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Klariz Vodlik

Another Nail in the Coffin - 3 views

the crown capital management international relations review another nail in coffin

started by Klariz Vodlik on 26 Jul 13
  • Klariz Vodlik

    This is Basic Gold Mining 101: There is this rock, see? Underground, see? It has gold in it. The ratio of gold (if you are lucky) is about 25 g for each 1 000 kg of rock. So you send people down the mine in a very big lift, called a cage, see? They drill and blast the rock, which is then hauled to the surface and the rock is crushed and the gold extracted and sold.

    All of this requires lots of electricity. For example, a medium-sized gold mine spends about R10-million a month on electricity, see? If the cost of electricity goes up, the profit from gold goes down. At a certain level of electricity cost, the operation does not make any money, see? Then everybody loses his or her job and goes on a social grant, which the public, other businesses and gold mines have to pay. Got it? Good.

    This is Basic Electricity Provision 101: To make electricity, you need energy. The most expensive energy comes from using diesel fuel, see? The cost (excluding the cost of the engine) is about R3.60/kWh. The cost of generation from coal at its most expensive is R0.70 (Medupi, you guessed it). So you do not use diesel fuel to power the national grid because the cost of electricity would be so high that most industries would shut down. Got it? Good.

    This is Basic Wind Farm Economics 101: The wind farm people say wind farms will produce electricity at a cheaper cost than the new coal-fired stations being built by Eskom, according to the energy regulator, the Democratic Alliance (DA) and Standard Bank, see? The DA and Standard Bank? Rather believe Eskom CEO Brian Dames who says: "The power we will buy from renewable-energy producers will come in at an average cost of R2.12/kWh, more than five times the cost of power generated by Eskom's own power stations." Got it? Good.

    There is also the matter of what to do when the wind does not blow. Well, what about flooding the country with diesel generators, which will fill in the gaps when the wind is not blowing? How about that for an idea? Good? Bad? Foolish? An idea conceived by the fanatically motivated and ruthlessly self-interested? Yes. The last-mentioned. But it is not happening, is it? Oh yes, it is.

    Christopher Booker wrote in the UK Sunday Telegraph of July 14: "Last week, when my colleague, Richard North, and I revealed government's 'secret weapon' in the battle to provide backup for when the wind isn't turning the tens of thousands of useless wind turbines it hopes to see built, we had no idea what a huge story this is turning out to be.''

    Under its STOR (Short Term Operating Reserve) scheme, the national grid has been signing up, at vast expense, thousands of diesel-driven standby generators to provide instantly available power to 'balance the grid' when the wind isn't blowing. But so huge are the sums the grid is offering to make this power available that hundreds of canny investors have seen that this is one of the great money-making rackets of our time. In old industrial sites, quarries and supermarket premises all over the country they are piling in to install dedicated 'generator parks' capable of producing up to 100 MW in return for 'availability payments' of up to £47 000 a year for each megawatt of their capacity. They then receive additional payment for the amount of electricity they actually feed to the grid, giving them an equivalent of £600 for each megawatt hour supplied - 12 times the going market rate.

    "Before long, STOR alone will be adding 5%, or £1-billion, a year to our electricity bills. Yet no one involved wants to talk about it. This is a scam so colossal that it makes the owners of those useless wind farms, who get subsidies of 100% or 150%, seem miserably underpaid . . ."

    If history is to be believed, this is shortly going to happen here. What a disaster. Please, say it isn't so.

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