Why a Fuel Cell Quota for South Africa is a No Brainer

The History of Fuel Cells
Fuel Cell technology is a proven technology that runs on hydrogen while producing only water as a by-product. No carbon, no pollution, no noise. The technology was originally developed in 1839 by William Grove who invented the “Gas Battery”, the first fuel cell. By 1960’s the American space program NASA and the Russian Space program realized that the only way to power up the required equipment in space was by using fuel cells. Soon afterwards the US navy deployed fuel cells to power its submarines. In the early 2000’s car companies such as Honda, Toyota and others promoted their first fuel cell powered cars to the consumer market.

Current commercial Status

  • “A commercial fuel cell and hydrogen energy industry is emerging. Worldwide revenues may reach $2 billion in 2015, dominated by the sale of large power systems. Markets are opening in Africa, South Asia, and South America”[1].
  • FCEVs are being sold and leased in Asia, Europe, and the United States. California dedicated funds to an incentive program worth $5,000 per vehicle; Japan’s federal government and the city of Tokyo announced a combined $27,000 per vehicle incentive.
  • The number of residential fuel cell systems installed in homes in Japan exceeded 100,000 in 2014, aided by price reductions, continued government support, and consumer concern over energy reliability; new markets are opening in apartment buildings, where fuel cells are offered by builders as an appliance option.
  • Total fuel cell power generation capacity in the United States was near 200 megawatts (MWs) by the end of 2014.
  • The market for fuel cell forklifts began to recover in 2013, led by an order of 1,783 units from Walmart.
  • In Europe, the European Commission formalized a seven-year commitment for fuel cell and hydrogen research, development, and demonstration (RD&D( and increased its financial commitment to more than$800 Industry-led H2Mobility established a new corporation to build stations and sell hydrogen throughout Europe, with a budget of about $445million, most of it from private funds.
  • California, in 2013, pledged up to $20 million annually to finance 100 hydrogen stations; in 2014, Toyota and Honda supported the effort financially with a combined $22 million. Toyota and Air Liquide announced plans for 12 stations in New England.

What are Fuel Cells?

Fuel cells generate electricity by an electrochemical reaction in which oxygen and a hydrogen-rich fuel combine to form water. Unlike internal combustion engines, the fuel is not combusted, the energy instead being released electrocatalytically. This allows fuel cells to be highly energy efficient, especially if the heat produced by the reaction is also harnessed for space heating, hot water or to drive refrigeration cycles.

A fuel cell is like a battery in that it generates electricity from an electrochemical reaction. Both batteries and fuel cells convert chemical potential energy into electrical energy and also, as a by-product of this process, into heat energy. However, a battery holds a closed store of energy within it and once this is depleted the battery must be discarded, or recharged by using an external supply of electricity to drive the electrochemical reaction in the reverse direction. A fuel cell, on the other hand, uses an external supply of chemical energy and can run indefinitely, as long as it is supplied with a source of hydrogen and a source of oxygen (usually air([2].

Why Should South Africa adopt Fuel Cells?

Fuel Cells can be located at commercial and industrial locations without an Environmental Impact Assessment (EIA), allowing for rapid deployment nationwide. They can serve several purposes including back up power when the grid is down, peak shaving when the grid operator requires additional peak power and primary power in the event that there is no grid available at all.

Fuel cells is an ideal solution to provide reliable, flexible and valuable grid peak demand reduction and reduce associated transmission and distribution costs since they can be located at the load centers.

Fuel Cells can also enable the cost effective delivery of power to rural areas where it makes no economic sense to run transmission and distributions wires to far out and hard to reach rural customers. Instead by deploying fuel cells as part of a mini grid, the utility can provide reliable supply of power at a costs effective price.

Achieving Social and Economic Development Goals

Fuel cells offer government the ability to achieve significant social and economic development goals:

  1. Fuel cells are the ideal solution to deliver reliable low cost and clean power into the rural areas
  2. Fuel cells offer skills training, research and development at universities throughout the country
  3. Fuel cells offer jobs in the form of logistics support, installation and maintenance crews, and manufacturing of more than 50% of system costs in South Africa
  4. Local manufacturing is an ideal scenario for fuel cells, considering that more than 50% of FC components can be manufactured in South Africa
    What Should RSA Do About It

In light of the above it would be prudent for the Department of Energy and the Treasury’s Independent Power Producer’s unit to promote this technology and recognize it as eligible for the following:

  • A bid tariff of maximum during standard hours of R1.30 per kWh and during peak demand at R3 per kWh for now more than 15 years
  • Minimum installed per units of 5kW up to 100kW
  • Minimum total installed capacity as a group bidding under one SPV must be at least 500KW up to 10MW
  • Total quota per bid window should be initially 20MW for bid window in 2016, 40MW for bid window in 2017, 60MW for bid window in 2018 and rising up to 100MW per bid window by 2020 onwards.
  • The bid tariff to be provided for at least 9 hours per day during peak hours as required. Currently we understand the peak to be 06:00 to 10:00 and 16:00 to 21:00.
  • If the grid operator requires peak shaving during any other times of the day in addition to the above times, the units should be available to despatch via a remote management system
  • The units may despatch outside of these times and be compensated by a third party
  • certification should be TUV or EC equivalent
  • Offer a Self Generation Incentive Program similar to the program that has been in place in California since 2001

Benefits of such a program
When compared to the CSP REIPPPP bidding program or the Gas procurement program or diesel peaking plants, an equivalent Fuel Cell bidding program can offer significant competitive advantages:

1. Significantly reduced peak tariff (CSP gets approximately R4 per kWh and Gas gets R6 whereas FC would get R3 per kWh)

2. Remove the costs associated with transmission and distribution of the power from the Northern Cape all the way to the major load centers of Western and Eastern Cape, Gauteng and KZN. This is about 30% of the end users’ tariff which would be saved by putting FC’s in the middle of urban areas where the electricity is consumed.

3. By incentivizing thousands of businesses and households to install such equipment we could replace our massive fleet of diesel generators that are sitting idly not being used for much and are costing billions of Rands to maintain. When they are used, think of all the noise and air pollution that is created. Fuel Cells would eliminate these wasted assets.

  1. There is no need to build out a network of pipelines since the delivery of hydrogen through Ammonia is readily available nationwide via the likes of Sasol Protea Chemicals and its distributors.

Conclusion

By introducing Fuel Cells into the energy mix in South Africa, the South African government will achieve its goals of securing zero carbon, non-polluting power at lower costs than is currently being procurement via CSP and Gas. It will also spur a new industry by encouraging locally produced Fuel Cells that will use at least 50% local content in the manufacturing of Fuel Cells, thus achieving significant job creation goals.

[1] 2014 ANNUAL REPORT of The Hydrogen and Fuel Cell Technical Advisory Committee

[2] See more at: http://www.fuelcelltoday.com/about-fuel-cells/introduction#sthash.WXP0FcKD.dpuf

You Might Also Like