Both Eskom and Sasol were inspired by German innovation. Now Germany has a different kind of lesson to teach us

No country has or should have a vision of a hermit. Countries learn from each other by replicating what has worked and avoiding what hasn’t. Ideally, each country should take only the best foreign practices and adapt them to its own circumstances. In terms of the application of energy generation innovations, South Africa has learnt a lot from Germany.

We owe our industrialisation that began in the 1920s to German ingenuity. But a closer look at recent developments in Europe, particularly the implementation of the energy transition from fossil fuels to renewables, suggests we should learn to avoid Germany’s costly mistakes.

Let’s look at Germany’s 20th-century lessons which South Africa adapted with great success to its circumstances and the 21st-century ones we must learn.

First, Germany was indirectly instrumental in the establishment of Eskom. It was in Germany that Eskom’s founding chair, the eminent industrialist Hendrik van der Bijl, was trained in engineering. German innovation was also instrumental in the establishment of Sasol. German scientists Franz Fischer and Hans Tropsch , leaders on coal – usage research, were behind the technology that is used to convert coal to petrol or diesel and extract chemicals from it.

Patented in 1925, the Fischer-Tropsch process triggered the interest of scientists across the world. Among them was Etienne Rousseau, a science student at Stellenbosch University. 

In 1950, with oil rationing introduced in SA after World War 2, the government established a committee to investigate producing liquid fuel from coal. Fuel independence was considered a national priority.

Rousseau was part of the committee. While other members of the committee toured the US and Britain to search for solutions, Rousseau turned to Germany.

The committee recommended that a state-owned company be established to take over the coal-to-liquid fuel venture that AngloVaal had abandoned.

In late 1950, Sasol was established with Rousseau as its founding head. The company would go on to use the German invention on a larger commercial scale than the Germans had imagined. Germany had invested heavily in coal-related research & development. Coal powered its industrialisation, alongside nuclear power, and gas. With a reliable and affordable energy supply, German’s Mittelstand’s (small and medium enterprise) manufacturing plants performed magic without much effort. Germany produced hi-tech export products.

But then came, the need to transition from fossil fuels to renewable energy sources. Germany, like SA, is a signatory to international instruments aimed at curbing climate change mostly attributed to fossil fuels. As Germany embarked on the transition to renewables, it provided the third lesson for SA. This time, it’s not clear that SA is carefully taking notes.

During her visit in 2020, then German Chancellor Angela Merkel encouraged SA to transition from coal to renewable. But Merkel sounded a warming based on Germany’s experience – renewables needed careful management because they produced power intermittently. By then, Germany had embarked on an ambitious renewable programme and decommissioned its coal plants more quickly than it installed alternative energy sources.

With nuclear energy having become politically unpopular, it, too had to be phased out. Germany was going to be overly reliant on renewable and natural gas from Russia pumped through the Nord Stream pipeline.

This transition cost Germans dearly. By last year the median household in the country was paying 43% more than the overage power bill in 27 other countries in the EU, according to Sarah Lohmann at Johns Hopkins University.

At least 50% of a German electricity bill was an additional levy to help pay for the transition to renewables. Lohmann noted that Germany paid a record of $38 bn for green electricity in 2020 and projected a further increase.

Something was not right with Germany’s transition. Lohmann suggests that Germany’s mistake was to elevate passion over numbers, citing the German federal audit as having said Germany was at risk of grid blackouts from this year to 2025. The audit said over $600 billion would be needed through 2025 to maintain a stable grid and warned that the “energy transition will endanger Germany as a business location.”

Germany was transitioning from being an energy-independent country to being energy-dependent. It would rely predominantly on France’s nuclear and Russia’s gas supplies. After Russia invaded Ukraine this year it reduced gas supplies to Germany and there were fears it might cut the flow completely.

Theoretically, Germany’s installed renewable capacity should help it stand up to Russia’s Vladimir Putin. In practice, however renewables capacity cannot replace the baseload provided by gas, coal, and nuclear. In response to its energy dilemma, Germany postponed the decommissioning of its remaining nuclear plants and re-opened its mothballed coal-fired power stations. No country in Europe teaches a more invaluable lesson about the importance of baseload and the need for a well-thought-out transition to renewables.

In SA, we ignore these lessons at our own peril. Eskom’s plans show we may have entered the territory of the periled. The company is planning to reduce baseload coal generation, hold nuclear generation constant and increase variable renewable power at a cost of over R1 trillion.

In building, Eskom Van der Bijl learnt from the Germans, as did Rousseau with Sasol. It’s time we sent Eskom leaders to Germany to study the performance of renewable capacity. They must then use the German lessons to advise our government to adopt facts-based policy instruments suitable to our circumstance as a developing country that aspires to industrialise and create much-needed jobs.

The policy must be keep abreast of technological changes and most importantly, it must not place fanatism above science.

This opinion piece was published in Sunday Times: https://www.timeslive.co.za/sunday-times/opinion-and-analysis/opinion/2022-09-04-germany-went-overboard-on-renewables–sa-must-steer-a-different-path/?utm_medium=Social&utm_source=Twitter#Echobox=1662270413-1