Measuring the social costs of coal-based electricity generation in South Africa

Abstract

Energy technologies interact with the economic, social and environmental systems, and do so not only directly but indirectly as well, through upstream and downstream processes. In addition, the interactions may produce positive and negative repercussions. To make informed decisions on the selection of energy technologies that assist a nation in reaping the socio-economic benefits of power generation technologies with minimal effects on the natural environment, energy technologies need to be understood in the light of the multifaceted system in which they function. But frequently, as disclosed by the literature review conducted in this research, the evaluation of energy technologies lacks clear benchmarks of appropriate assessments, which has resulted in difficulty to compare and to gauge the quality of various assessment practices. The assessment methods and tools tend to be discipline specific with little to no integrations. Parallel with the tools, the technology assessment studies offer piecemeal information that limits deeper understanding of energy technologies and their consequent socio-economic-environmental repercussions. Improved energy technology assessment requires the use of a holistic and integrative approach that traverses the disciplinary nature of energy technology assessment tools, examines the long-term implications of technologies while at the same time embracing energy technologies’ positive-and-negative interactions with the economic, social and environmental systems and in this manner offering economic, social and environmental indicators to assist decision makers in the decision-making process. Accordingly, this study focuses on improving the assessment of energy technologies through the application of a holistic and integrative approach, specifically system dynamics approach along a life-cycle viewpoint. Precisely, focus is on coal-based electricity generation and in particular, the Kusile coal-fired power station near eMalahleni as a case study. A COAL-based Power and Social Cost Assessment (COALPSCA) Model was developed for: (i) understanding coal-based power generation and its interactions with resource inputs, private costs, externalities, externality costs and hence its consequent socio-economic, and environmental impacts over its lifetime and fuel cycle; (ii) aiding coal-based power developers with a useful tool with a clear interface and graphical outputs for detecting the main drivers of private and externality costs and sources of socio-environmental burdens in the system; (iii) aiding energy decision makers with a visual tool for making informed energy-supply decisions that takes into account the financial viability and the socio-environmental consequences of power generation technologies; and for (iv) understanding the impacts of various policy scenarios on the viability of coal-based power generation. The validation of the COALPSCA Model was also conducted. Five structural validity tests were performed, namely structure verification, boundary adequacy, parameter verification, dimensional consistency and extreme condition tests. Behavioural validity was also conducted which included an analysis of the sensitivity of the model outcomes to key parameters such as the load factor, discount rate, private cost growth rates and damage cost growth rates using univariate and multivariate sensitivity analysis. Finally, while attempts were made to incorporate most of the important aspects of power generation in a coal-fired power plant, not all intrinsic aspects were incorporated due to lack of data, gaps in knowledge and anticipated model complication. The shortcomings of the model were highlighted and recommendations for future research were made.