Externality valuation of non-renewable electricity generation in South Africa – an externe approach

Abstract

The quality of electricity infrastructure and supply to a nation is seen as vital for the development of the local and regional economy. In recent times, electricity generation industries worldwide have undergone significant changes pertaining to the kind of technologies used. These changes were made in order to address concerns related to energy security and sustainability. South Africa has been identified as a carbon-intensive economy, with the electricity sector being at the high end of the carbon intensity spectrum. The need to analyse the socio-environmental impacts of existing electricity generation techniques becomes vital when taking into account the transitions in the South Africa electricity industry. Socio-environmental impacts are categorised into public, environmental and occupational impacts, based on the point of impact. The methodology used to quantify these impacts is based on the Impact Pathway Approach used in the Externalities of Energy study. The Externalities of Energy study was devised in Europe and has gained prominence particularly in developing countries because of its ability to adapt to local conditions. Since South Africa is a developing country, the methodology is suitable for the quantification of externalities when analysing scenarios that have a dearth of local data. iii South Africa historically focused on non-renewable electricity generation mechanisms. This was done primarily because of the abundant supplies of coal and secondly because of the need to provide electricity at affordable prices to the masses. The focus of the analysis is set on impacts caused by coal and nuclear electricity in South Africa, since these two technologies together contribute to more the 95% of the electricity generated. The impacts in each category are identified, prioritised, analysed and quantified. Once impacts are quantified, monetary costs are attributed to the impacts. The aggregation of the costs caused by the impacts results in determining the damages associated with the quantified impacts. Monetary damages individually are not of much use, and therefore the significance of such damages are underlined once calculated. Determined monetary damages are interpreted in average and total terms relative to the total electricity generated with the intention of highlighting the significance of the costs. The average damage costs are compared to existing electricity prices, which enables policy- and decision-makers to segregate the damages relative to electricity prices. The results of this analysis should enable policy-makers to prudently make decisions about the significance of the social and environmental impacts associated with the dominant non-renewable electricity generation technologies in the country while prioritising the sustainability of the society and environment.