Category Archives: IRP

Integrated Resource Plan

New ‘power-to-X’ prospects may arise as renewables costs continue to fall

Engineering News, 15 January, 2018.

The outlook for solar and wind electricity costs to 2020 “presages historically low costs for new renewable electricity”, which could create new economic and industrialopportunities, a new International Renewable Energy Agency (Irena) report argues.

Released in Abu Dhabi, the United Arab Emirates, this weekend, the report states that, by 2020, all existing renewable generation technologies will fall within the fossil fuel-fired cost range, with most, notably onshore wind and solar photovoltaic (PV) technologies, at the lower end, or undercutting fossil fuels.

The global weighted average costs over the last 12 months for onshore wind and solar PV were $0.06/kWh (ZAR 0.756/kWh) and $0.10/kWh (ZAR 0.13/kWh)  respectively, with onshore wind routinely commissioned for $0.04/kWh (ZAR 0.50/kWh). The current cost spectrum for fossil fuel power generation, by contrast, ranges from $0.05/kWh to $0.17/kWh (ZAR 0.63 – 2.12/kWh).

(Ed. note: South Africa’s Bid Window 4 rates are: solar PV ZAR 0.62/kWh and wind ZAR0.79/kWh. See http://www.gsb.uct.ac.za/files/EberhardNaude_REIPPPPReview_2017_1_1.pdf)

“Based on the latest auction and project-level cost data, global average costs could decline to about $0.05/kWh (ZAR 0.63/kWh) for onshore wind and $0.06/kWh (ZAR 0.76/kWh) for solar PV,” the ‘Renewable Power Generation Costs in 2017’ report states.

Auctions are having dramatic effects on renewable energy prices

IRENA, January, 2018.

At least 67 countries had used auctions for renewable energy contracts by mid-2016, up from less than 10 in 2005. This auctions report from the International Renewable Energy Agency (IRENA) provides key updates on this crucial mechanism for price discovery and market development.

Average contract prices fell to USD 50 per megawatt-hour (MWh) for solar and USD 40/MWh for wind power in 2016, compared to USD 250/MWh and USD 80/MWh, respectively, in 2010. Chile, Mexico, Morocco, Peru and the United Arab Emirates achieved record price lows with solar and wind auctions in 2016. Along with falling technology costs, policy support and improved access to finance have helped drive accelerating renewable energy development.

Chapter 1 gives the highlights of renewable energy auctions held or announced in 2016.

Chapter 2 reviews the main trends and analyses the evolution of prices resulting from auctions.

Price determinants, analysed in Chapter 3, include:

  • access to finance and country-specific conditions;
  • investor confidence and a conducive environment;
  • other policies aimed at supporting renewable energy development; and
  • auction design elements.

Chapter 4 presents country case studies to show how the design of each auction has to be tailored to a specific context and objectives.

Chapter 5 analyses the use of auctions to promote less mature technologies, such as offshore wind and biomass, while also delivering socio-economic benefits.

Finally, Chapter 6 outlines key considerations in renewable energy auction design, including trade-offs between maximum cost-effectiveness and other objectives.

The report follows IRENA’s earlier studies:

Here is the full report: IRENA_Renewable_Energy_Auctions_2017

Why the hurry with nuclear power?

BusinessDay, Energy Research Centre, UCT, 12 December, 2017.

The economic benefits of a nuclear fleet are no better than a flexible build plan, even in a future where we assumed nuclear is cheap

12 DECEMBER 2017 – 06:29 TARA CAETANO, BRUNO MERVEN AND HARALD WINKLER

Energy Minister David Mahlobo reportedly wants to finalise quickly the latest iteration of our electricity plan in support of new nuclear power. The minister claims that “there’s no discussion about the need, the need is there” for nuclear power.

Yet research that we have undertaken at the Energy Research Centre supports neither a need for, nor benefits of, forcing a large nuclear fleet into our electricity system.

Modelling of all available electricity generation options continues to show that nuclear power is not the least-cost solution. Nor does the country have the ability to finance the investments required for a 9.6GW fleet of large reactors. SA currently faces an excess of capacity and will not need this power in the short to medium term.

The latest modelling shows nuclear only coming into the mix around 2040. This is a finding consistent with earlier work the centre undertook for the National Planning Commission in 2013. Current research together with economic modellers also suggests a wait-and-see approach. The rush to complete the Integrated Resource Plan (IRP) and increase the share of nuclear is suboptimal for the electricity system and for the South African economy. There is no urgency about the decision around nuclear.

When would we need nuclear power? Nuclear plants take 10 years to build and will run for decades after, but it is virtually impossible to predict demand half a century into the future. Electricity demand projections have consistently been higher than actual growth, when evaluated ex post. Smaller nuclear reactors could in future track demand more closely than those being considered for the fleet.

