Category Archives: IEP

Integrated Energy Plan

Mahlobo rushes nuclear deal

News24, 5 November, 2017.

(Ed. note: Let’s hope that the DOE remember to take the public submissions into account – especially that of the CSIR, and they must use an unconstrained model to set the base case.)

As Energy Minister David Mahlobo forces his nuclear power plans into action, officials at his department are working weekends to finalise the country’s reviewed integrated energy resource plan – four months ahead of schedule.

The plan to determine the energy mix the country needs was expected to be finalised in February next year, but will now be finished in the next two weeks.

“We would have been talking February, but now we are talking November 14,” said an insider, vouching for the level of hard work the minister was putting into his job.

This would enable Mahlobo to make projections of the country’s future energy demands based on “empirical evidence”.

Last week, Finance Minister Malusi Gigaba told City Press that nuclear energy was neither affordable for the sluggish economy, nor immediately necessary.

Mahlobo, who has been in his new job for just more than two weeks after three years as state security minister, is now on a collision course with Gigaba and Treasury.

The nuclear energy plan is expected to cost South Africa about R1 trillion, an amount that economists and politicians from across the spectrum – including the ANC – say the country’s struggling economy cannot afford.

Mahlobo told City Press yesterday morning that government should not be “reckless”, but energy was central to the country’s security and shouldn’t only be treated as an economic issue.

In the opposite room, a group of senior managers waited for Mahlobo to join them for a meeting on the integrated energy resource plan.

“People who say we should not invest do not understand that, each and every day, more companies are closing down and more young people are getting out of employment and even more out of the education system. We are creating soldiers of unemployment,” Mahlobo said.

“Any responsible government will plan well because it is becoming a national security issue. One day these people would have nothing to lose and they will take this government out. The ANC must never be deterred in the face of political parties who want to stop us from implementing our programme.”

Mahlobo said much of the criticism against the nuclear project was based on an “unfounded narrative” about “who is going to win the tender”, which was none of his concern because, “if there is any procurement that is going to be done, the South African laws are going to be followed”.

The countries with the leading technology are France, Russia, the US, South Korea and China. Companies from these countries as well as their governments have been aggressively wooing South Africa’s decision-makers and working to sway public opinion their way. But many believe that President Jacob Zuma’s cosy relationship with his Russian counterpart Vladimir Putin, as well as Mahlobo’s own close ties to the Kremlin and its security establishment, has already tilted the scales in that country’s favour.

When Mahlobo’s predecessor Mmamoloko Kubayi was moved out of the department in the Cabinet reshuffle last month, there was widespread speculation that it was because she was not moving with haste on the nuclear programme.

“An energy solution”

Mahlobo confirmed his close ties with “the leadership of the Russian federation”, adding that not many people have access to the Kremlin, but he does because in his previous job they worked closely together on intelligence operations. However, he denied taking convicts-turned-businessmen Kenny Kunene and Gayton Mackenzie to the Kremlin during a recent trip to Moscow.

Mahlobo said his starting point was that “everyone in the country agreed that, for the economy to work and in order to reduce unemployment, you need to have an energy solution”.

“In our case, we say we want to ensure security of energy and it must be sustainable. That is, you do not want to have disturbances that one day you wake up you do not have sufficient energy or you cannot be able to drive investment.”

He said that although the affordability of the project was a “big issue”, the need for extra energy was genuine and legitimate.

South Africa uses both renewable and nonrenewable energy sources, and the sector contributes directly and indirectly more than 33% of gross domestic product. Other energy sources in the mix include coal, gas, water, solar and wind.

Mahlobo said “the principle of pace, scale and affordability applies to the entire energy mix”.

“The starting point is that we do not have energy that we can guarantee for future generations because it is finite. Whatever source you choose, you must be able to say at what scale, which is the volume you want or the demand met,” he said.

He said that projecting future energy demand for economic growth was “a function of saying who is going to take this energy up like industries, private sector and domestic usage”.

Mahlobo said building nuclear power stations created new industries because it was capital intensive and would take more than 10 years to build.

“Yes, it is expensive when you are building, but immediately [after] a nuclear plant has been built and [has started] to operate, it produces the cheapest electricity than any source. It is actually less than 35c per kilowatt hour, which is very cheap. The renewables are on average around 80c per kilowatt hour, and some are around R1.”

He said the technology in nuclear reactors had also improved and would reduce emissions. “Plus we have a good track record because we have never had reports that Koeberg [Nuclear Power Station in Cape Town] has caused problems in terms of safety and issues of environment,” he said.

Mahlobo said his approach would be informed by a “build, operate, train and transfer” model whereby if government did not have the funds to build it, it would go to the market seeking an investor who would build at their own risk.

“When operations start then government comes in. The investor will want to recoup the investment and make gains. Government then operates on the principle that the cost should not be passed to the end user, and it does so by setting the tariff.”

Mahlobo said it was critical to get the projection figures right to avoid costly mistakes, and the margin of error must be less than 15%.

“The growth of the economy must be our preoccupation and areas of growth must be chosen very well,” he said.
“We will always work with experts because I do not possess all the wisdom. There are people who have been there and they have seen it working.”

Mahlobo said he had no desire to see the country borrow money to fund the nuclear project.

“My first intention is to say who has the appetite to put the structure on the ground and they take the risk,” he said.

Eskom spokesperson Khulu Phasiwe said if the integrated energy resource plan showed the nuclear programme could go ahead, they would begin the tender process immediately.

