CRISPIAN OLVER: Why the IRP won’t keep the lights on

The release of the Integrated Resource Plan (IRP 2023) by the department of mineral resources & energy in January has sparked significant debate and discussion among stakeholders, including the presidential climate commission (PCC).

The IRP is particularly important because it is the primary instrument for electricity planning in the country, ensuring energy security, accessibility and affordability. It also needs to meet broader economic development objectives such as growth, job creation and building local manufacturing capacity.

SA’s economy is heavily reliant on coal for electricity generation, making it one of the most emissions-intensive economies in the world (for comparison, our emissions intensity per unit of GDP is 1.4 times that of India and 1.7 times that of China). This is a major vulnerability for our trade-exposed sectors as developed markets start to impose import tariffs or other taxes on embedded emissions.

Apart from our compliance with global climate commitments, as a matter of economic survival, we need a managed transition to a less carbon-intensive energy mix. As the president has frequently emphasised, such a transition must be undertaken at a pace and scale we can afford.

The PCC has reviewed the draft IRP 2023, building on our previous electricity recommendations report released in April 2023. These recommendations outlined a least-cost, low-emissions pathway aimed at maximising job creation and development impact. The PCC’s analysis indicates that IRP 2023 falls short of these objectives in several key areas, prompting a call for significant revisions.

One of the positive aspects of IRP 2023 is its separation into short-term and long-term investment horizons, allowing for analysis of immediate and future energy needs. Moreover, the inclusion of scenarios extending to 2050 offers a comprehensive view of different energy futures, including showing that extending coal plant operations and investing in new “clean coal” technologies are not the least-cost options.

Despite these innovations, the PCC criticises the IRP 2023 for several reasons. First, there is a notable mismatch between the IRP’s findings and available benchmark studies, particularly concerning technology costs and emissions. The IRP’s reliance on fixed 2021 costs for rapidly evolving technologies fails to capture the dynamic nature of the energy sector. Additionally, the plan’s primary objective of ensuring energy security is inadequately addressed, with insufficient analysis on achieving this goal in the short term.

Furthermore, IRP 2023 does not align with SA’s developmental context, nor does it provide a least-cost solution. It overlooks crucial factors such as energy access, energy efficiency, climate change and air quality, potentially putting it at odds with national laws and international agreements. As it stands, the IRP is open to legal challenge because it does not address the human health consequences of emissions. The plan also lacks sufficient market signals to support policies aimed at industrial development and job creation, such as the SA Renewable Energy Masterplan.

Models are beholden to their assumptions. The same model and modelling team will produce vastly different results depending on the questions asked of them. There are two bookend approaches to this: plan for what we can be certain about or plan for our developmental objectives. In its analysis of horizon 1, the IRP focuses on the certain approach (though it doesn’t apply the same pragmatism uniformly across technologies). It is an attempt to provide the most predictable case.

The PCC instead argues that energy planning must provide for our desired future (growth and jobs, managed decarbonisation, compliance with air quality). Neither approach is necessarily wrong, but are perhaps two sides of the same coin.

We should be planning for what we want and focusing on how we solve the practical challenges. The shortage of power is crippling the economy; we need to be doing all that is necessary as fast as we can — raising energy availability factors, investing in the upgrading of the grid, building renewables and peaking power, and driving energy efficiency.

In light of these shortcomings, the PCC recommends a comprehensive rework of the IRP, incorporating stakeholder inputs and allowing for further public consultation and consideration at the National Economic Development & Labour Council. The commission calls for the exploration of additional scenarios that address load-shedding and do not limit technology deployment. It also stresses the need for more detailed assumptions in the modelling process and a thorough analysis of the proposed energy mix’s costs relative to least-cost options.

The PCC’s critique builds on broader concerns shared by a diverse range of stakeholders, underscoring a consensus that IRP 2023 is not an adequate foundation for SA’s electricity planning. The commission expresses its willingness to collaborate with the department to rectify these issues, looking forward to a revised IRP that not only advances SA’s development interests but also aligns with the global imperative of decarbonising the electricity system.

In conclusion, while IRP 2023 introduces several innovative elements to SA’s energy planning framework, it requires substantial revisions to meet the country’s economic, environmental and social objectives. Addressing the concerns will be crucial for ensuring the IRP not only provides a road map for SA’s energy transition but also leverages this transition as a catalyst for sustainable development and job creation.

The collaborative efforts of all stakeholders, guided by informed critique and constructive recommendations, will be key to achieving an energy future that is both sustainable and prosperous for SA.

• Olver is executive director of the presidential climate commission, established by President Cyril Ramaphosa to advise government and society on the just transition to a net-zero economy.