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Can electric vehicles rescue Eskom?

It might start as a small component of total demand, but it can grow.

Eskom’s newly-installed board of directors and executive team should embrace the electric car as one long-term solution to the challenge of falling demand that is the most fundamental obstacle the state utility grapples with as it struggles to remain a going concern.

In the next five to ten years electric vehicles (EVs) have the potential to grow electricity demand and provide a new source of revenue and profit for the beleaguered company. Reduced demand from the mining and industrial sectors, partly as a result of the steep increases in the price of electricity over the last decade, has seen the national power producer face declining unit sales and an increase in excess capacity. As many parts of the world stride ahead in the adoption of electric cars, we ask the question, how quickly can they be adopted here?

Growing electric vehicle sales in Norway

Source: Wikipedia

The above graph demonstrates how quickly vehicle sales can be adopted when given an enabling environment by government. Between 2004 and 2017 (a period of thirteen years) EV sales in Norway grew at a compound annual growth rate of 62% per annum. By 2017, EV’s marketshare grew to 21% of all new cars sold in 2017. (When combined with the sale of hybrid cars, powered by electricity and petrol or diesel fuel, the market sharerose to almost 50% of new car sales in 2017.)   

By contrast, South Africa’s EV sales in 2017 accounted for just 356 of 368 000 passenger vehicle sales, not even 0.1%. The local market is roughly double the size of the Norwegian market. The cumulative number of EVs sold in Norway over the last seven years amounts to 200 000 vehicles, all of which need regular electrical charging. The growth in sales was driven by improvements in electric cars and focused incentives from government to encourage individuals to switch over from petrol/diesel cars to EVs. A similar growth pattern can be seen in EV sales in the USA, Japan and the Netherlands.

On the supply side, investment and innovation by EV manufacturers has addressed three key areas of customer concern of the early adopters, namely: choice of exciting cars, total cost of ownership and driving range. 

Powering the growing fleet of EVs

South African standards allow for two chargers: Direct current (DC) fast-charging stations are an option for setting up commercial facilities. Estimated costs per unit come in at approximately R350 000 and current can be drawn at a rate of 75 Amp (A) units. These stations have the capacity to charge a Nissan Leaf battery in just 25 minutes. 

The cheaper, alternating current (AC) charging stations can draw 8, 16 or 32A and will charge a Nissan Leaf in eight hours if set at 16A. To drive the rollout of the different parties, it will be crucial that the private sector and government get involved to rollout as many chargers as possible.

Adoption of EVs by the public will see the addition of the largest energy consuming “white appliance” ever known to man, driving up the home energy bill by 40% to 100%.  The beauty of this for Eskom is that the current target market at are grid-connected customers, who loyally pay their monthly accounts. 

Source: David Knight

If the taxi industry gets involved, along with other light commercial vehicle (van/truck) users, then these energy consumption and sales numbers will most likely double or treble. International companies are working hard at finding the right vehicles for these markets, as travel figures of 5 000 to 8 000km/ month significantly improve the economics of owning these vehicles. 

Now one has to ask: Should Eskom ignore potential sales of over R3 billion a year? Let us consider some basic numbers: What difference could a fleet of EVs make to Eskom over time?

Drawing off the Norwegian case study, and assuming within seven to ten years South Africa could have around 200 000 passenger EVs on the road, electrical energy consumption can be calculated, drawing from the experience of a Nissan Leaf. For example, assume the owner drives  2 000km per month, and has an electricity consumption figure of 21.25 kWh/100km plus a marginal 15% for charging losses. Eskom would need to provide around 1 159 GWh of electricity per year to keep a fleet of 200 000 Nissan Leaf cars running. At an electricity price of R1.25 per kWh, Eskom together with the municipalities could see potential electricity sales of R1.5 billion per year in this market at current prices.

But what should really pique Eskom’s interest is that recharging a passenger vehicle can be done during off-peak periods. For the average user that parks the EV in a garage or carport overnight, Eskom could incentivise users to charge the car between 10pm and 5am, during a period where demand for electricity is typically at its lowest. This would allow the utility to work its assets more efficiently and flatten the demand profile which exists at traditional peak periods.

