Green Electricity – a new paradigm for more sustainable energy service

provision?

City Energy Strategies ConferenceCape Town

19th – 21st November 2003

Glynn Morris, AGAMA Energy

Green electricity – what is it?• Green electricity, or Green Power, is electricity

which is certified to be different from ‘normal’ electricity on the basis of how it is generated and supplied to customers

• The certification ensures integrity that the generation is: from renewable energy resources, such as

• Solar energy• Wind energy• Biomass energy• Hydro energy• Wave or tidal energy

the manner which is sustainable

Why is Green Power of interest?• We need energy services, including those provided by means of

the electricity system• The differing climate change implications of electricity

production indicate the need to differentiate the quality of different types of electricity

• Green power is less environmentally damaging than non-green (=conventional) power Resource consumption Emissions / waste

• It offers a mechanism for delivering more sustainable energy services which actually create New long-term employment opportunities Decentralized economic development

Electricity generation in South Africa

HEX RIVERSALT RIVERCENTRAL WEST BANK

COLENSO

CONGELLOSOUTH COAST

UMGENI

BRAKPAN

KLIP

ROSHERVILLE

TAAIBOS

VAALVEREENINGING

WILGEWITBANKGEORGE

VIERFONTEINHIGHVELD

KOMATI

INGAGANE

CAMDEN

GROOTVLEI

HENDRINA

ARNOT

GARIEP

KRIEL

ACACIA PORT REX VAN DER KLOOF

MATLA

DUHVA

CAHORA BASSA

DRAKENSBERG

KOEBERG

TUTUKA

LETHABO

MATIMBA

KENDAL

PALMIET

MAJ UBA

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

55 60 65 70 75 80 85 90 95 00 05 10 15 20 25 30 35 40 45 50 55 60

Year

Me

ga

wa

tt In

sta

lled

55 60 65 70 75 80 85 90 95 00 05 10 15 20 25 30 35 40 45 50 55 60

Source: ESKOM

Generation capacity and investment requirements in SA

• In the absence of DSM or SAPP imports, South Africa needs: a continuous investment programme for new electricity

generation capacity Approx. 1000 MW per annum by 2007 (=$1 billion p.a.)

• a strategy for replacement of 25 GW of existing capacity by 2020 (=$25 billion)

• Based on the comparative social and environmental benefits, renewable energy technologies should comprise at least 15% of this new investment (= minimum of $150 million p.a.)

Employment in coal-generated electricity sector

0

20000

40000

60000

80000

100000

120000

140000

160000

180000

20000019

8019

8119

82

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

Year

Ou

tpu

t (G

Wh

)

0

15000

30000

45000

60000

75000

90000

105000

120000

135000

150000

Job

s

consumption:coal-generatedelectricityelectricity-relatedmining jobs (53%)

Eskom jobs

total jobs

Source: Own analysis, based on data from Eskom (1989), Eskom (2002), Statistics SA (1995), Statistics SA (2002), NER (2000), DME (2003c).

Comparison of all generation technologies: gross direct jobs/TWh-equivalent

80 130 700 952 13413778

8733

16318

0

5000

10000

15000

20000

technology

dire

ct jo

bs

An employment scenario for 2020• Based on:

•15% by 2020 and 100% local manufacture•projected electricity requirement of 267 TWh in 2020•current coal-based electricity consumption of 182 GWh in 2000 employing 59,987 people•there will be a net increase in both production and employment in the coal-based generation sector. There will be 36,373 new RET-related jobs in 2020.

Gross direct jobs in 2020 by technology to meet projected generation requirement

0

5000

10000

15000

20000

25000

30000

Coal Wind Biomass SolarThermal

solar PV landfill

technology

additional generation in2020 (GWh)

gross direct jobs

What is the international experience with Green Power?

• Approx. 10 years of experience in Europe, USA and Australia

• USA About 40% of retail customers in the United States now have

an option of purchasing a green power product directly from their electricity supplier.

15 marketers now sell "Green-e" certified TRCs nationally < 1% of US consumers are buying Green Power

• Similarly, in Germany and the United Kingdom this percentage is less then 1% of the households.

Green electricity in the Netherlands

• Over 13% of the Dutch households use renewable energy

• The amount of customers in The Netherlands is still growing fast

• Soon there will be 1 million of Dutch households using green energy

Typical announcement• Federal Green Power Purchasing Soars

• The U.S. Department of Energy's Federal Energy Management Program reports that federal purchases of green power have surged in recent months. Over the last year, federal purchases increased from 125 million kWh to more than 300 million kWh-the Department of Defense alone has at least 19 agreements to purchase renewable energy or renewable energy credits, totaling approximately 200 millionkWh annually. Green power purchases represent nearly one-half of the renewable energy resources acquired by the federal government since 1990 to meet the intent of Executive Order 13123, which is to encourage greater use of renewable energy by the federal government.

• [ http://www.eere.energy.gov/greenpower/0903_femp.shtml ]

Is green electricity relevant in a developing country like SA?

