Category Archives: IRP

Integrated Resource Plan

Eskom’s latest work on the IRP for the DoE rejects nuclear

Engineering News, Chris Yelland, 24 November, 2017.

Nuclear doesn’t make sense, does it?

The findings of the latest work on the draft Integrated Resource Plan for Electricity, IRP 2017, by Eskom for the South African Department of Energy (DoE) are proving to be somewhat problematic for Energy Minister David Mahlobo.

As a result, this latest work by Eskom, and all further work on IRP 2017, has now been taken out of the hands of both Eskom and the DoE planning technocrats by Minister Mahlobo and his nuclear team so they can “massage” it further with “policy adjustment”.

The Eskom work confirms studies by other respected research bodies in South Africa and abroad, as well as the statements by Finance Minister Malusi Gigaba at the recent World Bank and International Monetary Fund summit in New York, and in his medium-term budget policy statement, that the new-nuclear option for South Africa is both unnecessary and costly.

After modelling numerous scenarios in the latest work by Eskom, the study focusses on five broad scenario options, referred to by Eskom as: the Reference Case; the Optimum Plan; the Low Growth Scenario; the Carbon Budget Plan; and the Forced Nuclear scenario.

In the Forced Nuclear scenario, some 9,6 GW of new-nuclear power is “hardwired” (or forced) into the IRP model in the years to 2050, because none of the other scenarios modelled come up with this particular outcome, which appears to be preferred by the DoE nuclear team and the Zuma administration.

For the first time, this latest work by Eskom incorporates the cost of transmission infrastructure, by including these costs for all the generation technologies and scenarios modelled. Eskom concludes that contrary to what is often heard, the total cost of grid integration of renewable energy, coal, gas or nuclear is actually minimal in comparison to the cost of the generation component.

Based on local and international studies, and real-world experience, and again contrary to what is often heard from nuclear evangelists (including those within Eskom itself), the latest Eskom study shows that the overnight capital cost of new nuclear in SA is the highest by far of all the generation technologies, significantly higher even than that of concentrating solar power (CSP) with nine hours of energy storage.

Specifically, the study finds that the overnight capital cost of new nuclear power in South Africa comes in at US $5141 per kW installed. This is compared to $680 per kW for OCGT, $747 for CCGT, $1390 per kW for wind, $1220 per kW for fixed-tilt solar PV, $4336 per kW for CSP with nine hours of energy storage, and from $2950 to $3560 per kW for new coal.

The Forced Nuclear scenario, in which 9,6 GW of nuclear new-build is “hardwired” into the IRP model, would increase the electricity price trajectory in South Africa significantly more than that for any of the other viable scenarios modelled, with prices approximately R0,15 per kWh higher than that of the Optimum Case.

The Eskom study goes further to show that from 2030 to 2050 the cumulative electricity cost to customers resulting from the R0,15 per kWh higher electricity price of the Forced Nuclear scenario is some R800-billion higher than that of the Optimum Plan scenario, and R500-billion higher than that of the Reference (Base) Case scenario.

In the Carbon Budget scenario modelled by Eskom, a median demand growth is assumed, and a more demanding approach to CO2 emission reduction is taken. In addition, solar PV and wind capacity is artificially (i.e. politically) constrained at 1 GW and 1,8 GW per annum respectively. This forces 5,6 GW of new nuclear power into the IRP (made up of  4 x 1,4 GW reactors), but these are only required in 2039, 2040, 2045 and 2046 respectively.

In the Optimum Plan scenario modelled by Eskom, where a median demand growth is assumed, together with the more moderate “peak-plateau-decline” approach to CO2 emission reduction, and with no annual caps on wind and solar PV, the study shows that no new nuclear power is required at all in the years to 2050.

In fact, even in the base case Reference Plan scenario, where the artificial annual constraints of 1 GW and 1,8 GW per annum are imposed for wind and solar PV, together with a median demand growth forecast and the “peak-plateau-decline” approach to CO2 emission reduction, no new nuclear is required by 2050 at all.

In response to this article, Eskom has indicated that it unable to comment as it is not aware of the contents of the IRP. “The Eskom team is only involved in terms of providing the modelling work, with the approach and inputs given by the Department of Energy”, said Eskom spokesman Khulu Phasiwe. The DoE did not respond when given the opportunity for right-of-reply.

In summary, the Eskom modelling work makes it clear that the unconstrained least-cost scenario of the Optimum Plan does not include any new nuclear power, regardless of demand projections and COlimits. Furthermore, the modelling shows that the only way to getting new nuclear into the IRP is by artificially constraining renewable energy, or by taking a hardwired “Forced Nuclear” approach.

Perhaps it is these realities highlighted in the latest modelling work and findings by Eskom that are giving the DoE planners and nuclear team some headaches, leading to the delay in the release of IRP 2017 from the mid-November date indicated only a few weeks ago by the energy minister.

