JOHANNESBURG (miningweekly.com) – Eliminating coal-fired power generation from South Africa's energy mix will be detrimental to the country's economy, says Econometrix MD and senior economist Robert Jeffrey.
Speaking at the 2016 Southern African Energy Efficiency Convention, in Kempton Park, on Tuesday, he suggested that coal should play an even bigger role in South Africa than that set out in the Integrated Resources Plan.
Jeffrey indicated that the potential costs of “destroying” South Africa’s coal industry could extend to some R300-billion to R400-billion, as the industry was one of the country’s highest foreign exchange earners and the top minerals sector income earner.
The value of coal in South Africa is reflected in the country's position as the seventh-largest producer and seventh-largest exporter of coal. More than 70% of the country's electricity is also generated from coal.
“You do away with coal on the scale we are talking about [and] this will be the demise of South Africa as an industrialised economy – and poverty will rise,” Jeffrey warned.
Electricity is key to the country's economic growth and security of supply at low prices must be ensured, he argued.
Jeffrey noted that current energy resources should be exploited efficiently.
All power sources had certain costs and benefits; however, coal would continue to play a “very substantial” role in South Africa's future energy mix, he maintained.
“Various renewables supply only 31% and it is going to take time to develop renewables to the stage where they are highly, highly efficient,” he said.
Jeffrey added that while nuclear was a proven, reliable baseload source, South Africa may not be able to afford it.
Further, solar and wind power have limited uptime, with the offline time and dependency on other sources significantly inflating the true cost of output, despite being cheaper to produce.
The development of energy storage technologies, however, could significantly change the dynamics of renewable energy, Jeffrey noted.
Shale gas production is also still a long way off in South Africa.