ENERGY LEADER

Interview with Eddie O'Connor, CEO of Mainstream Renewable Power

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Renewable energy pioneer, Irishman Eddie O’Connor, wants the word to stop—but he has no intention of getting off when it happens.

He is referring to the fact that the world currently releases about 33 billion tonnes of carbon dioxide, and in 50 years’ time this figure should be reduced to zero.


“I want to publish a book on it shortly,” he says. “My proposition is this: the world needs to stop. How do we do this? All the new power plants being built should be made of renewable energy. The grids and the new technology to effect this transformation should be utilised throughout, and indeed they are. I refer particularly to solar. What we need to do is to make countries like South Africa completely dependent on solar and on wind. This is now possible...”


O’Connor’s company, Mainstream Renewable Power, is spending significant amounts of money investing in wind farms and other energy projects in South Africa, and he says he is very excited about future prospects in the country.
O’Connor is an engineer and began working for an electricity company in Ireland called EFB in 1970 and remained there for 17 years.


“I was buying all kinds of fuels, fossil and coal, oil, gas and peat from the Midlands of Ireland. I did this job for a while and then an advertisement came up from a peat company called Bord Na Móna. I applied for that job and got it and went to work for them for the next nine years as chief executive,” he recalls.


“It was while I was with that company that I became aware of global warming for the first time. I read about it, and one of my board members told me...that there was this thing called global warming, and of course I was not inclined to believe him because it had fairly dire consequences if you believed it.


“I was the leading polluter in Ireland at the time. We were a five million tonne polluter in terms of CO2. As chief executive of the board, I would have been responsible for releasing 10 million tonnes of CO2 into the air. So obviously when I heard this, it was very bad news for me and I eventually studied the science and I saw, through an Irishman John Tyndall—who had discovered all this stuff back in 1860—that certain gases such as CO2 and methane absorbed a lot of radiation coming from the sun, whereas the majority of the components of our atmosphere, which are nitrogen and O2, form about 98% of the atmosphere.”


Depressing state of affairs


O’Connor decided it was time to do something about this depressing state of affairs. Wind energy seemed a viable option.


“So in about 1991, we set up a division in the company to look at wind energy. We built Ireland’s first wind farm in 1992 in one of our bogs in the west of the country and I stayed with the company for another five years, until 1996. Then I left and set up Airtricity, which was designed to do just one thing, and that was renewable energy. And the only renewable energy of any consequence, of any meaning at that time, was wind—which, of course, has changed completely now with the emergence of solar.”


He soon found that there was no support for renewable energies at the time anywhere in the world, particularly in Ireland, where the dominant monopoly, EFB, controlled almost everything.


At the time, he recalls, the Electricity Regulation Act of 1999 was being set up, and his company succeeded in getting five clauses inserted into the Bill, allowing it to sell green electricity to anyone it wanted to.


“We developed wind farms without any support from the government in Ireland at the time. People still don’t believe that this is the case, but it’s a fact and history will show it is the case that we made our electricity one hundred percent with green, and it made a profit for us until the company got sold in 2008,” says O’Connor.


The company’s share price went up 54% per year for 11 years and, he says, he “finished up with a lot of money.”
He took his money—32 million dollars—and invested it in a new company called Mainstream.


“We set up in 2008 and, even if I’d tried, I couldn’t have found a worse time to set up anything, as you can well imagine. The world collapsed around us and it was in serious, serious trouble. It has been a really, really difficult story throughout this period to try and make sense of it all and to get a business going.


“The demand for electricity went down 17% globally. This translates into a big, big fall in price. Suddenly the global energy space was becoming quite commercial and people were seeing large quantities of money being made by the likes of me.”


A fixed price


Governments, says O’Connor, began to rethink their support for renewable energy, “so as well as having a reduction in price, our industry had to cope with the removal of lots of support schemes. For instance, when we went into South Africa, we went in on the basis that there was supposed to be a fixed price feeding system, but when (Finance Minister) Pravin Gordhan had finished, there wasn’t a fixed price feeding system but a
competitive one”.


Mainstream thrived in this competitive system, winning 240 megawatts in the first bidding round and 360 megawatts in the third.


“We bid a low enough price, we had purchasing power due to our brand recognition throughout the world and due to our contacts in the industry, so we were able to estimate where the price was going to be at. So we bid basically low enough to achieve good results, and we had to take into account things like black empowerment, too. But basically, when you have been compliant in other things, it comes down to price and you bid on price, and that makes it a very transparent system. It is completely non-corrupt and it is the way of the future. All future events in our space will be competitive.”


