Would you buy a used energy plan from Eskom? It and a bunch of other stakeholders, largely representatives of big users of energy, are involved in a process known as the IRP2 to set our energy needs for the next 20 years.
But based on briefings by Eskom and discussions with government and private players who are close to the process, the new Integrated Resource Plan, which is being produced under tight deadline pressure to become law in September, appears to be little improvement on the current failed offering.
Amazingly, although Eskom executives emphasise that the country faces severe electricity shortages in the coming years, the proposals do not anticipate the urgency of bringing in large-scale private producers of electricity into the mix.
Private players are largely limited to providing co-generation, such as where large private companies are able to convert their by-product waste into energy. Given that some of the biggest corporations, including Sasol, Tongaat, Illovo, Sappi and Xstrata could be involved, this is a puny target.
Internal discussions on the IRP2 envisage that electricity needs will largely be met by new capacity from Eskom, renewable technologies, a more active role for the municipalities and an aggressive demand-side management programme, such as through the introduction of a million solar water heaters.
But observers close to the process think Eskom’s timetable for bringing its next coal station, Medupi, on stream could face slippages. Its second giant station, Kusile, faces even greater delays as Eskom has a massive funding shortfall.
A centrepiece of the IRP2 are energy-efficiency measures, such as the roll-out of 250 000 new solar geysers by Eskom, intended to bring massive savings, as much as 3 000MW. Eskom has approved only 4 000 geysers to date.
The municipalities are understood to be a key building block of the IRP2. They are intended, with Eskom’s support, to help meet the growing energy needs.
I can’t speak for the rest of the country, but Jo’burg is battling to fix potholes. I don’t want to rely on it to supply me with electricity.
Renewables — wind, solar, hydro and biogas — are intended to play an increasing role in the new power to the grid. It is understood that queues of providers are keen to supply green power under the Refit subsidy, far in excess of what the IRP2 will call for.
But there is still regulatory uncertainty and, as the contracting period is 20 years and there is concern over Eskom’s financial stability, its purchase agreements may have to be backed by the treasury.
Eskom itself may have preferred to be dealing with a strong counter party in the form of a well-functioning department of energy which could insist that potential supply risks be lessened, for instance, by allowing for a greater role for private producers, set more aggressive renewable targets and give the energy-efficiency job to a less conflicted party than Eskom.
But the department is seen by many to be at best weak and at worst a joke, albeit an expensive one. Its only real contribution appears to be to keep its R8-billion diesel-fired peaker plant in the mix even as more and more experts point out that the peaking plants we have already are prohibitively expensive to run and are likely to become more so.