Here is the link to the article

Public-private partnership bridge energy gap – Ramaphosa

ESI Africa, 19 January, 2017.

South Africa’s Deputy President, Cyril Ramaphosa, advises countries to consider a partnership between government and the private sector in order to bridge the energy gap.

Ramaphosa was speaking during a panel discussion about bridging the energy gap in Africa by 2030 at the World Economic Forum in Davos, Switzerland on Tuesday, Fin24 reported.

According to the media, the deputy president is leading the South African delegation in Davos, themed “Responsive and Responsible Leadership”.

Among other ministers attending the seminar is finance minister Pravin Gordhan, minister of trade and industry Rob Davies and minister of economic development Ebrahim Patel.

Energy gap in Africa

Media reported that Ramaphosa recommended that in order for Africa to improve energy access, governments should look at getting the private sector to partner with them and eventually reach a point where the private sector generates power independently.

He said: “In South Africa we have seen the effectiveness of involving the private sector to set up independent power projects.”

The partnership is said to have resulted in nearly ZAR194 billion ($14 billion) worth of investments and 2,500MW of power generation, which presented the private sector an opportunity to generate power independently.

IPP programme

According to Fin24, Ramaphosa told the delegates that the South African IPP programme was established when government realised it could not bridge the electricity gap alone.

“We needed to bring in new technology and those with better reach for technology were in the private sector,” the deputy president stated.

He explained that the private sector is capable of raising funding and use their networks to acquire technologies, media reported.

As a result, a special unit was set up within the Department of Energy, which developed a policy to evaluate the IPP proposals. He applauded the robustness of the regulations in place.

“We had a huge number of proposals that came in because the private sector realised the government was serious about increasing energy supply in the country and that we wanted to move towards renewable energy and smart energy,” Ramaphosa said.

He added: “The private sector had a key role in sharpening government’s capability in this regard. We came out strong on renewable energy.”

Here is the article.

DoE extends comment period for energy plans to end of March

Engineering News, 9 January, 2017.

The Department of Energy (DoE) has formally extended the period for public comment on the draft Integrated Energy Plan (IEP) and the draft Integrated Resource Plan (IRP) base case until March 31.

The closing date for written comment was initially set as February 15, after the two plans were formally Gazetted on November 25.

The DoE said the decision to extend the comment period followed requests from a number of stakeholders.

To date, the department has hosted hearings on the IEP and the IRP in Gauteng, the Western Cape, the Eastern Cape and KwaZulu-Natal.

A number of participants expressed dismay at the short notice provided for preparing oral submissions and the restricted timeframe for the submission of written comments.

There has also been strong criticism of the plans, particularly of the IRP base case, which, in its assumptions, places constraints on the amount of renewable energy that should be introduced yearly on the basis of possible negative consequences for grid stability.

Several presenters urged the DoE to re-run the base case in order to generate a least-cost outcome, free from the “artificial constraints” imposed on renewable energy in the current draft.

Despite the constraints, the base case still assumes that the first new nuclear reactor would only be required by 2037, rather than the now unobtainable deadline of 2023 in the current IRP, which was published in early 2011 and is considered to be significantly out of date.

Nevertheless, State-owned utility Eskom issued a request for information (RFI) on December 20 for the ‘Nuclear New Build Programme’ in line with an amended section 34(1) determination, published in the Government Gazette of December 14, designating Eskom as the procurer of the nuclear generation plant, which also involves the front-end fuel cycle facilities which will be procured by the South African Nuclear Energy Corporation, or Necsa.

The RFI was issued instead of the request for proposals, previously mooted, and Eskom stressed that the process was not a competitive tender and would, thus, not create any financial commitments or obligations on it or government.

The closing date for responses to the RFI is April 28.

DoE urged to re-run IRP base case without ‘artificial constraints’

Engineering News, 8 December, 2106

A call has been made for the Integrated Resource Plan (IRP) base case to be re-run in order to generate a “least-cost” outcome that is free from the “artificial constraints” imposed on renewable energy in the current draft.

The base case, published by the Department of Energy (DoE) on November 22, outlines a proposed electricity generation mix to 2050. It has been generated, however, using a computer model that places constraints on how much wind and solar can be introduced in a single year. It also uses cost assumptions for renewables that are higher than those that have already been achieved during the most recent bidding rounds.

Here is the full article

Experts’ advice ignored to force nuclear option

BusinessDay, 8 December, 2016.

Task team tells public hearings of artificial constraints on how much renewable energy can be built, leaving lowest-cost option off the table.

A panel of experts appointed by Energy Minister Tina Joemat-Pettersson told public hearings on the Integrated Resource Plan (IRP) in Ekurhuleni on Wednesday that their advice had been ignored to force nuclear energy into the plan.

A task team for the 40-strong panel, which was headed by Mike Levington, says that the Department of Energy’s decision to impose artificial constraints on how much renewable energy can be built — as well as the use of outdated prices — had allowed nuclear energy into the model.

The result of this distortion was that the IRP, which will determine SA’s future energy mix, did not recommend the lowest-cost option for the generation of electricity in the long term. A lowest-cost option, said Levington, would not include nuclear in the plan, which projects energy needs until 2050.

Instead, the “base case” of the IRP 2016 suggests that new nuclear energy will be required by 2037 — 15 years later than was expected under the 2010 IRP — and that, by 2050, SA will need an additional 20GW of nuclear power.

Read more about the flawed planning process here