In the past few years, electricity demand has flattened and is even declining. The global financial crisis reduced economic demand, which is a key driver assumed in modelling electricity demand. The period of load-shedding that followed in SA further kept electricity demand low. So SA has time to carefully consider future investment needs as no new generation is needed before the late 2020s.

Does SA “need” nuclear when it is not the lowest-cost option for the country? Good policy should be informed by sound evidence. Here’s an explanation on how we cost nuclear power, in research terms.

Much of the public debate centres on “overnight capital costs”, which are the costs of construction, excluding inflation or interest. There are divergent figures on the “overnight costs” of nuclear, dependent on certain assumptions, technology choices and country of construction.

The IRP 2013 used a range of about $5,000/kW–$7,000/kW. This range was found to be consistent with literature for the types of plants SA would be considering, and was used in studies by the centre on nuclear power and bounding uncertainty, including those on costs. A more recent review by three research groups of overnight costs suggests that the upper range could be as high as $8,500/kW.

The “overnight cost” is not a very good basis for comparing the costs of electricity plant since it excludes other key components — fuel and operating costs, aggregate availability, lifetime, interest during construction, borrowing rates, system integration aspects and risk. Another measure of cost is the “levelised cost of energy”. This cost is expressed in cents per kWh, and takes into account the overnight costs and the other aspects listed above except for the system integration aspects. Risk is taken into account to a certain extent through the discount rate, but this does not fully account for the risk of over-build.

In SA, renewable energy prices have fallen rapidly, echoing global cost reduction trends. Actual average tariffs from solar photovoltaic (PV) and wind electricity generation decreased from R3.65/kWh and R1.51/kWh in 2011 respectively to R0.62/kWh in 2015, making it cheaper than electricity produced from a new-build coal-fired power plant (R1.03/kWh) as well as nuclear (R1.09/kWh), the latter figures being those published by the Department of Energy in 2016.

The measure of levelised costs can be useful for comparing the overall observed and expected energy cost from different technologies, but can be misleading when comparing technologies with very different characteristics. For example, non-dispatchable solar PV and wind do not provide the same value to the system as dispatchable generators. The actual value (and costs) to the energy system of any technology is a complex and dynamic combination of all prospective new and existing capacity and their overall ability to meet demand. Both demand and supply options change over time — over a day, week, month, year — as the structure of the overall power system evolves.

It is important to the operation of the system when supply and demand-side options produce and whether this is at the same time as demand. To fully understand the implications of the advances in energy technologies on future electricity generation in SA, a fully integrated energy systems assessment is required. An energy system model is also useful to compare different scenarios.

Our research has compared the economic effects of a nuclear fleet against a flexible, least-cost build plan. We found that the economic benefits of a nuclear fleet are no better than a flexible build plan, even in a future where we assumed nuclear is cheap. Given that the result depends on many inputs, the centre’s researchers further analysed many variants of these two scenarios and found that nuclear is not the least-cost option. A forced nuclear scenario results in electricity prices that are higher and this “would have negative impacts on growth, employment and welfare in SA”. In plain language, one has to cherry-pick a future in which nuclear power is affordable.

In a world where there is uncertainty about future demand, future technology costs and capabilities, future grids with distributed generation and storage, committing ourselves to a large investment far in advance is not prudent.

So nuclear power is not the most affordable option, by overnight costs, levelised costs or by running an energy system model. But there are factors other than cost to consider. SA would do well to invest in technologies that deliver what we really need, especially employment.

The localisation and respective job-creation potential of a nuclear fleet is low compared with other technologies, as most of the local jobs will be temporary construction jobs and a couple of thousand permanent jobs in operations and maintenance, depending on the number of nuclear plants being built. Pushing up the local content requirements for the nuclear programme is another way of increasing the cost to levels even unknown to the industry.

Over- and under-supply are both costly to the economy, and we have a poor track record in avoiding either. The “fleet” approach taken to nuclear in IRP 2010 makes the investment particularly large. A 9.6GW fleet has been estimated to cost between R322bn and R1.4-trillion. These estimates do not include cost overruns, which are common on mega-projects. Many studies do not include interest during construction, which due to long lead times of nuclear and depending on interest rates, can increase the capital cost of projects by 40%-50%.

The government is already committed to providing a R350bn debt guarantee to Eskom, and we have an unaffordable debt-to-GDP ratio (currently at 51.7%). Another R1.4-trillion in guarantees or sovereign debt would more than double our national debt, which is currently about R870bn. The Treasury is seeking to reduce debt to keep the interest paid on our national debt under control. Increasing that debt in the current economic climate seems unwise.

