests pushing their own agendas. Meanwhile, the Koreans – the world’s best at building large-scale nuclear plants – are itching to get into the SA market. Nuclear, because it is reliable and cheap to produce (not to build), is very much part of SA’s future energy mix.
Oil companies will continue to exit the local market in pursuit of decarbonisation mandates. We expect to see further exits from fossil fuel by oil majors – mainly the sale of retail and logistics operations. Glencore, which bought Caltex’s refinery and rebranded it Astron, says it will revive its refining capacity in Cape Town. Shell and BP have shuttered their refining operations, replacing them with costly fuel imports which are not reflected in the current pump prices. The current fuel price should be 5% higher if the petroleum products pricing mechanism has symmetrical pass-through to end consumers. Prices have been forced higher due to the war in Ukraine, but still do not reflect actual market realities. There are two refineries operating in SA where there were previously six. Only Natref (owned by Total and Sasol) and Secunda, which produces fuel from coal, remain of the original six refineries. The reason for the decline in national refining capacity seems to reflect lack of support for investments required to produce cleaner fuels with lower sulphur content. That required huge investments by the oil majors, but the government equivocated and delayed introducing regulations to give effect to this reality.
Energy professionals will take their skills elsewhere. We’ve already seen this trend over the last three to five years. Many South African colleagues have moved to markets like Nigeria and Dubai, and we appear to have lost this skill set for the foreseeable future. The oil and gas labour market attrition is catastrophic for the country, and will not easily be replaced. Most are moving to markets with large fossil-based economies. An example is the commissioning of the Dangote Refinery in Nigeria in early 2023, which has absorbed many of our very best skills. One ray of light out of all this is the proliferation of black-owned and run petroleum businesses that have bought up the portfolio assets of the disinvesting oil majors.
Video: God said: Exterminate the Blacks: The Harry Knoesen Story S.Africa
Lots of Whites say that Christians will never fight. Here is a story unlike any other. This is the strange story of the CRUSADERS, the (NCRM) National Christian Resistance Movement of South Africa. This was a Christian Racialist who had former SADF special forces, Recces with him. They wanted to seize back South Africa for WHITES! This took place in 2018 and 2019. We study what Harry did and the many strange twists and turns in this strange story.