Not only is Eskom currently producing excess power, it is already paid for as part of the operating model for coal-fired power stations, as the costs for Eskom are sunk – they have built the power stations already.

Fortunately, EV charging technology can now incorporate prepaid electricity, and implement time-of-use tariffs. EV charging stations can be installed with software that can be used to help Eskom shape customer behaviour in order to promote EV charging in off-peak periods. 

But it gets better. Customers will not only buy their power from Eskom in off-peak periods, but they will self-fund the batteries used in their cars, and their private charge stations.  EV manufacturers like Tesla envisage that in the future, EVs will form part of the home energy system allowing consumers to adjust their grid consumption energy patterns. On the back of these sales, municipalities will see a growth in their incomes from electricity distribution.

Government needs to get involved, and rollout the necessary legislation to incentivise the growth of this market. Along with the incentives, there needs to be significant capital investment into the rollout of a charge station infrastructure for EVs, something that would be commercially feasible for many private operators.

So what is the catch you may ask?  Simply put: time.  Eskom needs to capitalise on this market, grow sales and keep electricity costs down and attractive, or it will lose this entire paying customer base. Solar power companies are lining up to supply these consumers with electricity, who with their EVs and battery systems can move off the grid and not have to purchase power generated by Eskom. Hence why the off-peak tariff needs to at least match, or be lower than the supplied cost of a consumer installing renewable energy at their homes and thereby moving off grid.

The combined impact of EVs and their demand for electricity, deserve the attention of Eskom and government as they are a big part of the answer to growing sales and using the surplus electricity currently available in the national grid. But the time to act is now.

Read more on electric vehicles:  An electric opportunity

David Steven Knight is a senior management consultant with over 25 years’ experience in the business and engineering management environment. He previously served as Eskom’s Chief Project Quality Engineer for three-and-a-half years. 

COMMENTS   24

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In short. No.

Agreed. That is not where Eskom’s problems lie.

When you are reacting merely to the title, you are correct. Increased demand, from EVs will on its own not save Eskom.The trouble of gross mismanagement and corruption/ favouritism is surely deeply rooted.
Most of the SOEs can be sold voetstoots, closed down or sold in bits and pieces.
The Parasitals that are the biggest drain on the taxpayers and easily can be privatised, as they are competing with private entities should be auctioned off ASAP.

SAA should be very first to go. Over the last 20 odd years more than 20 billion of taxpayers money has been dumped in that bottomless pit, or maybe I better say that all that money has blown away in the sky, “our proud national carrier”. And they hardly own any airplanes, they just lease most of them. Led for many years by JZ’s Nyatsi, Dudu Myeni.

Eskom has the biggest debt of all the SOEs, around R 360 Billion.
Eskom can be split up in 3 or 4 powerproducers and a company that runs the grid. Gov should maybe only own a part of the grid company, as it is a monopoly. In that scenario energy regulator NERSA should act as a truly independent watchdog over the sector, and together with competition authorities and environmental agencies guard us from price fixing and environmental disasters.
Gov should only keep a broad oversight and create the right framework and guidelines, like the desired energy mix for the future.
This is what happened to the energy sector in most west European countries 20-40 years ago

“Government needs to get involved, and roll out the necessary legislation to incentivise the growth of this market.”

Yes, indeed! I for one would love to drive an EV (new Nissan LEAF is a great car in every respect). However, until the government starts to incentivise the purchase of EVs — either by offering subsidies at purchase, or by reducing the import duty — they will remain out of reach of most South Africans.

The reality is South Africa’s auto industry is being increasingly left behind, not only because we are missing out on the EV revolution, but because our fuel quality is increasingly dropping below international standards, due to delayed upgrades to our fuel refineries. While international manufacturers push for increasingly more fuel-efficient engines, our fuel quality is not keeping pace with these new engines.

We could circumvent that whole issue by aggressively promoting EVs but the government is so mired in other issues they can’t even get off the starting blocks on these critical issues.

Would be great to get rid of all the polluting cars and power stations and replace with clean power…

Not doable, and don’t forget that you simply displace the pollution. Then there is the storage problem that has not been resolved yet.

Of course it is possible, not on the short term, but certainly in the long run.
SA can easily produce around 40% of all electricity from renewables within 25 years and probably even up to 80% in the long run.
As in my other post on this page, all coal fired power stations should have FGD and particulate filtering.