He describes Gordhan as “an extremely effective and non-corruptible source”.


However bad things are, he says, “once you don’t have corruption, you can tolerate them and you get on with it and you know that if you bid low and follow the rules, you have a chance of winning. For most businessmen, that is what they want. You want a transparent process that allows you, if you are good enough, to win. There are no brown paper bags changing hands. I see none of that, and I wouldn’t have anything to do with it—I’d run a mile from it. However, we don’t have to because it is not there. It’s not in our space, and we are very happy with that.”


Constantly innovating, O’Connor invokes Bob Dylan in explaining why: “You’d better start swimming or you’ll sink like a stone, for the times they are a changing..”.


‘’The times are changing rapidly, particularly in solar energy. Solar is the big game changer of our times and it is dramatic how it has come down in price,” he says. “We built two big solar plants in South Africa in round one of bidding. We won 250MW plants, one in De Aar and the other in Drukfontein, in Kimberley.”


Apart from a new wind farm in Jeffrey’s Bay, the company also has plans to erect plants at Loeriesfontein and Noupoort in the Northern Cape, as well as the Khobab Wind Farm also in the Northern Cape.
When it comes to returns on investments, O’Connor says this is “very simple. You build something, develop something and you apply a rate to that, then you build it, you consolidate it and you sell it—so you look at the final price and you compare it to the price you had to pay, and you either make a profit or a loss.”


A rapidly changing space


He says coping with change in the world is something that innovators like. Change management and being able to convince staff that it is necessary to change are all “good things and necessary attributes of management and leadership, and you have to go and convince people in order to bring them along.


“It’s tough, and the space is changing so rapidly that you can’t give people guarantees about anything. I have no guarantees, even as the biggest owner in the company. (I can’t ensure) any kind of a guaranteed future or any kind of certain future.


“There is no certainty about the future. What I mean by this is, if you look at Germany and the number of rooftop installations they’ve put on top of houses, you will see there are 40 000MW of PV on the roofs, so every house—particularly in southern Germany—is self-sufficient for energy. If someone had said that as recently as five years ago, people would have said ‘that man is mad, please shoot him’”.


Without factoring in the environment, wind is 25% cheaper than current energy sources, he says. “The maths is very simple. You don’t need to have a PhD in Calculus to work that one out. We are cheaper than new coal”.


Asked where he sees Mainstream going in South Africa in the next few years, O’Connor says: “Round four is coming up soon and we have a team in South Africa and we are going to bid wind and solar into the situation there. But I don’t think South Africa can get all the way by this public programme. I think South Africa has to get more imaginative about how it delivers its electricity service.


“I don’t think I am expressing an individual value judgement here.


“What I am actually saying is there will be an agreement at COP 21 in Paris at the end of next year. This is the Conference of Parties, under the auspices of the United Nations, and there will be a worldwide price on carbon and so countries are going to have to stop burning carbon and releasing carbon dioxide because it’s killing us.


“I think COP is going to have a lot of teeth. We’ve dodged the bullet for too long in the West and everywhere else and right now we have to get the world back in order.


“And I see the Chinese experimenting in five cities and two provinces with a price on carbon. There has to be a universal price on carbon if we are going to stop polluting and stop relying on fossil fuels. I believe the mood music coming out of the Obama administration in America is very positive toward this. They have been working with the Chinese and issuing statements saying, ‘we’re getting there, we’re happy with the progress’.”


Secular stagnation


The world is also suffering from secular stagnation, says O’Connor. “We can come out of secular stagnation if we embrace the 100 percent reality of going green and stop making our electricity and everything else from carbon and make it from renewable sources instead—and make it sustainable. That, I believe, is open and possible to us now.


“We should get on with that, as there is $40 trillion to be spent—this is 40 multiplied by 10 to the 12th, according to the International Energy Agency. Their executive summary was published (in June) and it is a special report—it is a world energy investment outlook. The money can either be spent on two things: on coal, oil and gas, or on renewables. I don’t have to tell you what that looks like to someone like me”.


Twenty-five percent of that $40 trillion would be spent by Saudi Arabia “going deep and broad in what it is doing to find new sources of hydrocarbons,” he says, “so we have a choice of going down a deeply hydrocarbon route—the world, that is—or going down a route that is sustainable. I don’t believe the democracies of the West and of China, and indeed of India, are going down a route that will see massive investment in countries with tiny populations.
“Not only that, but such countries often tend to weigh in on geopolitics in ways that aren’t always peaceful or productive.”


