INTEGRATED RESOURCE PLAN
Forward-looking energy plan must tackle jobs issue in order to shine
While electricity needs will be met and coal dependency abolished, the human element must be factored in, writes Johan van den Berg
The Integrated Resource Plan (IRP) 2018, the multi-decade electricity plan for SA that had been delayed since 2012, finally appeared for comment on Monday. Along the way it was highly contested, long-repressed and extensively reverse-engineered.
It has been released in more than one sense of the word: not only is it out and South Africans now have a chance to comment, but the plan has been released from the obligation to render an outcome that serves narrow, vested interests. With some exceptions, it tells us what path science and rigorous, honest modelling indicates is the best future for SA.
The outcome is modern, aligned with international trends, allows dreams of a return to abundant and affordable electricity and (while silent now) allows later alignment with global trends, showing an increased coupling of transport, heating/cooling and the electricity sector. Most compellingly, it documents the cheapest way to secure sufficient electricity and, as appears from the Council for Scientific and Industrial Research and other bodies, would create the most jobs in all possible ways while having the most environment-or climate-friendly outcome of all the possibilities.
The assertion that something as historically divisive has a possible outcome that is the "best of all possible worlds" seems counterintuitive and in need of further explanation. Perhaps a return to the very basics, including: where is the world? Where are we? What has happened recently? Where are we going? Why is it important?
In finalising the Paris Climate Agreement, the international community agreed that our prosperous and continued existence on our planet requires us to stop greenhouse gas emissions entirely after 2050. Practically all countries, including SA, signed up to this science-based agreement. International law thus says we have only three decades of dirty energy production left, and that we should wean ourselves sooner, if at all possible. This period is less than the life of a coal plant, which can also take very long to build. The carbon constraints are a hard reality that thankfully only serves to guide us towards our best interest.
This wasn’t always so. Just 10 years ago renewable energy was far less affordable than coal or nuclear. This has changed dramatically and in SA wind and solar PV energy are now about 40% cheaper than new coal and 50% cheaper than new nuclear-derived electricity — before you count water costs, pollution costs, health costs etc.
The IRP uses highly sophisticated software to model the best way to fulfil expected electricity demand. The 2018 version has minor flaws but essentially tells us that the highest possible penetration of cheap wind and solar PV electricity will lead to the lowest-cost electricity future. That part is intuitive. The big conventional counter-argument, now discredited internationally, has been that the sun doesn’t always shine and the wind doesn’t always blow. The response is that we’ll build enough of it that we’ll still have enough electricity on a statistically average day and we’ll only need something else on a really bad day. That something else is flexibility in the form of gas or storage (batteries/other).
IRP 2018 chooses gas to bring the predictability to bad days. The combination of a lot of very cheap wind/solar PV and a little of expensive gas (with low capital costs) brings a stable electricity system that is most affordable, given SA’s competitive advantages, such as very good sun and wind, a large land mass and very affordable land where renewable energy can co-exist with agriculture.
What we have now is almost the pure scientific model. It errs in still assuming costs for renewables that are considerably higher than in the market place, and by assuming arbitrarily that we can only build so much of it in a given year.
This leads to the model only asking for more renewables after 2025, instead of sooner. Nevertheless, we are now in the phase of "policy adjustment" — based on comments received, the government can decide to tweak the plan this way or that.
This leads to the discussion of why the IRP has been so contested and why the policy adjustment process will likely be the subject of intense pressure to return to the ways of yesterday, being coal, nuclear and a vertically integrated Eskom.
Climate protection and clean energy have developed from technical and economic challenges to human challenges. With the technical answers now in hand at least cost, progress is frustrated by cynical, vested interest and by legitimate human fear. The first was evidenced abundantly from 2013, in efforts to suppress the scientific IRP and to reverse-engineer an outcome that would include additional nuclear energy. Indeed, in the aborted IRP of December 2017, the science was abandoned altogether in favour of a "let’s have a bit of everything" political compromise. That is hopefully behind us.
What remains is the very legitimate fear and apprehension of coal miners, trade unions and the like that history will strand the singular skill a worker depends on to make a living. To a coal worker, the promise of a job-rich renewables future (almost 1 million people work for the State Grid Corporation of China that generates no electricity) can be cold comfort. With so many job-seekers, what guarantee is there that someone else won’t get that new job?
The most urgent imperative in our energy transition is a compelling vision of how we will take care of workers in the incumbent industries. As one example, a plan is afoot to use international climate funding to create a $100m investment fund that will allow redundant coal workers to be retrained in renewables and invest equity in renewable energy projects. Another suggestion is to ensure that some renewable energy plants get built where existing coal infrastructure will ramp down. This domain is where the battle for hearts and minds will be won.
As for the policy adjustment of the IRP 2018, we need to move towards more science, not less. The "IRP1" scenario comes closest but requires an update of the real costs of wind and solar PV. Once we have the incumbents on-side, we need to adjust the base-case IRP by not completing Kusile power station’s last two units and by not building any more coal-dependent power producers. We need to lean into the emergent future rather than towards a redundant past.
Our reward will be a modern, affordable electricity system that again gives SA a competitive advantage, supporting industrial growth and expansion. We will be ready for the explosion in electric vehicle numbers and will use these to absorb the excess electricity of very good wind and solar days (charging our cars). On bad days, the state grid company may ask to buy some electricity back from us and so cut our collective dependence on gas as a transition fuel.
The IRP 2018 can be the basis of a prosperous future. For that to happen, we must address the human component so that the science can continue to lead us.
• Van den Berg is MD of energy consultancy Skrander. He served on the inaugural Ministerial Advisory Commission on Energy and is a contributing author to Mari-Louise van der Walt’s The State of Renewable Energy in SA 2017 (Department of Energy, forthcoming).