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29 September 2022 | Story Nitha Ramnath and André Damons | Photo iStock
Energy efficiency and renewable energy is the game for South Africa to transition to a carbon-friendly economy by 2050.
Energy efficiency and renewable energy is the game for South Africa to transition to a carbon-friendly economy by 2050.

Energy efficiency and renewable energy is the game for South Africa to transition to a carbon-friendly economy by 2050. The energy mix by 2050 is focused on renewables and the long-term journey is very clear: we have to be renewable driven.

This is according to panellists speaking at the University of the Free State’s (UFS) third webinar in the 2022 Thought-Leader webinar series. The webinar titled, What needs to be done to POWER up South Africa? comprised panellists Matthew Mflathelwa, General Manager: Strategy and Planning at Eskom; Steve Nicholls, Head of Mitigation at South Africa’s Presidential Climate Commission (PCC); Happy Khambule, Environment and Energy Manager at Business Unity South Africa (BUSA); and Louis Lagrange, Head: Department of Engineering Sciences in the Faculty of Natural and Agricultural Sciences, UFS. 

We need to invest in new infrastructure

In his presentation, Mflathelwa talked about how Eskom can unlock additional grid capacity and how to start rolling out business models to enable this transition. 

“On the demand side, we are looking at some exciting and interesting initiatives. We are looking at how we can start to aggregate or leverage the idea of consumers becoming prosumers, and leverage technology to aggregate the potential supply and management demand from that perspective.” 

“The question is also how to do this sustainably in the long term. We need to invest a considerable amount of new infrastructure,” said Mflathelwa. 

According to him, it is not a secret that most of Eskom’s generating assets are approaching the end of life. The question now is how to proactively plan for this to ensure that we address the problem of load shedding sustainably. “The big takeaway is that there is a significant amount of new capacity that needs to be built and this is predominantly going to be renewables, but it is not the only additional infrastructure that is required. We need an energy mix that can respond and achieve adequacy for the future requirements.”  

Another important element that is often neglected is the transmission of grid infrastructure, given the penetration or entry of new players with greater penetration of renewable energy and the advantages that come with distributing these energy sources across the country. There is a lot of transmission and distribution infrastructure needed to enable this future capacity.

Some of the things also being discussed, said Mflathelwa, are how to enable greater and faster penetration of new capacity – specifically renewables to aid in the reduction of environmental challenges. 

LISTEN: 2022 UFS Thought-Leader Webinar:
What needs to be done to POWER up South Africa 
(Recorded on 27 September 2022)

 

The next decade is critical 

Nicholls gave a climate-friendly perspective on the work that Eskom is doing, saying energy transition in SA is core to the overall economy transition and getting a zero-carbon, least-cost energy system is fundamental to the strategy of the country. 

“We need to move from carbon emissions of around 480 megatons per annum today to somewhere between 350 and 420 by 2030, and then onto zero carbon emissions by 2050. If South Africa is to reach net-zero by 2050, we need targeted investment between now and 2030, setting the stage for accelerated investment in decarbonisation post 2030. The next decade is critical. Given the state of South Africa’s balance sheets, international support and foreign direct investment are critical.”

Nicholls said the energy mix by 2050 is really focused on renewables, and the long-term journey is very clear: we have to be renewable driven. The short- and long-term solutions are alike; renewables are cheaper, quicker to get onto the grid, pending some investment in the grid.   

“In the long term, we need big investments in renewables – about 6 GW a year between now and mid-2050. We need a big investment in the transmission grid. Hydrogen plays a critical role in decarbonisation of power and industry. Energy efficiency is key. It’s really the unsung hero in this conversation. If we can be energy efficient, we can take two power stations off the grid and that makes a big difference in terms of affordability.” 

“Transport is also important; if we are going to be a net-zero economy, we have to fully electrify the transport fleet, which puts an extra load on what Eskom needs to achieve,” Nicholls said. 

Energy efficiency is most critical

Khambule emphasized that the country needs to focus on using energy in an efficient manner in the commercial and household sectors, as energy efficiency is critical to the country’s power supply issues in the short term. According to Khambule, the country is not using energy in an efficient manner.

"If we are able to use power the minute it is necessary and become more efficient with it, we can get more value out of that power," said Khambule.

Lagrange concurred with Khambule on the importance of energy efficiency, referring to it as ‘the unsung hero’. “Energy efficiency is the biggest solution that we can have, and people need to be trained on how to use energy efficiently,” said Lagrange.

Khambule also addressed the issue of power cuts, saying the unpredictability thereof, even in the short-term, further exacerbated the situation.

"The unpredictability of load shedding has become much more of a driver for uncertainty, which leads to a lack of business confidence, and secondly leads to losses in production;  a key notion is that if we have predictability of load shedding, planning can be undertaken, and if planning is undertaken in a more judicious manner, then we are at least able to keep the losses at a minimum and see how we can weather the storm until a sustainable supply can be implemented."

