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SA’s electricity issues are fixable but we need political will

 

 

NEWS ANALYSIS

It is not unreasonable to predict that when policy is developed at a grindingly slow pace, it may well be pretty much irrelevant when it finally sees the light of day. Such is the case with the integrated resource plan (IRP), South Africa’s electricity provision plan. The last version of the IRP was agreed in 2010; it was only earlier this month that we had sight of the new version intended to take us to 2030.

But the deliberations at National Economic Development and Labour Council about the new IRP have been so slow that it arrived with a warning that unless 2 000 megawatts to 3 000MW are procured immediately, the country faces the high cost and uncertain power provision that have characterised electricity supply in recent weeks. Think burning diesel and load-shedding.

The IRP puts urgency at the top of a list of nine priorities: “Undertake a power purchase programme to assist with the acquisition of capacity needed to supplement Eskom’s declining plant performance and to reduce the extensive utilisation of diesel peaking generators in the immediate to medium term. Lead time is … the key.”

Minerals and energy minister Gwede Mantashe told reporters at the release of the IRP that the department would issue a request for information in the coming weeks to close an immediate electricity supply gap of between 2 000MW and 3 000MW, primarily the result of a fall in the energy availability factor from Eskom’s coal fleet and a derating of the nameplate output of the Medupi and Kusile plants.

READ MORE: Mantashe’s dangerous energy agenda is from the Trump playbook

A ministerial determination under section 34 of the Electricity Regulation Act to create the framework for an emergency procurement programme would follow.

While Mantashe signals a scramble to plug the energy gap, his Indian counterpart, Piyush Goyal, has been leading the transformation of the electricity market, according to Tim Buckley of the Institute for Energy Economics and Financial Analysis. “This month alone has seen the cancellation of 13.7 gigawatts of proposed coal-fired power plants across India and an admission that $9-billion of already operating import-coal-fired power plants are potentially no longer viable,” Buckley writes.

He says Indian solar tariffs have been in free fall for months, notching up record lows which can last just a matter of days before a new lower price is achieved.

So dire is the need for electricity in South Africa that a proposal mooted by the department of minerals and energy suggests power station ships be brought into South African ports and plugged into the grid.

Kadri Nassiep, Cape Town’s executive director for energy, says gas- or diesel-powered generators on vessels are referred to as power barges. “We even looked at an option for Cape Town in which a power barge supplied electricity to a desalination plant … A Turkish company, Karadeniz, has been campaigning here for some time to get their vessels into our ports.

“The issue is cost, of course,” says Nassiep. “Diesel-powered electricity probably costs over R5 a kilowatt-hour, maybe even more. Gas won’t be too much cheaper.”

But the emergency electricity required needs to both arrive soon and be well-priced.

Jo Dean of the South African Renewable Energy Council — an umbrella body that represents associations in the sector — says renewables can supply the 3 000MW shortfall at the best pricing and within 12 months.

She says this will not bend existing rules but will need a ministerial determination and for the National Energy Regulator of South Africa (Nersa) to be on board. “We request that government urgently issues the [request for information] for the 2 000MW to 3 000MW so developers and investors can prepare projects at an accelerated pace. Many projects have been developed over the years and are in a ready-to-bid state,” Dean says.

The new IRP makes provision for technologies such as distributed generation, co-generation, biomass and landfill gas to be used between 2019 and 2023 to supply short-term capacity.

Dean says the stalled rollout of renewable technologies has led to pent-up demand. A number of companies have co-generation and other distributed energy projects that can help meet the projected shortfall.

She says energy storage is now the disrupter. “Any small project can release a new pricing structure when tied to storage. Energy becomes dispatchable and pricing can even beat megaflex [the price Eskom charges industrial users],” she says, adding that small-scale energy suppliers are not looking for preferential treatment. They will, for instance, pay grid connection fees if applicable.

Should the government “open the market for private-public agreements via conducive policy and frameworks, renewables can provide energy at a rate of 20% to 30% lower than Eskom megaflex tariffs to intensive energy users, which should address a lot of the short-term capacity challenges and, ultimately, avoid load-shedding”, says Dean. She says the large, grid-connected concentrated solar power projects can provide both daytime and night-time power via dispatchable storage. These solutions, which have been in full operation since the inception of the renewable energy independent power producer programme (REIPPP), can add “tremendous immediate relief and value to the grid”.

READ MORE: Last minute court interdict blocks renewable energy power purchase

The government should also relook the power-purchase agreements, which currently include conditions that limit the generation times and the maximum export capacity of these plants. Storage systems can deliver power during both peak times. Closing the 20 projects under the REIPPP small projects programme with preferred bidders can deliver a significant benefit, says Dean.

Nassiep says that even with a ministerial dispensation in favour of cities, projects that the City of Cape Town is considering will be on the ground only in two to three years. “[We must] allow for procurement and project preparation, plus testing and commissioning, so nothing major can happen before then.”

Mantashe, meanwhile, talks urgency but at a press conference and in Parliament he accused a journalist and MP, respectively, who asked when the next REIPPP round would be announced, of being lobbyists.

Could we swap him for India’s Goyal?

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Kevin Davie

Kevin Davie is M&G's business editor. A journalist for more than 30 years, he has worked in senior positions at most major titles in the country. Davie is a Nieman Fellow (1995-1996) and cyberspace innovator, having co-founded SA's first online-only news portal, Woza, and the first online stockbroking operation. He is a lecturer at Wits Journalism. In his spare time he can be found riding a bicycle, usually somewhere remote.

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