Electric cars are supposed to save the planet so it would be a sad dichotomy if they save Eskom.

I think independent suppliers will beat Eskom to the draw; like the post office and SAA.

I for one will think of using solar to charge batteries during the day. At night charge our electric cars using battery power.

No, it will not help Escom. It will only add R3B/year to the bailout escom will need.

People will simply charge at illegal electrical connections. Expect this to catch on in the taxi industry asap.

I might even do it myself as a sort of revenge against the taxman.

What is TESLA’s BBBEE-level??? (Huh…?)

OK, there’s your answer Eskom!

The battery is simply an energy storage mechanism. The energy that EVs use must still be generated. In this country the energy is 90% from coal-fired power stations, so the energy used by EVs is not “clean” energy.

One main advantage is that the pollution is further away from you, not in your street, so it falls on someone else, not you (the NIMBY principle). Another is the fuel efficiency, so the running costs are far lower (electricity is seven times less per 100km than for premium petrol fuel) and almost no maintenance servicing).

A disadvantage is the capital cost for the vehicle. Many countries subsidise this.

But once you have used an EV, you will never go back to a smelly car.

India is looking at replacing the smelly cars by 2030. I dunno whether legislation is passed or in the initial stages of national debate. They have a major headache with regards to diesel pollution from vehicles.

Don’t agree entirely. Power stations burn coal very efficiently and use ash and sulphur dioxide scrubbers so there is very little pollution even where they are situated.

The average electricity consumption for an EV is about 20kWh per 100km. The price in rand per kWh is about R1.50, thus R30 per 100km. The average ICE car uses about 10 litres per 100km. At R14 per litre this would equate to R140. The ratio is about 4.6 not 7.

More than half of the petrol price is different taxes in SA, in Europe the tax is around 70%. At the moment the fuel/electricity cost might justify the electric option, but if the percentage of electric vehicles reach 10-15% in a country the government will have to find a way to replace the lost petrol tax. What will they do to compensate for it? Increase the price of electricity? Increase the yearly licence fee 10-20 times of the current one? Will they monitor the monthly mileage and demand some kind of road tax per km?

The modern ICE car gets well under 10l/100kms. A late model, modern hatchback will easily achieve under 7l/100kms in urban conditions dropping down to 5l/100kms on the open road. My 12 year VW Golf 1.9 Tdi manages 6.5l/100 in urban driving and drops down to 5l/100kms on the open road with a useful range of 1100kms. Try doing that with an EV.

And furthermore SARS would lose out on the fuel levy … no way. tHE ONLY WAY TO MAKE ESKOM efficient would be to reduce the payroll in line with international standards. Government will have to place a moratorium on new hires and ruthlessly fire all non-performing employees as well as all the crooked ones too.

Eskom power stations do NOT have FGD, Flue Gas Desulphurisation, also called wet scrubbers. They remove the SO2 from the chimneys. Neither do they have particulate filters, I am not even talking about carbon capturing.Not even the latest, Medupi and Kusile.
Medupi and Kusile should never, ever have been built. All Eskom coal fired power stations are extremely polluting. More modern coal fired generators should have at least FGD and particulate filters.

Eskom will have to be very aggressive to keep this revenue as most people opting for EV’s will also opt for Solar PV – it makes the car completely clean and cost is already now down to R0.20/kWh on commercial scale solar installations – Eskoms cost of transmission is probably higher than that.

Wrt amount of kW required to run an electric car I think the average is more like 10-15kWh/100km and that most people will only recharge 4-8kWh per day (to replenish their 28 – 56km daily commute). Recharging 4kWh on 16A will take only take a little over an hour.

We run a Nissan Leaf entirely on solar PV – we charge on 10A for 2-4 hours per day to cover daily commute – solar system is sunk cost so it feels like we are driving for free. I hope government will see value in this transition and will step in to give EV’s the support required to make it happen

Cost for Solar PV generation is not 20c/kWh, more like 74c/kWh at present and transmission costs are the same. A small PV installation will generate power at R 1.20 kWh depending on the size of the installation amortised over 20 years.

When Transnet/PRASA get their act together and offer tourism packages, it can surely help!

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