/ 11 April 2024

South Africa urged to finalise Integrated Resource Plan to boost investor confidence

Photo: Salam Habash / Unsplash

South Africa should swiftly conclude and gazette the integrated resource plan (IRP) document or risk losing investor confidence because of delays, says South African National Energy Development Institution’s chief executive Titus Mathe.

The IRP 2023, released last year by the Department of Mineral Resources and Energy (DMRE) for public comment, is the electricity infrastructure plan that looks at power demand and how it will be supplied.

The final plan is expected before the end of May.

Mathe told the Mail & Guardian that although the IRP draft does not specify which energy pathway the country should take, it can still effectively resolve the energy crisis.

The draft IRP describes two horizons, which explain how the government will stabilise the power system between now and 2030 as the first pathway, and what kind of energy South Africa will need between 2030 and 2050 as the second horizon.

Mathe said that as technology improves, the DMRE can update the document to ensure it stays up-to-date. “Because the draft is imperfect, that does not mean we must stop the approval process. We must approve the current draft and highlight the risk areas that need further investigation because the investors are waiting,” Mathe said.

He added that extensions and delays in completing the document were detrimental to the country because they created uncertainty.  

“The IRP draft document focuses on completing the initiatives outlined in the IRP 2019 by incorporating gas and enhancing collaboration with the private sector to connect them to the grid. While these objectives are sound, prolonged waiting periods are detrimental to the country, and that cannot be ignored,” he said.

Mathe suggested that the DMRE should be open to annual document reviews to ensure ongoing consultation progress.

He said consultations would ensure that the department meets its annual review deadlines to avoid late submissions and public uproar.  

The DMRE came under fire last year after the widely anticipated plan faced numerous delays. The new draft has also disappointed some, with several commentators pointing to a lack of detail in the document. 

Mathe said to address the concerns of the commentators, the final IRP document should prioritise addressing the questions about transmission lines and how Eskom plans to build 14 000 kilometres of transmission lines in eight years to cater for grid expansion, which will enable the utility to take in more generation from renewable energy.

This is despite Eskom only having built four kilometres of transmission lines in 10 years.

“It must be indicated in the document how we are going to address this. We need private-public partnerships to assist with the building of that infrastructure. If that can be reflected in the revised document, it will also provide clarity to investors so that they can best distribute their resources and finances,” Mathe said.

He said the final IRP draft should also include solutions to Eskom’s high emissions if it plans to extend its coal-fired power stations. 

“The draft assumes Eskom will receive an exemption from the Department of Forestry, Fisheries, and Environment (DFFE) to continue burning dirty coal. However, if the DFFE refuses to exempt the utility’s emissions, then the document must clarify funding for retrofitting current coal usage.”

Retrofitting coal is the process of enhancing existing coal-fired plants by installing advanced technologies to boost efficiency and slash emissions, including upgraded pollution controls and improved boilers and turbines.

South Africa’s energy crisis has worsened existing economic challenges, prompting rating agencies, the International Monetary Fund and the South African Reserve Bank to flag load-shedding as a significant barrier to economic recovery.

Controversially, the draft IRP 2023 sees load-shedding continuing until 2027, an outcome that would be a bad sign for South Africa’s limping economy.

The DMRE told the M&G that it would not miss the May deadline.

“The department received extensive written submissions which are currently being analysed, and which will inform the final plan that will be recommended to cabinet for approval before the end of May 2024,” the DMRE said. 

It added that critics should let them complete the final document, using the commentary it received during the consultation period.

“We have received extensive comments that we are working with. So there is no need to focus on the so-called experts and their commentary,” the department said.

Mathe said while the DMRE completes the IRP document, Eskom must create a special intervention plan and weekly targets to improve the energy availability factor—actual energy output of a power plant—for Duvha, Matla, Kriel, Tutuka, Kendal and Majuba power stations. 

These stations are the biggest under performers, with less than 70% EAF.

“Weekly EAF improvement targets must be set per power station and per unit at the power station. If these targets are met and sustained for at least a month, then the entire power station personnel should be rewarded through a monthly performance bonus incentive scheme,” said Mathe.