Planning for South Africa’s energy future these days is like flying blind.
Just last year South Africa was thrown back into load-shedding as the demand for electricity outstripped supply. Now the energy crisis is over, largely a result of an ailing economy and depressed power demand. The ratings agencies continue to express concern about inadequate drivers of growth locally – and globally it’s also unclear when and where economic advancement will occur.
The base case in the updated draft Integrated Resource Plan (IRP), released this week, embodies this uncertainty. Nuclear plans have been pushed out until 2037 and caps have been put on how many renewable energy projects can come online each year. Despite the unpredictability, this model assumes annual average energy growth of 2.17%.
Other scenarios are also presented. The base case assumes a moderate decline in carbon dioxide emissions. But if South Africa aimed for a more ambitious reduction in carbon emissions and constraints on renewable energy remained, nuclear could start as soon as 2026.
In this case the procurement process would need to begin immediately. It is the scenario that Eskom – and its head of generation, Matshela Koko – has seemingly taken a shine to in announcing this week that it would put out requests for proposals for nuclear procurement before the year is out.
Such requests are the first stage in tendering, and would provide a rough idea of what is on offer and what it would cost.
One industry insider bemoaned it as a tragic waste of time and money.
Another scenario seeks a bigger drop in emissions than the base case and removes constraints from renewables. In this case, nuclear energy will only be required in 2037 – and a lot less of it. The energy department claims that the constraints on renewables are required because of Eskom’s grid limitations.
Andrew Kenny, an independent energy consultant, said the real demand for electricity is huge if South Africa is to have a growing economy.
“It’s absolute nonsense about energy demand levelling out. In 2008 we found we did not have enough and it was devastating for the economy. Still, it is the number one reason for lack of investment in South Africa,” he said.
Unemployment, coming in at 27.1%, is at its highest level in 13 years. “We can only get it down by exploiting our massive mineral wealth,” said Kenny, noting that mining and beneficiation require huge amounts of base-load power.
Frank Spencer, a South African Photovoltaic Industry Association board member, said there is an increasingly decoupling of the historical trend between GDP growth and power demand. GDP is growing, but energy demand is dropping.
“Ultimately, we don’t know what demand is going to do, but that makes a stronger case for flexible plants [involving a mix of renewables and gas]. You don’t want to be stuck with big coal and nuclear plants when you don’t need it,” he said, noting such a situation in South Africa previously saw a number of coal plants being mothballed.
The constraints on the IRP base case have prompted some concern because it is meant to be an unconstrained least-cost scenario, with which the others can then be compared.
Proponents of renewable power have also pointed out that the costing of green power in the draft IRP does not reflect recent drops in pricing.
Now, the draft IRP will be subject to many attempts to change it.
However, the modelling of the IRP has been replicated by the Council for Scientific and Industrial Research, using the very same software as the department of energy, making it difficult to fudge the facts.
The plan is also at risk of simply disappearing into the ether – much like the 2010 IRP update in 2013 did.