Delays to South Africa’s renewable-energy procurement processes, together with new uncertainty surrounding the renewable energy feed-in tariffs (Refit) rates, are inhibiting cement producer PPC from committing to some “advanced” renewable energy projects, which it says could help it reduce its carbon footprint and meet the 10% saving goal that could soon become mandatory.
CEO Paul Stuiver tells Engineering News Online that the JSE-listed group is currently meeting its 10% saving target, but mainly as a result of reduced production levels when compared to the benchmark date of 2006.
The South African cement industry is well off its 2007 demand peak, when regional demand rose to above 15-million tons. There is currently significant overcapacity, which will only be absorbed once South Africa’s R800-billion-plus infrastructure plan begins in earnest and if this investment were coupled with a revival in private investment and residential building.
“Achieving the 10% electricity saving at full production volumes will be a challenge without the ability to procure renewable energy,” Stuiver reports. This, notwithstanding a number of other electricity saving initiatives that reportedly compare well with international benchmarks.
The group says it is prepared to guarantee the purchase of a portion of the electricity delivered from a number of wind projects, at least one of which could be build on property owned by the company. But such ‘anchoring’, would only prove viable should the balance of the capacity be purchased, at Refit rates, by either the single buyer office at Eskom, or by the independent systems and market operator.
However, the Refit procurement process has not yet started, leaving project developers and PPC frustrated, while the National Energy Regulator of South Africa (Nersa) has issued a consultation paper proposing a material decrease in the Refit rates approved in 2009. Hearings will be held on the proposed 2011 rates on May 5.
“On the one hand, South African industry is being pressurised to save electrical energy, while on the other, the delays and the confusion around renewable energy tariffs and regulations is not allowing anyone to commit to, or proceed with, potential projects,” a frustrated Stuiver explains.
Theoretically, PPC’s full ‘electrical’ energy requirement could be produced from renewable sources, with a typical 1-million ton a year cement plant consuming about 10 MW of electric energy – equivalent to the output of between two and three modern wind turbines.
Producing cement also involves the consumption of coal used to provide thermal, or heat energy, as well as liquid fuels to transport inputs from the mining operations and the final product to the market. Electricity is used mainly to power a plant’s grinding mills, fans and conveying systems.
For this reason, PPC has been in discussion with the various renewable energy developers for some time, with the intention of acting as an “anchor tenant” to their Refit-approved projects. In so doing, PPC could create a market for supplementary capacity that may not have received a Refit allocation.
“We have reviewed a number of projects, but none have been able to offer us terms that ensure a long-term financial return independent of Refit,” Stuiver explains.
He adds that the new proposed Refit tariffs have not only worsened the uncertainty, but may even “sink” some proposed projects.
Similarly, PPC is frustrated by the slow pace of development with regards to allowing cement producers to use alternative fuel sources from waste materials, including waste tyres, to meet its thermal energy requirement.
“The use of alternative fuels has thus far been constrained by the irregular and slow permitting of cement factories for the co-processing of waste.
“After five years of applications, only two PPC factories have been permitted to co-process waste materials,” Stuiver reports, adding that the co-processing of tyres has been hampered by the delays in the publication, by the Department of Environmental Affairs, of the approved tyre-industry waste management plan.
Edited by: Creamer Media Reporter