Eskom to government: Forecasts for electricity demand in IRP too high

Eskom has said the forecasts for future electricity demand in the draft Integrated Resource Plan (IRP) were too high and could result in too much new power being commissioned.

The utility has also raised serious concerns about the amount of gas envisaged in the IRP, both because South Africa lacks gas infrastructure and because of the effect that fluctuations in the gas price could have on the country’s electricity price.

These were some of the issues Eskom highlighted in its report to government – previously confidential but made public this week – on the Department of Energy’s draft IRP 2018, the country’s road map for future electricity generation until 2030.

Questions over Grand Inga

Eskom also raised questions and concerns about the DRC’s Grand Inga hydro-electric project, particularly regarding the issue of who was to pay for the 5 000km transmission lines from the DRC to the border.

Eskom doubted the project would be developed in the 2030 time frame of the IRP.

"Furthermore, there is a need for the IRP to identify trigger points that would signal that Inga is an approved project.

"Clarity needs to be provided on how Inga and the associated transmission lines to the border would be funded," Eskom said.

Eskom’s worries about Grand Inga were also raised by several groups that made submissions on the draft IRP during public hearings held in Parliament by the portfolio committee on energy.

South Africa signed a treaty with the DRC in 2014 that committed us to buying 2 500MW of hydropower from Inga when it comes online, and also to invest directly in the cost of building the dam on the Congo River.

However, alarm bells started to ring among civil society and energy experts after the World Bank pulled out of Inga project in 2016 because of the DRC government’s decision to "take the project in a different strategic direction to that agreed between the World Bank and the government in 2014".

Eskom said it supported the IRP’s proposal of an electricity mix based on least cost to the consumer, which included gas and renewables, but said the necessary infrastructure to deliver gas via pipeline to power stations was not sufficiently developed in South Africa to meet the amount of electricity generated by gas that is envisaged in the IRP.

Also, the large amount of gas proposed in the IRP could expose the electricity price to external factors like the oil price and exchange rate, as the gas will be imported.

"The use of gas will expose the cost of the system to the exchange rate and market price risks, where the primary fuel price and production are out of our hands," Eskom said.

'An attractive option'

It suggests that given the risk associated with gas, and that the renewable energy allocation is dependent on having gas, an alternative of pumped storage might be "an attractive option" to replace some of the gas allocation.

The utility said the IRP’s electricity demand forecasts were too high. Eskom’s electricity sales were decreasing and its demand forecast was 52GW by 2050, compared to 58GW forecast in the IRP.

Eskom corrected the decommissioning dates in the IRP for some of its aging coal plants, and said it had brought forward decommissioning dates: Komati power station will be shut down between 2018 and 2021; Grootvlei, between 2018 and 2020; Hendrina, between 2018 and 2022; Arnot, between 2021 and 2029.

Eskom said the IRP failed to include the amount of solar PV power already installed on rooftops around the country, which the utility estimated to be between 300 and 400MW.

Cost of coal 'unrealistic'

Eskom raised the issue of pricing in the IRP, and took issue with the price of gas used in the modelling, adding that the IRP’s projected cost of coal may be "unrealistic".

"The assumptions used for technologies are beginning with 2017 numbers. Given the rate at which technology costs change, specifically renewable technologies, this may be a reason for concern."

It called for studies to be done on how stability of the electricity grid could be maintained with the increase in the amount of renewable energy.

Eskom also corrected the IRP’s statement that Koeberg Nuclear Power Station’s lifespan had been extended to 80 years by the steam generator’s refurbishment, and said in fact it had been extend from 40 to 60 years.

Eskom agreed with the fact that no new nuclear power had been included in the future electricity plan until at least 2030, "because the earliest plausible commissioning date is expected after 2030".

Eskom said the lack of water in water-stressed South Africa could impede energy development. There was a need for a plan that integrated water resources and infrastructure development to make electricity development possible.

In particular, the IRP should consider energy technologies that were water efficient.

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