Archive Civil Society DEA DoE IRP IRP 2018 Parliament

Committee Report on Draft Integrated Resource Plan – Discussion with Deputy Minister

Energy

13 November 2018
Chairperson: Mr F Majola (ANC)

Meeting Summary

Committee Report on Draft Integrated Resource Plan

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▪ Coal – Some stakeholders were concerned about the reduced role of coal in the draft IRP and the impact that would have on job creation and base load power generation. The inclusion of two coal power stations would have a negative impact on the environment but it would be good for job creation. If the DOE included the two coal fired power stations it had to conduct additional studies such as the assessment of the environmental impact if coal goes ahead and the socio-economic impact on jobs if excluded.
▪ Hydro – DOE stated that the SA government had signed a treaty with the DRC on hydro power from Inga and that SA could not renege on the treaty agreements.
▪ Wind Energy Procurement gap – DOE had to assess the risk related to local jobs and manufacturing associated with the gap in procuring wind energy.
▪ Embedded Generation – DOE advised that the 200MW per annum was an arbitrary number and that it was not based on science or statistics. It would be assessed properly in the final plan.
▪ Nuclear Energy – DOE indicated that nuclear had been included in the energy scenarios and that it had been modelled as two 1500MW fleets. According to the Department, nuclear was one of the most expensive energy options but that it would test its assumptions against other suggestions made at the public hearings.
▪ Technology Costing – Given the uncertainty of future demand, technology and innovation, the IRP had to be flexible enough to respond to these changes. DOE agreed with this and advised that plans would be updated frequently to incorporate these developments.

The discussion by Members focused on nuclear energy, coal, gas, renewables, Eskom and the Grand Inga. Some Members felt coal and nuclear energy had to feature more prominently in the report and that the Inga project was not worth including due to excessive costs and the uncertainty about its viability.

Deputy Energy Minister Majola reminded Members that the Inga treaty was signed between SA and the DRC and approved by the National Assembly. A key point in the treaty was that it should not place any burden on the SA fiscus – that is, when electricity was purchased it had to be at “our” costs or lower. 

The Chairperson said that all Committee Members had to work together to finalise the report. He was hopeful that this could be achieved by the following week. There were important aspects to consider, especially on jobs and the impact of technology on environment. The dialogue on a Just Energy Transition was critical and the Committee had to apply its mind to search for answers on the scenarios that may play out – such as finding solutions for communities that currently made a living from coal mines and what would happen once the coal mines were gone.

Meeting report

The Chairperson commented that Members had not submitted written comments for the first draft report hence the second draft report presented at this meeting were based on verbal comments made by Members during the meeting of 6 November 2018. 

Deputy Minister of Energy, Thembi Majola, and senior Department of Energy (DOE) staff including Jacob Mbele, Deputy Director-General: Energy Programmes and Projects, and Mr Zizamele Mbambo, DDG: Nuclear Energy, attended the meeting. Other attendees from the general public were Ms Liz McDaid from SAFCEI as well as Project 90×2030 representatives and the media.

The following additions were pointed out by the Committee Researcher, Mr Sivuyile Maboda:
▪ Coal – some stakeholders were concerned about the reduced role of coal in the draft IRP and the impact that would have on job creation and base load power generation. The inclusion of two coal power stations would have a negative impact on the environment but it would be good for job creation. If the DOE included the two coal fired power stations it had to conduct further studies – such as the assessment of environmental impacts if coal goes ahead and the socio-economic impacts on jobs if excluded.
▪ Hydro – DOE stated that the SA government had signed a treaty with the DRC on hydro power from Inga and that SA could not renege on the treaty agreements.
▪ Wind Energy Procurement gap – DOE had to assess the risk related to local jobs and manufacturing associated with the gap in procuring wind energy.
▪ Embedded Generation – DOE advised that the 200MW per annum was an arbitrary number and that it was not based on science or statistics. It would be assessed properly in the final plan.
▪ Nuclear Energy – DOE indicated that nuclear had been included in the energy scenarios and that it had been modelled as two 1500MW fleets. According to the Department, nuclear was one of the most expensive energy options but that it would test its assumptions against other suggestions made at the public hearings.
▪ Technology Costing – Given the uncertainty of future demand, technology and innovation, the IRP had to be flexible enough to respond to these changes. DOE agreed with this and advised that plans would be updated frequently to incorporate these developments.