The other big choice facing the world now, says O’Connor, is how to put a “world price” on carbon. “We in Europe have experimented with a price on carbon for the past seven or eight years and it was a dismal failure because it didn’t deal with the issue of volume. Because of this, we have the ludicrous prospect of us in Europe making an enormous amount of electricity from coal, and deep coal displaced by shale gas in America.


“I’m urging that South Africa doesn’t do any shale gas, which is possibly a larger polluter than coal. The way you release shale gas from the ground is to fracture the substructure, the shale rock, and this fracturing is uncontrolled. If you have an electronics background, you would know that a water hammer has one of the strongest forces of fracture. At a local level, a water hammer releases forces at nuclear strength and sometimes much stronger than nuclear, but they are so local that this would sound like a silly statement.


“They release massive force and they open pathways to the surface that we don’t know about and can’t be controlled. So I would be extraordinarily slow to go down a gas fracturing route because I can’t see how you would know where that is going to finish, and you start releasing more than 3% into the atmosphere. Instead of being a clean solution and a semi-renewable solution that the shale gas people are trying to portray themselves, when you actually look at it you are dirtier than coal.”


O’Connor wants to see environmental impact assessments carried out to “the world’s satisfaction,” and maintains that there are currently no EIAs being carried out in America.


“They don’t exist, that’s the best way to put it. There are no EIAs needed. Their man (former vice president Dick) Cheney introduced certain acts under the (George W.) Bush administration, which allowed the exploration of natural resources, all because they didn’t want to be dependent on the Arabs, so there are no assessments being done”.


Staggering and crazy


“It’s staggering, it’s crazy and it doesn’t make any sense to me, and I doubt that it makes sense to anybody else. And then to be going round the world saying shale gas is the answer! The answer to what? I don’t see it being an answer to much, and particularly to talk about doing the shale gas project in the Karoo. I said when I was in South Africa talking to various people that the Karoo is a water-starved part of the world, it’s a semi-desert. Why, if you do release water, would you release it by blasting holes down in the ground, which will release methane—and possibly a lot of it—into the atmosphere? I was told it would be going down below the drinking water, to water that is trapped down there. The lies that these people have prepared to justify their stance are quite staggering to me, and it doesn’t make a lot of sense”.


Asked about rare earths metals that go into wind turbine magnets and which reports suggest are devastating vast areas of China, O’Connor says: “It all depends on the production processes that you use – it is no dirtier than gold extraction. It depends again on the planning conditions. If you allow untrammelled extraction anywhere in the world, you are going to get the same result.


“The point is, none of these things has to be inherently dirty if they are properly controlled. In other words, if you do the job right, it doesn’t have to be dirty. If you allow the gung-ho wildcatters out there who don’t care about the environment to carry on, you release toxins into the ground in an uncontrolled manner, and that’s crazy stuff. But that doesn’t have to be. I’d make the point that all extractions of metals anywhere in the world have to be carefully controlled.


“Permanent magnets are incredibly important things in our lives. You would be surprised at the number of devices that include permanent magnets. It’s not just wind turbines where these things are used. Basically every little electric motor has a permanent magnet in it. So is it being made cleanly? I don’t know. You can choose a much cheaper turbine using permanent magnets than using electromagnets. Therefore it is going in the right direction, making cheaper electricity by using these electromagnets”.


O’Connor says it’s “amazing” the lengths that the fossil fuel lobby will go to discredit “the new boy on the block”. “I’ve seen them say that when you account for the amount of energy used in manufacturing a wind turbine, it never recovers that CO2 burden, but in fact the CO2 is recovered in three months. It makes electricity now very cheap across the globe, with wind energy coming off in price probably by 25%, maybe a little more.


“The price keeps going down—not as dramatically as solar, but it does keep going down. You hear all types of allegations made as to why wind is bad. I saw people objecting to a planning permission in Scotland and they said that giving planning permission to this particular wind farm, which was some distance from Edinburgh, would release meteoritic niobium into the ground and would kill a million people in Edinburgh. You had a ‘reputable’’ person saying this. So, whatever comes into their minds, they say?”


The key message: “Stick with the green agenda. There will be much more employment out of it than out of further coal development. I know t is a fairly radical suggestion in South Africa, which is one of the big coal producers in the world. But think about it: there’s a price to be paid for carbon and South African industry, on a global basis, is penalised by this. How long will coal last?


“The rest of Africa is going to be populated with renewable energy over the next 30 years. Where is that manufacturing going to happen? If South Africa does the job right, that manufacturing will happen in South Africa. It will happen systematically and one can build one’s economy on going green with the purpose of supplying the rest of Africa with renewable energies, because South Africa is the logical location for the manufacturing industry”.


Greg Penfold and David Capel

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