Khambule also added that in the short and mid-term, solutions must consider protecting or mitigating options for vulnerable sectors. “In some industries – such as health care, power is essential and there is a need for predictable supply. Therefore, some sectors will require mitigating solutions to protect some essential sectors,” said Khambule.
According to Lagrange, no amazing technology for the generation and distribution of energy has been developed over the past decade. “We need to reimagine the entire current regulatory systems business model, because it is caught up in an energy stagnation, which is frighteningly fragile from a physical and cyber-security point of view,” added Lagrange.

News Archive

Inaugural lecture: Prof. Phillipe Burger
2007-11-26

 

Attending the lecture were, from the left: Prof. Tienie Crous (Dean of the Faculty of Economic and Management Sciences at the UFS), Prof. Phillipe Burger (Departmental Chairperson of the Department of Economics at the UFS), and Prof. Frederick Fourie (Rector and Vice-Chancellor of the UFS).
Photo: Stephen Collet

 
A summary of an inaugural lecture presented by Prof. Phillipe Burger on the topic: “The ups and downs of the South African Economy: Rough seas or smooth sailing?”

South African business cycle shows reduction in volatility

Better monetary policy and improvements in the financial sector that place less liquidity constraints on individuals is one of the main reasons for the reduction in the volatility of the South African economy. The improvement in access to the financial sector also enables individuals to manage their debt better.

These are some of the findings in an analysis on the volatility of the South African business cycle done by Prof. Philippe Burger, Departmental Chairperson of the University of the Free State’s (UFS) Department of Economics.

Prof. Burger delivered his inaugural lecture last night (22 November 2007) on the Main Campus in Bloemfontein on the topic “The ups and downs of the South African Economy: Rough seas or smooth sailing?”

In his lecture, Prof. Burger emphasised a few key aspects of the South African business cycle and indicated how it changed during the periods 1960-1976, 1976-1994 en 1994-2006.

With the Gross Domestic Product (GDP) as an indicator of the business cycle, the analysis identified the variables that showed the highest correlation with the GDP. During the periods 1976-1994 and 1994-2006, these included durable consumption, manufacturing investment, private sector investment, as well as investment in machinery and non-residential buildings. Other variables that also show a high correlation with the GDP are imports, non-durable consumption, investment in the financial services sector, investment by general government, as well as investment in residential buildings.

Prof. Burger’s analysis also shows that changes in durable consumption, investment in the manufacturing sector, investment in the private sector, as well as investment in non-residential buildings preceded changes in the GDP. If changes in a variable such as durable consumption precede changes in the GDP, it is an indication that durable consumption is one of the drivers of the business cycle. The up or down swing of durable consumption may, in other words, just as well contribute to an up or down swing in the business cycle.

A surprising finding of the analysis is the particularly strong role durable consumption has played in the business cycle since 1994. This finding is especially surprising due to the fact that durable consumption only constitutes about 12% of the total household consumption.

A further surprising finding is the particularly small role exports have been playing since 1960 as a driver of the business cycle. In South Africa it is still generally accepted that exports are one of the most important drivers of the business cycle. It is generally accepted that, should the business cycles of South Africa’s most important trade partners show an upward phase; these partners will purchase more from South Africa. This increase in exports will contribute to the South African economy moving upward. Prof. Burger’s analyses shows, however, that exports have generally never fulfil this role.

Over and above the identification of the drivers of the South African business cycle, Prof. Burger’s analysis also investigated the volatility of the business cycle.

When the periods 1976-1994 and 1994-2006 are compared, the analysis shows that the volatility of the business cycle has reduced since 1994 with more than half. The reduction in volatility can be traced to the reduction in the volatility of household consumption (especially durables and services), as well as a reduction in the volatility of investment in machinery, non-residential buildings and transport equipment. The last three coincide with the general reduction in the volatility of investment in the manufacturing sector. Investment in sectors such as electricity and transport (not to be confused with investment in transport equipment by various sectors) which are strongly dominated by the government, did not contribute to the decrease in volatility.

In his analysis, Prof. Burger supplies reasons for the reduction in volatility. One of the explanations is the reduction in the shocks affecting the economy – especially in the South African context. Another explanation is the application of an improved monetary policy by the South African Reserve Bank since the mid 1990’s. A third explanation is the better access to liquidity and credit since the mid 1990’s, which enables the better management of household finance and the absorption of financial shocks.

A further reason which contributed to the reduction in volatility in countries such as the United States of America’s business cycle is better inventory management. While the volatility of inventory in South Africa has also reduced there is, according to Prof. Burger, little proof that better inventory management contributed to the reduction in volatility of the GDP.

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