Tag Archives: ERC

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

 

 

Eskom threatens fastest renewable expansion

Mail and Guardian, 6 December, 2016.

Opposition from Eskom Holdings SOC Ltd. and government infighting threatens to sabotage the world’s fastest-growing green energy program.

Eskom is stalling on signing government-brokered deals to buy renewable energy from private producers, encouraged to develop capacity after outages over the past eight years hobbled the continent’s most industrialised nation. With the economy in the doldrums, the state utility says it no longer requires additional green power, arguing it’s not always available during peak demand periods and will push up prices for South African consumers.

Eskom’s reticence over renewables contrasts with its enthusiasm to find bidders for nuclear plants, even after the Energy Ministry last month proposed delaying new atomic reactors by 14 years. That contradiction reflects the schism at the heart of government, where President Jacob Zuma’s championing of nuclear power puts him at loggerheads with his Finance Minister Pravin Gordhan, who has questioned its affordability.

“There are strong political overtones to this,” said Professor Harald Winkler, director of University of Cape Town’s Energy Research Centre. “It doesn’t give investors in renewable energy consistency. It’s a way of exercising control by Eskom.”

Increasing Risk

Eskom has refused to sign off on an agreement to purchase 250 megawatts of power from two wind projects planned by Irish clean-energy developer Mainstream Renewable Power Ltd., and a deal with Saudi Arabia’s ACWA Power International to supply 100 megawatts of solar energy.

Eskom’s actions are “in contravention of government policy,” Mainstream Chief Executive Officer Eddie O’Connor said in a November 30 phone interview. “These guys have gone completely rogue. It’s increasing the risk of outside investors investing in South Africa fairly dramatically.”

Some projects haven’t been signed off because they are “very expensive,” Eskom spokesman Khulu Phasiwe said by phone.

“The price they are charging for their power is much higher than we are selling it for and higher than we are willing to pay,” he said. “The projects that came at a reasonable price, we were able to sign them on.”

Energy Minister Tina Joemat-Pettersson and Public Enterprises Minister Lynne Brown have done little to pull Eskom into line.

Here is the full article

Procurement models applied to IPP programmes in South Africa

EE Publishers, Brenda Martin and Harald Winkler, 27 August, 2014.

The Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) is largely viewed as a positive and innovative programme. We need a base-load procurement model that builds on the successes of the REIPPPP and extends these to base-load IPPs. Eskom’s future financial health presents a significant risk to procurement of renewables, thermal base-load and nuclear power. The contribution to socio-economic development should be extended to all other IPP procurement. There is significant risk that political considerations may override rational planning in relation to nuclear power. Procurement should be well-designed upfront, flexible, plans indicative, the regulator active and procurement more vibrantly competitive. 

This is an executive summary of a research report from the University of Cape Town’s Energy Research Centre.

Download the full report here

What is the procurement model in South Africa as it applies to renewable energy (RE) and base load (BL) independent power producer procurement programmes (IPPPP) and how might these be improved? What lessons have been learned in the REIPPPP? What challenges might the emerging BL IPPP programme face and how might these challenges be addressed? To what extent are lessons from RE applicable to BL?

This research paper provides conclusions from consideration of these questions, shares research findings, highlights remaining critical questions, and provides recommendations for the future.

Procurement is an aspect of governance, and improved governance is one of five goals of energy policy, as outlined in the 1998 White Paper, which considers procurement as “that step within planning during which government determines what is to be built; and which ends with the announcement of preferred bidder(s)”.

Research findings are based on primary data gathered through a literature review followed by interviews with 20 senior respondents from the following zones within the energy sector: government, business, investment, consultancy and advisory, labour and NGOs. A listing of secondary literature consulted is provided on the final pages of this report.

Read more…

Electricity plan ‘out of date’

Melanie Gosling | 07 May 2013 | Cape Times

SOUTH Africa’s electricity plan is out of date and could lead to the building of unneeded power stations at great cost – and higher electricity prices.

The proposed expansion of nuclear power stations should be delayed because more nuclear power would not be needed before at least 2029, and perhaps not until 2040.

These are some of the findings of a study, “Towards a New Power Plan”, commissioned by the National Planning Commission and compiled by UCT’s Energy Research Centre. Continue reading

South Africa: Nuclear Power’s Threat to Democracy

EarthLife Africa | 30 April 2013 | AllAfrica.com

OPINION

Without much fanfare, the Department of Energy has propelled the country towards a democratic crisis. In a briefing to Parliament’s Portfolio Committee on Energy (April 16, 2013), the Department of Energy stated that it would not be reviewing the country’s electricity plan (Integrated Resources Plan 2010) this year, and that the planned six new nuclear reactors were not up for review at any point in the future. The Department’s Director General, Nelisiwe Magubane, indicated that this was the view of Cabinet.

The possible purchase of 9600 MW of new nuclear power represents the most expensive procurement in the history of South Africa and will have long-term impact on the level of South Africa’s national debt.

The day after the Department’s briefing to Parliament, the National Planning Commission released a study, conducted by the University of Cape Town’s Energy Research Centre, into South Africa’s energy future. The headline messages from this study (Towards a New Energy Future, available at http://www.erc.uct.ac.za/) are that there is no need to invest in nuclear power for at least the next 15 to 25 years, that nuclear power is not cost-effective based on the latest cost data, and that South Africa can meet its commitments on carbon emissions without nuclear power. One of the reasons why nuclear is not required now is that the demand for electricity has grown slower than what the Department of Energy predicted back in 2010…

(The full NPC modelling report is also available here).

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