The growing popularity and affordability of renewable energy technologies could potentially drive the country’s coal industry in a new direction.
This is the view of James McKay, spokesperson for energy solutions provider Energy Partners. Commenting on the recently updated Integrated Resource Plan 2018 (IRP) McKay notes that the plan contains a clear path for reducing coal generation in South Africa from approximately 70%, to around 44.6% of the total energy mix within the span of only twelve short years.
A growing market for exports
According to this plan, renewable energy will be given an opportunity to play a much bigger role, accounting for around 25% of electricity generated in the country by 2030. “With that said, coal still has a major role to play in the future of South Africa, and a future reduction in demand from the utilities side, may in fact see this industry benefit significantly.”
McKay explains that with clean-coal technology growing, the demand for coal on the international market is expected to continue growing.
“The export market may hold more profitable opportunities for even the low-grade thermal coal that currently gets earmarked for power generation.
“Our suggestion to Government, is to work towards finding methods of phasing out coal-based power generation even faster, and to use thermal coal in a way that can bring much more benefit to the country’s economy, namely through export,” he points out.
Better distribution models
The IRP update also reveals that electricity consumption in South Africa is currently around 30% less than what was projected in 2010.
“We believe that this massive reduction in energy demand is in no small part due to the private sector’s increasing access to renewable energy and private generation capabilities.
“In addition to cheaper renewable generation, energy storage solutions are becoming more efficient and affordable. This will likely further promote the use of private micro-grids.
As such, McKinsey believes the next draft of the IRP should make a far greater allowance for the growth of private generation, and explore new ways to better predict and work towards electricity distribution models that lead the way for the whole of the African continent.