• Caetano, Merven and Winkler work at the University of Cape Town’s Energy Research Centre. They write in their personal capacities.

Here is the link to the article

ENERGY IS THE PEOPLE’S INDABA – CIVIL SOCIETY SNUBBED BY MINISTER

NEWS RELEASE                                                                                                                    

6 DECEMBER 2017

ENERGY IS THE PEOPLE’S INDABA – CIVIL SOCIETY SNUBBED BY MINISTER

 Today, the Southern African Faith Communities’ Environment Institute (SAFCEI) and the Campaign for a Just Energy Future (CJEF) joined a number of civil society organisations to discuss the way forward, following the deliberate exclusion of civil society in the Minister of Energy’s rushed energy indaba, planned for tomorrow and Friday (7-8 December).

According to SAFCEI, the short notice indaba does not fulfil the Western Cape High Court’s ruling regarding meaningful participation in the nuclear court case – since it was announced just more than two weeks ago, it was only accessible by invitation, and therefore not open to the public or various concerned civil society organisations.

In November, Energy Minister David Mahlobo told parliament that the energy plan will have nuclear energy even though the draft released for comment in 2016 found no need for nuclear energy.

There is overwhelming evidence that it is too costly and also unnecessary. In addition to this, a study published by Eskom further reinforces that there is no rational case to support nuclear.

According to Pooven Moodley, Campaign Coordinator for the Campaign for a Just Energy Future, the number and nature of the organisations excluded from the invite list is serious cause for alarm and feels like a manoeuvre to wilfully exclude those in civil society who are working on energy.

“While the Minister of Finance says that SA will take on nuclear at a rate and pace the country can afford, he is unwavering in his desire to keep it in the plan. It is unclear whether Minister Mahlobo’s intentions are questionable and linked to #StateCapture claims or whether his insistence on nuclear has to do with his naivety in the role of Energy Minister,” says Moodley.

Liz McDaid, SAFCEI’s energy expert says, “SAFCEI was NOT invited, tried to register and at the last minute, after the minister expressly told civil society organisations that the meeting was not for civil society and was by invitation only, suddenly responds saying we can come. This makes no sense, and it seems that the minister is playing games.”

We are serious about engaging with lawful processes as set out in the April 2017 court judgement, which ruled the nuclear deal unlawful and unconstitutional, and ordered government to follow a process of public consultation over any proposed nuclear deal. This indaba is definitely not part of any real consultation.

Lydia Mogano, SAFCEI’s Regional Coordinator in Pretoria says, “The upcoming energy indaba is an epitome of how our government continues to undermine the voices, rights and values of its citizens, and this is disappointing.”

Right2Know Campaign’s Vainola Makan says that R2K is appalled by the closed-door approach to the energy indaba and the fact that environmental and social justice organisations have been excluded.

 Says Makan, “We demand full transparency and full consultation, not a secretive process like this”

 In October, SAFCEI and 40 other organisations – under the banner of the National Campaign for a Just Energy Future (CJEF) – sent a letter to the PCE chair, Fikile Majola, demanding that Parliament also have hearings on energy justice.

“We approached the chairperson to ask what happened to our letter to Parliament, but he did not even have the courtesy to table the letter to the Committee. We asked for the chance for civil society to put our views before the end of November. However, with Parliament has just about closed, the Chair has said that he might have public hearings next year. Sadly, Parliament has failed the people of South Africa in this matter,” said Zainab Adams, Outreach Coordinator at SAFCEI. 

Shu-Aib Appleby from the Muslim Judicial Council – a member organisation of SAFCEI – says, “As faith leaders, our appeal to our faith-conscious and strongly grounded political leadership is that they uphold their oaths of office with the truest of commitments. This means stopping any process to conclude the nuclear deal until there is due public participation, as prescribed by the Constitution and Parliamentary procedure and to make all information available to its constituency, the South African Nation. We also call upon the government to publish its reports on any steps taken on the Integrated Resource Plan (IRP) and procurement. We have the right to know.”

Andy Pienaar, Coordinator of the Namaqualand Action Group for Environmental Justice and representing a community affected by nuclear waste in the Northern Cape, and who were also not invited to the indaba adds, “We are tired of the empty promises. The chairperson promised, when we came to parliament last year, to have public hearings. But, it is now a year later and no public engagement has happened, yet now they hold indabas without us. The PCE and its chairperson have failed us.”

“How can Parliament hold the Executive to account if it is not prepared to listen to civil society? We have so much valuable information which can be used to challenge the Executive,” says Pienaar.

