There is a lot of good news but also much to debate in the Integrated Resource Plan (IRP) that was published by energy minister Jeff Radebe on Monday.
The IRP is SA’s long-term energy plan. It models projected electricity demand and projected costs of the various energy-generating technologies to guide the commissioning of new generation capacity. A guiding principle is to establish the lowest cost option to meet an economy’s needs. It is an essential planning tool for the government and for industry.
The good news is that for the first time since 2011 we have an IRP that is transparent and credible. The relative costs of the technologies are set out: nuclear is the most expensive and renewable energy is the cheapest. Renditions of the plan during the Zuma era were mangled by politics, in particular by the former president’s desire to force new nuclear energy into the model.
This IRP, which goes up until 2030, sees no need for new nuclear energy. It assumes that all the capacity that has already been commissioned by the government up to 2024 — both coal and renewable — will go ahead as previously planned.
That means coming online will be: another 5,732MW of coal-fired energy from Eskom’s Medupi and Kusile; 1,000MW of coal from two independent power producers (IPP); and all the renewable energy — 2,476MW of wind and solar — that has been awarded in IPP bidding windows so far.
RENDITIONS OF THE [ENERGY] PLAN DURING THE ZUMA ERA WERE MANGLED BY POLITICS
At the same time, 12,600MW from Eskom’s old power stations will be decommissioned by 2030, implying a net reduction of coal-fired energy over the next 12 years.
After 2024 the plan makes a radical departure, commissioning only renewable energy — wind and solar Photovoltaics — and gas, until 2030. The modellers have chosen not to go beyond 2030 given the long-term uncertainties. This switch to a combination of renewable energy and gas is an attempt to pursue the least-cost option into the future. The first discussion point is by assuming that everything already commissioned must go ahead, the transition to a new cleaner future is essentially put on hold for five to six years, after which it quite suddenly takes off.
Related to this approach is the question of whether the two coal IPPs should go ahead. While the bids were adjudicated two years ago, work has not begun and agreements have not been signed. As coal is significantly more expensive than renewable energy, the two IPPs should be seriously reconsidered.
The second point for debate is whether Eskom’s old plant should not be retired more quickly. The modellers have not considered this. It may be cheaper to retire the old coal more quickly and replace it with renewable energy. This is especially so since the plan has assumed quite conservative costs for new renewable energy. We know from auctions in other countries that prices have continued to drop since SA last procured renewable energy.
The third point is whether the start-stop-start again procurement pattern for renewable energy is in the best interests of the industry. The plan sees new renewables starting up again in 2019 and then going into a lull for three to four years before resuming. To enable the growth of a sustainable manufacturing industry, it would be a good idea to smooth this out.
The fourth concern is the ambitious gas programme that is envisaged from 2025. As SA has no gas of its own and has never procured any on this scale, getting this right is going to require time and careful expertise.
Last, and by no means least, is the management of the transition away from coal. There are large implications both for workers and the communities around the power stations and coal mines that have fed them. Handling this transition badly could be disastrous for energy security and social stability.
It is therefore also good news that Radebe, who initially planned only 30 days for comment, has already extended this to 60. It is time now to get down to talking.