South Africa should tap into its 2,000 MW cogeneration potential to help avoid another power crisis, but obstacles are hindering the country’s progress according to a former regional manager at paper maker Sappi, Dave Long. He said that despite a battle lasting years the industry has not been able to sell any cogenerated power so far.
"This is the fourth year that we are trying for something to happen… we have the assets but we have no agreements in place yet," Long told a cogeneration conference in Johannesburg. He said Sappi is generating over 800 MW worldwide and has signed power purchase agreements with utilities globally.
The paper maker has invested R100 million in power generation in South Africa alone but has yet to sell its first power to South Africa’s Eskom, even though the utility is battling to meet fast rising demand.
Yousuf Haffejee, head of Eskom’s single buyer office, said that cogenerators needed to be given a market to trade their power. "We have a monopolistic market in South Africa with power either produced by Eskom or bought by Eskom … we need to do something and we need to do it quickly," he said.
Regulatory guidelines are being developed that are aimed at both retrofitting existing industrial plants as well as greenfield projects that could include cogeneration infrastructure. These guidelines for cogeneration projects are expected to be complete by the end of the year according to National Energy Regulator of South Africa senior engineer Ferdi Kruger. Some industries in the country have already begun to establish cogeneration plants such as steel producer Mittal Steel South Africa.
The country, as the most industrialized country on the continent, has a great amount of potential for cogeneration. Highly developed industries, lofty energy demand, and the possibility for clean development mechanism projects could be a possible motivator for the increased implementation of CHP projects. Mittal has established cogeneration units at its Vanderbijilpark and Newcastle plants generating 23 MW and 8 MW respectively.
Cogeneration contributes a minor amount to Mittal’s power requirements, generating an average of 31 MW. Each of the company’s business units use between 590-600 MW, although Mittal spokeswoman Tami Didiza said that the process improves overall efficiency of the company’s steelmaking process and will result in future economic benefits. “The challenge lies in developing financially viable cogeneration projects, which will be to the benefit of not only Mittal but to all consumers of electricity in South Africa,” she added.
Energy for Sustainable Development managing director in Nairobi, Stephen Mutimba said that cheap, readily available coal is a better option compared to the high start-up costs, and South Africa has an abundance of coal. He also added that the difficulty in accessing finance for renewable energy – particularly with a downturn in the global economy – and the unwillingness by engineers to convert to new technologies also plays an important factor.
Nonetheless, cogeneration is a viable option for African nations. A well constructed plant would provide the most effective and efficient form of power generation and with this comes an increased profit margin compared to conventional sources of generation. Mutimba said that, “Due to the high demand of CDM projects from developed countries, cogeneration projects can attract foreign investment to Africa.” Most importantly, cogeneration offers the chance for countries to diversify their energy mix and become more energy independent – all the while large oil companies can ride the wave and generate revenue while meeting environmental standards.