Business groups call for realistic energy plan

The government’s proposed Integrated Resource Plan (IRP) — its long-term planning tool that is under discussion in parliament — is based on unrealistic assumptions about economic growth and Eskom’s performance, business groups told MPs on Wednesday.

The plan, which models energy demand and plans, and costs energy supply based on the various technology options, assumes that the economy will grow at an average of 4.26% until 2030. On that basis, the plan suggests that electricity demand will grow at 1.8%.

Business Unity SA (Busa) and the Energy Intensive Users Group (EIUG), which represents large industrial and mining users, told parliament’s energy committee that these estimates were too high and must be revised if the government wanted to make “least regret” investment decisions for the country.

An unrealistic demand projection could lead to an overbuild of generating capacity and stranded assets.

The business groups also expressed serious concern over Eskom’s declining plant reliability due to plant outages, which has fallen steadily since the start of 2018 to just 72%. This, Eskom has said, is due mostly to coal supply constraints. It is close to the lowest recorded level of plant outages at Eskom to date — 70.8% in 2015.

But while Eskom’s performance is in decline, the IRP assumes an unrealistically high level of performance in the future, estimating Eskom’s plant availability up to 2030 at 80%. This assumption skews the plan contained in the IRP, says business.

“We do not believe it is realistic that this will suddenly be achieved… a scenario ought to be modeled addressing the event that plant availability is closer to current plant availability,” Busa’s energy and environment policy manager Jarredine Morris told the hearing.

Both business groups also expressed fears that a threatened legal challenge by environmental groups to the two proposed coal-energy power stations to be built by the private sector — which have been penciled into the draft IRP — could hold up the entire process of the IRP. An IRP scenario that includes a delay to these projects or completely halts them, should be modelled.

The new coal independent power producers (IPPs) should also, at the very least, be obliged to incorporate “carbon abatement technologies” to reduce carbon emissions, the EIUG’s Precious Mpepele said.

Should these be made compulsory, both the costs and timelines of the coal IPPs would be affected.

patonc@businesslive.co.za