Energize, Chris Yelland, 29 November, 2016.
Electricity is the biggest energy carrier in South Africa. As such, an up-to-date national Integrated Resource Plan (IRP) for electricity is essential for the country’s overall economic and energy planning process for the provision of adequate electricity generation capacity to meet demand for the next 20 to 40 years.
While the lead-time for new generation capacity for some technologies can be a decade and more, ongoing, reliable and cost effective electricity is critical for the daily activities and well-being of mining, industrial, transportation, business, agricultural, municipal, commercial and domestic customers.
New electricity generation capacity must therefore be planned and provided at least cost, while meeting existing ministerial determinations and contractual commitments for any existing new-build, as well as government’s policy objectives.
These policy objectives include universal access to electricity, economic growth and jobs, environmental compliance and sustainability, and increasing the diversity of both primary energy sources and generators within the electricity supply industry in order to manage risk.
Following a thoroughly discredited first attempt (IRP1) by the South African Department of Energy (DoE) in 2009, a respectable version of the national Integrated Resource Plan for electricity for the next 20 years – the so-called IRP2010-2030 – was promulgated by the DoE in March 2011, based on work done in 2009 and 2010.
This IRP should then have been updated annually (or at the very least, every two years) by the DoE, based on new economic data, revised technology costs, actual electricity demand growth in previous years, and a revised electricity demand forecast for the subsequent years ahead.
A Draft IRP2013 as an update to IRP2010-2030 was prepared and published in 2013 by the DoE, but for various reasons it was never accepted by the Cabinet or Government. It has been widely reported that this was because the Draft IRP2013 recommended a reduced and delayed nuclear new-build for South Africa.
Lightweight and superficial
Against this background, the latest update to IRP2010-2030, known now as the Draft IRP2016, has been awaited with great expectation, as well as concern at the repeated delays and extensions to the date of release of the Draft by the DoE for input and comment through a public participation process before promulgation.
However, after it was finally published for public comment in the Government Gazette on 25 November 2016, one of the first things that any informed reader would notice in perusing the Draft IRP2016 dated October 2016 in the Gazette is that it is both lightweight and superficial in comparison with the substantial IRP2010-2030 and Draft IRP2013 documents.
A number of the Appendices referred in Section 7 of the gazetted Draft IRP2016 dated October 2016 are missing, and contrary to what is stated on page 18, these are not readily available on the DoE website. The missing Appendices 7.3, 7.4 and 7.5 include: substantiation of the technology learning rates assumed; the presentation on the discount rate assumed; and the report on all other assumptions made in the Draft IRP2016.
Within days, a revised Draft IRP2016 Revision 1 dated November 2016 was published on the DoE website in which all references to the above missing Appendices have now been removed. In addition, the gazetted Draft IRP2016, and its Revision 1 on the DoE website, contain a number of further important errors, inconsistencies and omissions, as detailed below.
Erroneous and inconsistent technology costs used
One of the major areas of error, inconsistency and omission in the Draft IRP2016 report is that of the technology costs used.
In the first instance, the Draft IRP2016 states that the costs of generic technologies used are based on a previously secret, updated EPRI report dated August 2015, provided via Eskom as a member of EPRI, which was finally released in September 2016. The report was initially marked “Secret”, but is now declassified.
However in the above EPRI report, the critical nuclear, solar PV and wind technology costs presented bear no resemblance to all known, up-to-date, levelised costs of electricity (LCOE) calculations and contracted prices for new nuclear, solar PV and wind power in South Africa.
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