Discussion 
Ms T Mahambehlala (ANC) made some substantial comments on nuclear energy, coal, gas, renewables, Eskom and hydro from the Grand Inga. She said that there had not been enough time to enable Members to submit their written views to the Committee secretary.

Ms Mahambehlala said the comments on nuclear energy had to be those that were raised by stakeholders in the public hearings and not what DOE had proposed. According to her most of the views expressed at the hearings were in favour of nuclear. She said a majority view was based on the substance of the arguments advanced and not on the number of people that supported a view.

The majority view on gas was that it needed more clarity in the IRP as the country did not have gas (it would have to be imported). There was also opposition to the inclusion of future gas from fracking in the Karoo.

DOE had to address policy uncertainty in the IRP – there had to be a clear policy applicable to the whole country. She was concerned, as one province was already in the process of establishing its own energy policy, which was not correct, as all provinces had to adhere to a national policy.

She said the IRP had to clarify the position of Eskom, as many issues had been raised about the latter. The Committee had to decide whether it wanted to include a view on Eskom in its report.

She felt that the views on renewables were not comprehensive enough as not all aspects raised at the public hearings were included such as the risk to birds associated with wind energy. The IRP was biased towards renewables and had to include a more balanced view.

On the Grand Inga she said that although there were agreements in place, it had to be recorded that the majority view at the public hearings were concerned about the political instability in the DRC and the impact of that on the viability of the Inga hydro scheme, as well as cost overruns.

She felt strongly that government had to guard against creating ghost towns if coal is given a lesser role. Coal was the country’s premier source of energy and had to be given a more prominent role in the IRP.

She said the Committee had to meet with support staff to ensure that all relevant points were included in the report for a more balanced view of the IRP – the Committee could not be biased towards any view.

Mr J Esterhuizen (IFP) said he agreed with the views of Ms Mahambehlala and raised the following points.

He said that the Grand Inga was a pipe dream and would not materialise. It was fundamentally flawed and that the SA government would not be able to exercise any control over the project. The World Bank had already withdrawn support for the project. SA had already paid $10m and the additional R400m needed for the project would result in very expensive electricity costs that the country could not afford. 

He said that nuclear power could provide a sufficient electricity source but that real costs had to be used to compare it with other sources such as renewables.

There was no clear policy on gas or on coal which would always remain important for the country. He was concerned about Eskom’s sub-optimal productivity and high prices.

Ms T Gqada (DA) apologised for not sending her comments in time and said these would be submitted later in the day. She was concerned about the lack of transparency about the Inga Hydro project and felt that as a country, we cannot afford it. The Committee needed more information on Inga to make a proper assessment.

Deputy Minister Majola commented that she was not sure about  the $10m and what the Committee member was referring to, as well as the further R400m required for the project. She reminded Members that the Inga treaty was signed between SA and the DRC with approval by the National Assembly. A key point in the treaty was that it should place any burden on the SA fiscus – that is, when electricity was purchased it had to be at “our” costs or lower. 

Mr R Mavunda (ANC) said that given the comments from Members thus far, he proposed that any recommendations on the IRP be delayed until the Committee had a further opportunity to study all the inputs and views raised at this meeting.

Ms Z Faku agreed with Mr Mavunda. The Committee needed more time to discuss the complex issues in the IRP.

Mr Esterhuizen said that his views were based on factual information. The amount of R400m was sourced from information provided by the World Bank. Power from Inga would be too costly. Accurate cost information was critical to the debate on the IRP

The Deputy Minister said that perhaps it would be opportune for the Committee to take a bit more time to finalise the report, as the IRP was important to the country. It was imperative that all had to work together to put SA first – plans had to be in the best interest of South Africa. We have to grow our industrial and manufacturing base, fast-track localisation and create more jobs. It was important that jobs were kept in the country and that we do not export jobs. We have to learn from global experience and adapt these to suit our local conditions.

She mentioned that a new organisation had been formed within SADC that would provide support for renewable energy projects throughout Southern Africa.

Mr Esterhuizen asked if it was possible to form a small subcommittee within the Committee to help finalise the Committee report on the IRP.

The Chairperson said that all Committee Members had to work together to finalise the report. He was hopeful that this could be achieved by the following week. There were important aspects to consider, especially energy and jobs as well as the impact of technology on the environment. The dialogue on a “Just Energy Transition” was critical and he emphasised that the Committee had to really apply its mind to search for answers on the various scenarios at play – such as finding solutions for communities that currently made a living from coal mines and what would happen once the coal mines were gone.

The meeting was adjourned.Following committee

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