Kelvin Power Station in Johannesburg, South Africa

South Africa’s electricity prices are still among the world’s cheapest, despite the National Electricity Regulator’s (Nersa’s) decision to allow Electricity Supply Commission (Eskom) to hike tariffs by 14.2 percent.
Nersa declined Eskom’s application to change some of the current rules under which electricity prices are determined, since this would have resulted in an 18.7 percent increase in the average price of electricity in 2008/9.
The 14.2 percent increase translates to an average tariff of 22.61 cents per kWh, which means South Africa’s electricity tariffs are still among the lowest globally, Fin24.co.za reported.
South Africa supplies two-thirds of Africa’s electricity and is one of the four cheapest electricity producers in the world, says the department of minerals and energy. And even after the imminent price hike, this will still be true.
In its 2007 International Electricity Report and Cost Survey released earlier this year, NUS Consulting South Africa showed that for the third consecutive year, South African power prices remained the lowest of the fourteen leading economies surveyed.
NUS Consulting Group is the world’s leading utility cost management consulting firm.
At 24.63c per kWh, South African electricity is still 42.4 percent lower than the 42.75c charged in Canada, 61.6 percent lower than the 64.2c cost in the US and 68.1 percent lower than the UK’s 77.21c.
The report showed that South Africa’s tariffs in 2007 were 4.4 percent higher than 2006 and 2006’s tariff was 2.3 percent up in 2005.
In the five years from 2005 to 2006, tariffs rose by 25.1 percent and because tariffs were set out to 2008, the country’s competitiveness will remain for the short term.
But in its 2006 report, NUS Consulting cautioned that South Africa’s position of having the lowest power prices in the world would be threatened as Eskom was pressured to bring more generating capacity on stream.
“The most pressing problem facing our electricity supply industry in the medium term is to generate additional capacity rapidly without incurring punitive costs, which will have to be passed on to consumers,“ Stephan Dolk of NUS Consulting foresaw in 2006.
“Demand for electricity is quickly outweighing supply and this will have adverse effects on the country’s economy,“ Dolk said, adding that Eskom would have little choice but to increase tariffs.
This was most certainly Eskom’s argument in its application to Nersa.
In requesting the changes to the current pricing system, Eskom was effectively looking to pass the soaring cost of coal--its primary fuel - and its massive capital expenditure plans on to the end user.
But having recognized electricity as an essential developmental tool, the regulator has managed to strike a balance between sustainability of the utility and affordability for customers.
However, it could still come under fire for approving an increase that is more than double the upper end of the Reserve Bank’s three percent to six percent inflation target range.
Nersa said it noted concerns regarding the possible impact of the Eskom price hike on the economy, especially on the poor, and was of the view that in the long run “benefits to the economy far outweigh the short-term concerns“.

Unlike oil, ethanol is clean, renewable and easy to produce.

aOil wasn’t always king of the energy world, though today it’s hard to find another source that provides as much bang for the buck.
But that bang is going for a lot more bucks these days. So investors are searching for cleaner, renewable successors, Money.cnn.com reported.
According to research firm New Energy Finance, global investments in clean alternative energy topped $100 billion this year with growth rates of around 25 percent a year over the past three years. Renewable energy represented about 15 percent of all new power-generation capacity installed in 2006.
New Energy Finance predicts that about 11 percent of all new capacity installed through 2015 will come from renewable sources, not counting hydroelectric power.
Even oil companies are getting into the act. Exxon Mobil XOM, for example, is working on a chemical film that could dramatically improve the safety of lithium ion batteries--the kind used in cell phones and laptop computers--to make them viable for cars.
Though known for their power and efficiency, no automaker has dared use lithium ion batteries in vehicles--as many gadget hounds have learned firsthand, the technology can be unstable, leading to overheating, flames and even explosions.
In much the same way, most alternative energy projects are works in progress, each with its strengths and weaknesses.
Here’s an overview of the most promising alternatives to standard gasoline:
In his 2003 State of the Union Address, President Bush proposed a $1.2 billion hydrogen fuel initiative to wean US drivers from foreign oil.
In cars, the technology works via fuel cells, mini-power plants of sorts that convert chemical energy into electricity. Polymer-electrolyte membrane cells, the most common type used in cars, generate a current by harnessing the movement of electrons when hydrogen meets platinum and oxygen.
The only byproducts of this process are heat and water.
Pros: Hydrogen, the universe’s most abundant element, is one of the cleanest energy sources around.
Cons: Transitioning to a hydrogen-based transportation system would require a massive, coordinated undertaking by gas stations, automakers and consumers. And compressing hydrogen into a usable liquid state takes lots of energy.
Ethanol which is already used as a fuel additive, some are pushing a newer blend called E85--85% ethanol and 15 percent gasoline.
Out of the gasoline alternatives on the market today, E85 could be one of the easiest to integrate into the nation’s existing fuel infrastructure.
The fuel has garnered backing from giants such as General Motors, which makes “flex-fuel“ vehicles that can switch between E85 and regular gasoline--a crucial bridge in what would likely be a long transition period.
Wal-Mart, the world’s biggest retailer, has mulled selling E85 alongside regular gasoline.
Pros: Unlike oil, ethanol is clean, renewable and easy to produce. More than 5 million cars on the road today can already use the blend.
Cons: When made from corn--the most commonly used form in the US--ethanol can be expensive and doesn’t provide much more energy than is required to grow it. Ethanol production also diverts corn from other uses such as cattle feed, driving up food prices.
Biodiesel, a mix of regular petroleum-based diesel gasoline and vegetable or animal oil, is getting more attention, thanks in part to a push by country singer Willie Nelson and his BioWillie brand of fuel.
It can be made from a variety of crops, including soybeans, canola seed oil, rapeseed oil and even used restaurant grease.
Pros: Biodiesel emits fewer greenhouse gases than pure diesel fuel and the “bio“ part of the blend is renewable. Standard diesel engines can use biodiesel with few or no modifications. And because it has a higher flash point 20han regular diesel, it’s safer to store and transport.
Cons: It can be hard enough to find a regular diesel station; biodiesel stations are even fewer. Like ethanol, biodiesel could raise food costs. And biodiesel still pollutes.
Natural Gas is used widely in industrial settings and homes. It is the clean-burning fuel which can be used to power cars, too, whether they are electric cars or those specially fitted to use natural gas. While it’s not renewable, the US has plenty of it.
Pros: Natural gas burns cleaner than gasoline.
Cons: It’s not a renewable fuel, and sources are getting harder to find, making prices volatile. It’s also hard to transport and store. Like hydrogen, natural gas in transportation would require a huge transition from the current infrastructure. Natural-gas-powered cars exist, but they’re hard to find.

