The long-awaited new Integrated Resource Plan (IRP) has been hailed as a massive improvement over its opaque nuclear-boosting predecessor, but it still poses problems.
Two unnecessary private coal stations have been forced into the equation and the IRP also assumes the delayed Grand Inga hydro project in the Democratic Republic of Congo will be realised in 2030.
The new IRP still leaves the door open for nuclear in the 2030s and 2040s under scenarios where South Africa strictly enforces carbon emission targets and the current artificial build limits on renewables are maintained.
These long-term scenarios envisage a nuclear build similar to the one punted by its controversial predecessor under the Jacob Zuma presidency released in November 2016, then shrouded in secrecy for more than a year.
The difference is that the new IRP now states how much more this would cost: an additional R857 billion by 2050, in 2017 rand terms.
“They were not bold enough to say nuclear is off the table, but they did give the public all the information they need to show it is a bad idea,” said Tobias Bischof-Niemz, formerly an energy expert at the Centre for Scientific Industrial Research and now a director of renewable energy group Enertrag.
According to Bischof-Niemz, this multibillion-rand estimate is an understatement because the new IRP still uses prices for renewables that are higher than actual current prices.
WHAT REALLY CHANGED?
The new IRP makes three major changes compared with the 2016 one:
. The first big change is to dramatically revise the forecast for South Africa’s energy demand downwards.
The 2016 IRP had used a projection that the country would need 525 terawatt hours of power in 2050.
In the new IRP released this week, the most optimistic “high” scenario puts demand at 430Twh – a difference of more than a few nuclear reactors. Current annual demand is in the region of 250Twh. This revision is the main reason the new IRP no longer calls for massive new coal plants and has relegated nuclear to specific scenarios instead of the “base case”.
. More important, the new IRP has abandoned planning three decades into the future. It only sets out the energy investment path up to 2030, not 2050.
That is half the reason there appears to be no nuclear in the new plan.
Under the old IRP’s “base case”, nuclear would also still have been built after 2030 anyway.
“It is ... recommended that the post 2030 path not be confirmed, but that detailed studies be undertaken to inform the future update of the IRP,” read the IRP, released by Energy Minister Jeff Radebe this week.
The big question is natural gas because a power grid running mostly off renewables will require flexible peak plants.
The long-term price of gas, which South Africa has to import, is the key variable in the long term and the next IRP will require a detailed study of the gas market.
The new IRP implies that only very expensive gas would justify nuclear stations in the future.
. The third big change is that the new IRP takes the “least cost” energy investment path as its point of departure. The mathematical modelling then automatically proposes that South Afica build literally nothing except solar and wind power stations into the future.
The IRP – which is now out for comments – however makes “policy adjustments” to include the two private coal stations and Grand Inga, for political reasons.
The IRP itself estimates that its policy adjustments (to include coal and Grand Inga) will cost consumers an additional R350 billion by 2050 – in current rand terms.
NEXT FIGHT: COAL
The new IRP says the Thabametsi and Khanyisa private coal power stations will come on line in 2023 and 2024. They will produce 500 megawatts each and will most likely be the last coal power stations built in SA.
Environmental activists are, however, already knee-deep in a fight to stop both stations.
The IRP forced the stations into the plan on the grounds that this will soften job losses from the inevitable closure of old Eskom coal stations, also that they are already “procured and announced”.
Neither of these rationales hold water, claims the Centre for Environmental Rights (CER), which is part of the Life After Coal campaign.
In a letter to Radebe last month, the CER pointed out that the two stations combined would only employ 332 people when they were operational, according to their own applications for generation licences at the National Energy Regulator of South Africa.
In addition, the excuse that the stations are already “procured” is legal nonsense, said the NGO.
The point of no return would only be reached after an actual power purchase agreement (PPA) was signed with them.
The CER is challenging the environmental authorisations of both projects in court, which automatically prohibits the state from going ahead until the case is concluded in the coal stations’ favour.
According to the letter the CER sent Radebe, it would also be illegal to sign PPAs with the two coal stations because of how expensive they are.
According to the regulations governing independent power producers (IPPs), the state cannot sign a PPA if it does not demonstrate “value for money”.
Apart from demanding the assessment the department used to conclude that the two coal IPPs provide “value for money”, the CER asserts that they could not possibly provide value for money.
The IRP itself acknowledges that the “policy-adjusted” plan is far more expensive that the “least cost” option.
WHAT WERE THEY THINKING?
The new IRP demonstrates just how absurd the Zuma administration’s attempts to rush through a nuclear deal were.
In December 2017, following months of silence, Zuma’s last energy minister – spy boss David Mahlobo – made the bizarre announcement that “nuclear will happen”.
He did this at a press conference tied to an equally bizarre energy indaba where most of the participants were not sure why they were there, furthermore, discussing the IRP was banned.
Mahlobo tried to convince journalists that the IRP was not really a policy and that South Africa’s energy policy called for 20% of the future energy mix to be nuclear, no matter what.
Everyone else just didn’t understand the country’s energy policy, he suggested to the press conference, where most attendees were his own staff and his answers to questions drew applause.* SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox.