Cost Assessment: Electricity Generating Sources Against Energy Efficiency Measures

Over the last decade, South Africa has been experiencing a severe electricity supply crisis. Consequently, the stability of the national power grid has been operating under strain. The reason of this crisis was due to insufficient generation capacity as well as an increased demand for electricity. To counteract this situation, the state-owned electricity utility decided to increase its power capacity by building new power plants, and implementing energy efficiency measures to save energy, all of these came at a cost. To date, cost assessment of building new power plants and upgrading the capacity of existing plants has been the focus of various studies over the past decade. Unfortunately, this latter is biased and is not comprehensive because it only considers the costs related to the construction of power plants. Hence, snubbing the costs associated with the implementation of energy efficiency measures is becoming critical to business decision. In light of this, the present study designed a novel cost analysis that includes those blind spots. It is, therefore, believed that the novel model will offer decision makers a more accurate picture of the trade-offs involved in decisions affecting various investments in the electricity sector. To achieve this goal, the novel cost model was tested through various analyses including costs of building power generating plants (coal, gas, nuclear, wind, concentrated solar power, and solar photovoltaic) against costs of implementing energy efficiency measures (residential mass rollouts, standard offer program, standard product program, performance contracting program, and ESCO model mass rollouts), and costs of producing electricity versus costs of saving energy. The results were tested through sensitive analyses, to discount rate, to load factor, and to lifespan. Afterwards, it was demonstrated clearly that energy efficiency measures are least cost option to electricity sector, and they can help to counteract the current electricity supply crisis, delaying the need of building new power plants, and assisting the utility to save Billions of Rand (South African currency) from using large amount of coal, fuel, water, and doing much maintenance to the plants. As far as the author is aware, this study is the first example in the African continent.