David Mahlobo. Picture: BUSINESS DAY
David Mahlobo. Picture: BUSINESS DAY

Energy Minister David Mahlobo has rejected suggestions that he is in a great rush to conclude a nuclear energy deal.

His denial came in a written reply to a parliamentary question by EFF MP Mzingisi Dlamini who asked the minister why he was "seemingly in a rush to expedite a nuclear energy deal that South Africa cannot afford."

Not so, said the minister, although he did concede that the department was concluding the revised integrated resource plan — initially planned for completion in February next year — and would be submitting it to cabinet for approval soon.

"There is no nuclear energy deal in South Africa that is being rushed and expedited by myself as Minister of Energy," Mahlobo said. "The Department of Energy is currently updating the integrated energy plan and the integrated resource plan.

"The completion of the integrated resource plan is driven by the need to create policy certainty which is necessary to create a conducive environment to support investor confidence for increased investment in our economy. The three critical components of this process will be scale, pace and affordability."

The minister stressed that the integrated resource plan was a living plan that was expected to be continuously revised and updated as required by changing circumstances.

There have been a number of developments in the energy sector, the country and the region which necessitated the review and updating of the plan. Some of the changes are that demand is lower than what was envisaged due to the economic downturn, additional capacity, reduced plant performance, drought in certain parts of the Southern African Development Community region, environmental obligations and changes in technology."

The minister said the review of the integrated resource plan would use the existing IRP as a reference point. The objectives would remain the same — namely security of supply, affordable cost of electricity, job creation, localisation, minimal negative environmental impact, minimal water usage, diversity of supply sources and promotion of energy access.

The minister said historically long-term capacity infrastructure planning was very easy and predictable as it was driven by population growth and expansion in GDP.

"There is now a decoupling of GDP growth from increase in electricity demand, that is the relationship is no longer linear. This is because intensive energy users are now using more energy efficient technologies and the structure of the economy is changing (towards) less intensive energy industries, for example services.

"Intensive energy users are now building their own generation plans, commercial buildings are moving towards roof-top power generation. Electricity demand from the national grid will become more difficult to estimate."

Mahlobo said these circumstances meant that the integrated resource plan would have to be revised more frequently "otherwise we may end up building infrastructure that will not be optimally used, that is stranded assets."

Infrastructure build programmes would have to be implemented in a modular manner so that they could respond to changes in the market. The low cost of smaller generation units facilitated this approach, he said.

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