Technological advances and Americans’ hearty appetite for natural gas have given Anadarko Petroleum Corp. the opportunity to break new ground--literally and figuratively--in this remote, rugged region of the Rocky Mountains.
On a cliff several hundred feet above the White River, Texas-based Anadarko is drilling 17 wells from a single location--a dozen more than it has drilled from a single site in the past, AP reported.
Rather than spread the wells across the landscape, they’ll be concentrated in a relatively small area. The ultimate goal is to snake the drill bit thousands of feet into the earth, tapping natural-gas supplies beneath the river.
“The driving factor is being able to get under the river,“ said Jordan Hixson, who supervises Anadarko’s production operations in northeastern Utah. “We can’t get to it drilling conventional, vertical wells.“
By using increasingly sophisticated--and more expensive--drilling methods and equipment, Anadarko and others are expanding their presence but reducing their “environmental footprint“ throughout the Rockies and elsewhere. They’re doing so primarily by consolidating wells to groups of 17, 22 and even larger combinations, then drilling in a variety of directions to reach reservoirs--some previously inaccessible.
In Utah, where Anadarko plans to go from 1,200 to 3,500 wells, the company is targeting 24-well combos next year. Its 17-well site occupies about 7 acres; a single-well pad is typically 2 to 2 1/2 acres.
Royal Dutch Shell PLC, Williams Cos. and others are expanding their use of the practice in Wyoming, Colorado, New Mexico and other states.
Such clusters cost more because they require the latest equipment and techniques in directional drilling. But analysts say the economics make sense because multiple-well operations allow companies to work more efficiently, decrease environmental disturbance and, in some cases, find new sources of fuel in unconventional geologic formations once deemed too costly to tap.
Higher market prices for natural gas in recent years have helped spur activity.
“Setting aside environmental goodness and conscience, brute economics has driven companies to say it’s in their best interest to concentrate their footprint and do what they can from a given location,“ said Richard Ranger, a senior policy adviser for the American Petroleum Institute.
Shell Exploration & Production Co., an arm of Royal Dutch Shell PLC, is a good example.
The company, which began such drilling in Wyoming’s natural-gas fields about five years ago, has been moving back to its 60 or so existing work sites, or pads, to produce additional wells rather than creating new pads--and disturbing more landscape.
Shell says it built only two new pads this year but added more than 70 wells.
“This is a major transformation in operating practices in the field,“ said Pete Stark, vice president of industrial relations at IHS Inc., a provider of technical information and decision-support tools. “It’s a big-time change--a change in response to the increasing confrontation between environmental interests and energy-security interests. It started in the Rockies, but it’s spreading elsewhere.“
Keren Murphy, the Sierra Club’s oil and gas expert in Washington, said the environmental group acknowledges that bunching wells together can prevent disturbance, but it’s trying to make sure certain areas don’t become “throwaway zones.“
“It does help protect areas that are deemed pristine, but it also has the potential to create some sacrifice zones,“ Murphy said.
The move to multiple wells off single pads also is linked to energy companies’ expanding production of unconventional sources such as “tight“ sands and shale-- geographic formations that make it tougher to unlock gas and typically require more wells.
“They’re getting more out of the ground, but it’s taking more holes to do so,“ Stark said.
The US Energy Information Administration says 31,587 natural-gas wells were drilled for exploration and production in 2006, up from 16,728 just four years earlier.
Still, natural-gas producers have struggled to keep up with demand. And despite the surge in drilling activity--buoyed by strong market prices--there’s no expectation the industry will add significant supplies anytime soon.