• YES• In addition to DSM/conservation gains, we need new generation capacity• Green Power opens the door for

political commitments to RE ( mandatory quotas – some Green Electricity for ALL) consumer choice ( the voluntary market – 100% Green Electricity for those who wish

to pay for it)• It offers excellent opportunities for moderating the heavy dependence on coal

and nuclear generated electricity in the southern African region – diversification of the mix

• Diversification brings with it: Potential employment Risk adjustment of the economic costs of generation

• Technical considerations include: Distributed generation Efficiency – lower transmission and distribution losses Greater flexibility and stability in the generation mix Energy security

What is the cost of Green Electricity?

• Green electricity costs more or less the same as ‘normal’ electricity, BUT

• the full costs of ‘normal’ electricity are not included in the price we pay per unit of electricity

• We pay the hidden costs (or external costs) of ‘normal’ electricity through our taxes (say, for example, to cover the costs of mining / nuclear accidents or oil spills) and the depletion of the quality of our health and the environment

• present cost of ‘normal’ electricity can range between 15 – 40 c/kWh

• At the WSSD, the NER approved a voluntary tariff of 50 c/kWh

Costs - cont’d

• Overall it is expected that the costs of Green Electricity will fall (in real terms), as economies of scale kick in and with technical developments, whereas conventional electricity costs are predicted to rise – to reflect the full economic costs of production and also due to increased input costs for land, water, fuel(s) and risk

0

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0 10 20 30 40

Years

Uni

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lecr

icity

(c/k

Wh) Green elecricity

'Normal'electricity

What are the benefits of Green Electricity?

• It is less damaging to peoples’ health and to the local and global environment

• It asserts the positive value of more sustainable electricity generation and utilisation

• It provides more long-term employment creation than conventional energy systems

• It can be implemented at any scale – from 1 kW to 1 GW• It can be implemented quickly – with shorter lead times (=less

risk) than large conventional power stations• It offers economic empowerment opportunities because it can

be owned by individuals and SME’s, in addition to large corporations or parastatals

What are the benefits of Green Electricity – cont’d?

It can be implemented anywhere on (or off) the national grid and hence provide for more decentralised economic development

It offers an easy, but meaningful, way for public authorities and businesses to demonstrate their commitment to more sustainable operating policies and more equitable triple bottom line reporting

It assists the government objectives of increasing the amount of renewable energy in the South African Energy economy – as set out in the 1998 White Paper on Energy Policy and Draft White Paper on Renewable Energy (www.dme.gov.za/energy/)

What are the constraints on Green Electricity

Higher average cost (at present) to the consumer per unit of electricity

Lack of familiarity – consumer and political awareness Lack of support infrastructure for implementing and operating

green electricity systems Green electricity cannot immediately replace all the more

conventional electricity generation and supply systems – this will be a gradual process which will have to start somewhere and grow systematically

Is there a market for Green Power in South Africa?

• We don’t know

• Market surveys have been undertaken in Cape Town (2002) and Johannesburg (in progress)

• Indications are promising but are not tested or proven

What is the available capacity in the region?

• There is currently more than 200MW of existing generation capacity in SA which meets the NER draft criteria

• Includes: Biomass CHP Small sustainable hydro Wind Solar PV – both grid-connected and off-grid

• The real objective of Green Power is to stimulate investment in NEW green generation capacity

Eskom wind demo site - Klipheuwel

Grid-connected PV systems

Wind and solar in Kimberley

Temaruru Community Managed Wind Powered Mini Grid, Zimbabwe

Policy and Regulatory context• The White Paper on Energy and Draft White Paper on RE both support

the development of the RE sector• The key to a meaningful Green Power sector is the integrity of the

certification and regulatory framework• In 2002, the Green Power for the WSSD Project supplied 845MWh of

green power to the World Summit venues pioneered a regulatory and trading framework (using a TREC mechanism) which was endorsed by the National Electricity Regulator in SA

• The Regional Electricity Regulators Association (RERA) in southern Africa is supportive of regional trade of Green Power

• The FCO in UK is supporting a study into the role for TRECs for regional trade of Green Power in southern Africa

• The REEEP has identified Green Power as a key opportunity for accelerating the development of RE technologies

Green Power for the WSSD

• a project grant under the DEAT climate change program funded by USAID

• 845MWh of Green Power supplied to the two main venues of the WSSD

• In association with NER, CityPower, green generators, UBUNTU Village (JOWSCO) and NASREC Expocentre

Eight good reasons to choose Green Electricity

• Reduce the negative resource consumption and Climate Change effects of electricity use

• Demonstrate environmental responsibility• Provide competitive advantages• Valuing energy and achieving energy savings• Hedging against present and future financial uncertainties• Stabilise volatility in operating costs• Enhance relations with employees• Strengthen relations with local communities

Adapted from: WWF 2002

Links

• EUGENE: www.greenelectricitynetwork.org• Global Warming: www.climatehotmap.org• Green Energy in Europe: www.greenprices.org• International Panel on Climate Change: www.ipcc.ch• International Council for Local Environment

Initiatives: www.iclei.org• European Sustainable Cities and Towns Campaign:

www.sustainable-cities.org• REEEP: www.reeep.org• AGAMA Energy : www.agama.co.za

Thank you !

AGAMA Energy (Pty) LtdP O Box 606, Constantia, 7848

South Africatel: +27 21 701 7052fax: +27 21 701 7056

cell: +27 83 780 9460glynn@agama.co.zawww.agama.co.za