ENDS

Issued by Natasha Adonis, on behalf of SAFCEI. For more information, contact Natasha on 0797-999-654 or adonisnatasha@yahoo.co.uk.

Recent engagements between Minister of Energy Mahlobo and civil society organisations

Joint Media Release: Recent engagements between Minister of Energy Mahlobo and civil society organisations

7 December 2017

Below we set out key events in recent engagements between Minister of Energy David Mahlobo and civil society organisations around the Integrated Resource Plan for Electricity and the Energy Indaba scheduled for 7-8 December 2017.

On 10 November 2017, Greenpeace Africa, together with the Life After Coal Campaign (made up of groundWork, Earthlife Africa Johannesburg, and the Centre for Environmental Rights (CER)), sent a letter to the newly-appointed Minister of Energy David Mahlobo to congratulate him on his appointment, to highlight numerous concerns and questions in relation to South Africa’s future energy plans, and to request a meeting with him. No response was received.

On 28 November 2017, a larger number of civil society organisations sent a joint open letter to Minister Mahlobo raising concerns around the planned Energy Indaba, the inadequate consultation around the Integrated Resource Plan for Electricity (IRP), and the Integrated Energy Plan (IEP).

On 29 November 2017, the Minister contacted the CER and invited the organisations who had sent the 10 November letter to a meeting on 5 December 2017. During that call, the Minister indicated that the organisations that had sent the joint open letter had incorrectly assumed that they had been invited to the Energy Indaba convened for 7-8 December 2017.

On 5 December 2017, 6 representatives of CER, groundWork, Earthlife Africa Johannesburg and Greenpeace Africa attended a meeting with Minister Mahlobo and 5 representatives from the Department of Energy, held in Johannesburg. The contents of this meeting are recorded in the attached letter sent to the Ministry today.

Importantly, at the meeting on 5 December 2017, the Minister made it clear that:

  1. there would be no further public participation on the contents of the IRP before its approval by Cabinet, and its subsequent publication; and
  2. the Energy Indaba was not intended to address the IRP in any way, shape or form – instead it was for business, labour, and government to discuss ways to reinvigorate the energy sector in order to stimulate economic growth.

The organisations who attended the meeting with the Minister have reported fully on the contents of the meeting to a broad coalition of civil society and community-based organisations working on energy issues. A number of these organisations attended a meeting on 6 December 2017 to discuss recent events, the state of the IRP, and the Energy Indaba.

At this stage, we know that:

  1. very few civil society organisations were invited to the Indaba, and people from affected communities and members of the public have not been involved in this process at all;
  2. a number of civil society organisations who tried to register for the Indaba did not have their registration confirmed;
  3. others who tried to register by email had their emails returned as undelivered, presumably because the email address for registrations was full;
  4. the evening before the Indaba, 6 December 2017, representatives of at least 2 civil society organisations were invited to the Indaba, although the invitation indicates that a response to the invitation was required by 4 December 2017;
  5. the leaked, and allegedly confidential draft agenda for the Indaba does not address any of the issues raised repeatedly by civil society organisations as serious concerns around South Africa’s electricity plans – including nuclear, coal and renewables, and the IRP;
  6. the final agenda will only be made available to delegates on registration at the Indaba on 7 December 2017; and
  7. the media advisory circulated to certain members of the media on 4 December appears to have been since amended. Whereas the initial advisory stated that “the Indaba will be attended by all energy stakeholders including academics, and civil society,” the amended version no longer states that civil society will be attending.  The initial advisory indicated that the Indaba’s purpose is to “stimulate a national conversation for South Africans to find solutions towards a sustainable energy sector”. By contrast, the amended version indicates that the Indaba
    “brings together various role players in reigniting economic growth amid the challenges of growth”.

The Minister has failed to respond to our joint open letter of 28 November 2017. In particular, the Minister has failed to provide the long list of information requested on numerous occasions by organisations – and formally from the Department through the Promotion of Access to Information Act – included in the list below.

The undersigned civil society organisations wish to make it clear that we regard the consultation around the IRP as inadequate, and susceptible to legal challenge. Furthermore, we do not regard the Energy Indaba as a legitimate process for the discussion of South Africa’s energy future – a discussion which should include members of civil society, particularly members of communities most impacted by the pollution and harmful effects of electricity generation; and labour.

The serious concerns that we have raised with the Minister remain, even after the meeting that was scheduled on 5 December 2017. We now await the publication of the IRP, following which we will decide the way forward, which may include further litigation.

 

GREENPEACE AFRICA

GROUNDWORK

EARTHLIFE AFRICA JOHANNESBURG

CENTRE FOR ENVIRONMENTAL RIGHTS

OTHERS