Draft IRP tainted by politics at the cost of rational energy policy
As prices for renewable energy are falling, the environmental and cost tide is turning against coal and nuclear
Crises make strange bedfellows. A national trauma such as war and climate disaster can create the moral and intellectual clarity that is difficult to achieve in the mess of daily life. In these moments we may find ourselves on the same side of issues as people we consider to be wrong, bad, even evil.
We may find ourselves advocating for sustainable renewable energy perhaps on the same side as people lobbying against socio-economic transformation or justice; or advocating for the redistribution of economic resources through energy policy, on the same side as people denying the climate disaster and lobbying for new coal-fired power plants.
The fact that people you do not want to agree with can hold the same position as you is part of the way democracies function. Agreement is the basis for coherent policy frameworks.
The stakes are high because our electricity involves major infrastructure investments in the order of hundreds of billions of rand, as well as natural resource consumption, land use and major environmental effects. Electricity is a key component for wellbeing and wealth, and it is at the centre of pre-election politics.
In this mire there seems no end to misinformation and misleading narratives. There are also scant accessible resources for residents and businesses to sort fact from misinformation or deliberate mischief.
We must commit to evidence-based policy and reasonable debate, as well as compassion for the risks and exposure of the most vulnerable in society.
Some of the facts are:
● Renewable energy prices are decreasing. Prices secured in round four of the Renewable Energy Independent Power Producer Programme (REIPPP) were globally competitive, coming in lower than other developing country markets, including India and Brazil, for the same year, 2015. According to the department of energy’s own planning, new renewable energy will be cheaper than new coal.
● Human-driven climate change is real and is caused primarily by the consumption of fossil fuels. Coal-based electricity systems are a major driver of climate change.
● Whatever your feelings are about nuclear, the economics make no sense for SA’s economy and its ailing national fiscus. Studies commissioned by the Treasury have been unable to make a case for large-scale new nuclear procurement. The exclusion of new nuclear energy from the Integrated Resource Plan (IRP) 2018 is based on economic reason. Nuclear energy is not least-cost.
● Eskom’s balance sheet is beyond the point of piecemeal interventions and it cannot access the finance required to support SA’s sustainable energy transition on its own.
● Jobs are being shed in the coal sector because of the changing economics of coal mining, inclusive of mechanisation and automation. Private banks have pulled out of coal IPPs planned in the latest version of the IRP, not seeing a viable future for this infrastructure.
● Job-creation potential in the renewable energy sector is significant, in the order of tens of thousands of jobs, but these jobs will not be created and will not benefit people without deliberate supportive policies.
We need to reach outside our organisations, parties, communities and sectors, to come together to share information and build consensus.
Electricity should be seen as a tool to achieve primary development goals. Poverty, inequality and unemployment can be addressed in their many manifestations through the development and implementation of progressive electricity policy. This is impossible without a shared frame of reference, a shared evidence base that is more robust than individual whims and politicking.
The IRP process is meant to facilitate and communicate this shared reference for electricity investment. The current absence of the IRP as a policy instrument that enables investment in the electricity supply industry does not bode well for efforts to create a sustainable electricity supply industry, nor does it create any policy certainty.
The draft IRP 2018 is itself not entirely based on a technically coherent and economically appropriate energy policy; it is partly based on political decisions. While this last IRP process has been more rigorous and inclusive than 2013 and 2016 respectively, many reasonable questions and challenges remain unanswered.
To adequately address the future of the country’s electricity sector and Eskom’s role within it, as well as the developmental objectives of SA and concerns related to the just transition, a new energy policy that looks beyond 2030 is required. The IRP 2019 update must be finalised and published, with a commitment to regular annual updates, keeping pace with technological and economic changes.
Heroes and villains will come and go in politics, but decisions taken in the sector can have impacts that last decades. Without a debate or discussion that considers the above, we will remain in this state of uncertainty and precariousness that hinders our development progress.
• Lauren Hermanus is research associate at the University of Cape Town Graduate School of Business, working as strategy and engagement lead for the Power Futures SA project. Happy Khambule is senior political adviser at Greenpeace Africa