Peter Middleton comments on a modern approach being adopted by energy sector newcomer, Fusion Energy, which, out of the sector’s “murky past”, is blazing a cleaner and more cost effective energy future. 

Peter pic latestI read with interest a press release from a new kid on the block in the energy sector, Fusion Energy, which notes that, when it comes to energy, most South Africans talk about “the increasing dent it is making in the monthly budget along with endless controversy surrounding Eskom”.

About the government’s Renewable Energy Programme, the article suggests most will say these new renewable technologies are more expensive than coal power, and so, either way, the consumer is going to be hit. People are resigned to paying more for less and indirectly supporting a more polluting future for South Africa and the world.

When it comes to the subject of power, Fusion Energy suggests that South Africans feel powerless. I couldn’t agree more, but: “While energy wrestles with a murky past, Fusion Energy is blazing a cleaner future,” reads the article.

“Our core business fully embraces the principles of social, economic and environmental sustainability,” says Wendy Green, CEO of the Stellenbosch-based company. Can we say the same of the Medupi and Kusile projects? How does the nuclear proposal stack up against social, economic and environmental sustainability?

“The reality is that, whilst fossil fuel-produced electricity costs are increasing, renewables and grid security technology costs are dropping – and this divergence is becoming an unstoppable force. This means that a new energy future is coming in which consumers can enjoy lower costs, minimal environmental impacts and a world of opportunity to create jobs and economic empowerment through good business sense and the inherent innovation of all South Africans,” says Green.

Hooray!

Corroborating this view, a New Energy Update article on concentrated solar power (CSP) reports that the levelised cost (LCOE) of CSP-generated electricity in the Middle East could fall to below $50/MWh next year, according to the predictions of two of the industry’s leading consultants at CSP Seville 2017. The article cites ACWA Power’s 700 MW CSP project in Dubai, which is in its fourth phase of development.

This project combines tower and trough technologies and will deliver a US$73/MWh LCOE (7.3 US cents or 98 SA cents per kWh) from direct normal irradiance (DNI) of about 2 050 kWh per square-metre per year, notes Jonathan Walters, MENA CSP Knowledge and Innovation Programme Team Leader and a senior figure at Castalia Advisors.

Given this, Walters says, $50/MWh could easily be achieved in Jordan, Egypt, Tunisia, or Morocco, where DNI typically reaches 2 500-2 800.

Based on solar maps released by Stellenbosch University in co-operation with GeoSUN Africa, the DNI in South Africa is as high as 3 200 kWh/m2 per year in the Northern Cape, which, if implemented in SA, would bring the costs of this CSP technology down further by between 15 and 26%. Potentially, this puts the LCOE of new CSP in the Northern Cape Province at between 58 and 68 South African cents per kWh.

Belen Gallego of Empresarios ATA Insights and a colleague of Walters points out that six to 12 months ago nobody in the CSP sector would have dared mention LCOE. “Now the numbers are looking better and the industry is buzzing.”

PV is at $20-30/MWh, and CSP has reached as low as around $60/MWh in Australia and Chile, despite there being only 5.0 GW of global CSP installations compared to 80 GW of global PV installations, she says. “If we keep growing this market, the cost will continue to come down. CSP is very simple and there is nothing in the value chain that is rare or limited in supply” – or dangerous!

The $73/MWh LCOE for ACWA’s Dubai plant also includes 15 hours of storage, which allows the power producer to “sell a lot of energy” and “to spread the fixed costs to get down to something low like 7.3 cents (US),” Gallego points out.

With 15 hours of storage, surely capacity factors must be exceptionally high? And this without the unaffordability that we have been told is associated with renewable storage technologies.

There in an uncomfortable sense that we are racing to finalise a nuclear deal in South Africa, one that cannot easily be justified in terms of current or medium term energy needs. Nor is it obviously affordable, unless we adopt the build-own-operate (BOO) model, which is likely to prove even more expensive in the long term and, like the e-toll project, could commit the nation to paying huge amounts of money for something that is not needed.

The decentralised, modern approach, based mostly on renewable options, makes much more sense to me. We should be looking towards organic growth of our energy sector, using smaller installations to meet immediate or mid-term needs.

Fusion Energy is currently looking to become “South Africa’s first listed, diversified, clean energy brand”. I think the company is worthy of our support.

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