The unfolding events around the Energy Indaba mooted by the DoE for early December 2017, and the pending release of IRP 2017 following “policy adjustment” input by the cabinet, with the possibility of “Forced Nuclear”, could be dramatic. Watch this space!

Here is the full article

Be alert to the risks of legitimising a hollow process for a new electricity IRP

Daily Maverick, Richard Worthington, 13 November, 2017

Imagine that, consistent with recent statements by the new Minister of Energy, an Integrated Resource Plan (IRP) for electricity is released in the next week or two, with a new generation build plan that mandates nuclear procurement. What would our response be?

For argument’s sake, let’s say the plan is scaled back to no more than half the total previously deemed necessary to achieve the benefits of “fleet procurement” (the 9.6 GW contemplated for a Rosatom contract), as a concession to widespread opposition.

Since there is a requirement for consultation, the minister would need to convene some kind of public engagement. There have been calls from various stakeholders for some kind of summit on energy (or the economy more generally), so even a very hastily convened event might be presented as being responsive to stakeholder concerns, as well as fulfilling requirements for the new IRP to be tabled in Parliament subsequently. What would we do?

Unlike the Integrated Energy Plan (IEP) that covers the entire energy system, the requirements for which are explicitly set out in the Energy Act of 2008, the process for seeking common ground on a policy-adjusted plan for the electricity system, before it is tabled for parliamentary approval, is not defined. Determinations by the minister that generation capacity will be procured must, as recently determined by the High Court (Western Cape), be subject to public hearings and Nersa consideration, but the new build plan of the IRP is nevertheless treated as binding…

… However, legitimising a hollow process on an IRP that will set parameters on electricity infrastructure investment for the coming decades carries enormous risk. Like in 2010, we might be assured that it will be regularly updated, but getting this one right – or at the very least ensuring it doesn’t mandate irresponsible procurement and greatly deepen our debt – is imperative for any prospect of reducing poverty and inequality…

he public narrative that we need nuclear power to meet our commitments to climate change mitigation is false, as is clear from work already released in the IRP documentation published for comment a year ago. Robust modelling by several agencies, including the Council for Scientific and Industrial Research, shows that an electricity system without nuclear can meet and exceed our emissions reduction commitment at lower cost and with higher employment than when new nuclear is included. The Energy Research Centre modelled scenarios with a range of cost assumptions and even the most optimistic pricing fails to find nuclear power offering net benefits over renewable energy options…

… With a positive objective in mind – an electricity system contributing to the well-being of all South Africans, with a net value that is positive for society as a whole and over time, when full costs and life cycles are assessed – we must be prepared to reject what might be put forward. To do this, stakeholders not accustomed to parading their interests and positioning in public need to consider how to avoid being complicit in legitimising a plan designed to serve the elite, and to start talking about taking a collective stand on electricity and economic prudence.

 

Here is the full article

 

 

Joint media release: What we expect from SA’s Integrated Resource Plan for electricity

Centre for Environmental Rights (CER), 9 november, 2017

Media reports indicate that the Minister of Energy has instructed the Department of Energy to publish the long-overdue update to the crucially important Integrated Resource Plan for Electricity 2010-2030 (IRP) within the next week.

Energy Minister David Mahlobo (as at 13 November, 2017 anyway). Image: moneyweb

At this critical juncture in South Africa’s energy future, our choices have to be based on sound, accurate, current, and accepted energy policy that will benefit all South Africans. The Life After Coal/Impilo Ngaphandle Kwamalahle Campaign (made up of groundWorkthe Centre for Environmental Rights and Earthlife Africa, Johannesburg) and Greenpeace Africa would like to reiterate our position on what we expect to see in the IRP.

 

We also express our alarm that, despite earlier  statements in Parliament by the Department of Energy that there would be provision for further consultation on the draft IRP, the Minister has since suggested that a final policy-adjusted IRP will be promulgated without further public participation. To date, stakeholders have only had an opportunity to consider and comment on the draft IRP base case and assumptions published a year ago in November 2016. An open and democratic IRP process requires first, a new base case taking account of those comments, and then open discussion of any variations that will be taken into account in the drafting of a policy-adjusted IRP.  A policy-adjusted IRP without further public participation can only be viewed as illegitimate.

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

Structure of the market needs to be revised to ensure least-cost energy

BusinessDay, Anton Eberhard, 9 May, 2017

The battle for SA’s nuclear and energy future is not over. While many South Africans welcomed the decision by the High Court in Cape Town setting aside international nuclear energy treaties and declaring the government’s nuclear procurement programme unlawful and unconstitutional, President Jacob Zuma and his allies have not given up. Ultimately, the structure of SA’s power market will need to change to ensure an optimal and least-cost energy mix.

Reforming the power sector will be the more important struggle.

Unfortunately, the court’s nuclear decisions were essentially around procedural issues and it declined to rule on substantive matters, such as the rationality of procuring nuclear power when the government’s own updated electricity plan says it is not needed.

Here is the full article