In a crucial policy moment for SA, and not without criticism, government’s new Independent Resource Plan (IRP) was released last week. It continues to hold the line of an energy mix dominated by coal, alongside independent power producers and renewables, writes Legalbrief. At last week’s ministerial briefing, gas was described as the future 'game changer' as mini-nuclear also popped up, notes a Daily Maverick analysis. The IRP outlines the need to extend the lifespan of Koeberg, the nuclear power station outside Cape Town, by 20 years to 2044, and then to take that lead time to build ‘small’ modular nuclear generators. ‘We build our nuclear capacity now; we need not wait until 2044,’ said Mineral Resources Minister Gwede Mantashe. ‘We are not going to go big scale.’ But IRP2019 seemed to hammer home that coal remained the mainstay of SA’s energy mix. That IRP 2019 did not announce major shifts seems to be based on government’s view that, as Mantashe put it, ‘none of the assumption since the IRP2010 have changed’. ‘And so coal remains central despite concerns about emissions pollution, particularly in Mpumalanga, the new carbon tax and the pressure faced to retrain and re-skill tens of thousands of workers in those coal power stations representing the 24 100MW to be decommissioned by 2050,’ the analysis states.
‘But the reality is SA faces a transition, given the decommissioning of old coal power stations and the unbundling of Eskom into three entities on generation, transmission and distribution,’ the analysis goes on to say. ‘While the IRP may not necessarily deal with any of this in detail – a special paper on Eskom has been pending since February – it does cite “just transition” as one of its nine policy positions,’ it notes. ‘Talk is the Eskom special paper would finally be released by end of October in line with the Medium-Term Budget Policy Statement (MTBPS), which is expected to talk to Eskom and its dire finances,’ the analysis notes.
- Coal will continue to play a significant role in electricity generation as the country has the resource in abundance. 1 500MW of new coal-fired power will be procured by 2030.
- IRP 2019 provides for the procurement of an additional 1 860MW of nuclear power to be commissioned by 2024, which represents the 20 year extension of the life of the Koeberg nuclear power plant in Cape Town specifically. Government will commence preparations for a nuclear build programme to the extent of 2 500MW at a pace and scale that the country can afford because it is a no-regret option in the long term.
- 1 000 MW of new gas to power will be installed by 2023 and 2 000 MW will be installed by 2027.
- 6 000 MW of new solar PV capacity and 14 400 MW of new wind power capacity will be commissioned by 2030 under IRP 2019.
- In support of regional integration and energy trading, SA has entered into a Treaty for the development of, and the purchase of 2 500MW of hydro-electric power from, the Grand Inga Project in the Democratic Republic of Congo (DRC).
- IRP 2019 provides for uncapped procurement of Distributed Generation up to and including 2022, and thereafter, procurement would be capped at 500MW per year up to 2030.
See more on this in POLICY WATCH section (below)
Commenting on coal, Mantashe said the country has 16 coal-fired power stations. ‘They will be around for a long time,’ he said. ‘We are going to still have a big volume of electricity generation of coal. Therefore we are cautioning those who are saying coal is coming to an end – we have 16 power stations which are coal-fired. That is the reality of today. Coal will continue to play a significant role,’ Mantashe said. Mantashe said investors in coal were urged to direct funds towards efficient coal technologies, underground coal gasification and the development of carbon capture and storage – so that coal resources could be used in an ‘environmentally responsible’ way. Mantashe said for energy demand to be met, the economy would need ‘all’ technologies. ‘If we do not have technologies we do not have secure supply of energy,’ he said.
The government wants to attract investment in cutting-edge coal technologies to reduce the impact of its coal-fired power generation, President Cyril Ramaphosa said yesterday. A BusinessLIVE report notes that, in a weekly newsletter, issued from the desk of the President, Ramaphosa said: ‘Because coal remains the dominant energy source for our country we will be focusing on attracting investment in high-efficiency, low-emission coal technologies.’ Such advanced technologies are used to reduce greenhouse gas emissions levels, airborne pollutants and other environmental impacts. The IRP also envisages a move towards steadily reducing emissions through a greater uptake of renewable power. While the IRP spells out the country’s long-term plans, Ramaphosa said SA must address its most pressing challenge, which is getting Eskom out of its financial and operational crisis. The urgency with which government must act was made clearer when load-shedding was reinstituted, Ramaphosa said. The government will soon announce the appointment of a new Eskom CEO who, together with a strengthened board, will be tasked with turning the entity around. They will be guided by the path set out in the special paper on Eskom, which will also be released shortly.
The IRP2019 warns of ‘an immediate risk of huge power shortages’ that could last four years due to Eskom’s poor performance. A Business Day report notes the plan maps out how SA will meet its energy needs by 2030, when coal is expected to account for 43% of installed capacity, while wind and solar power will account for 33%. Aside from long-term additional power capacity, the plan warns of an immediate risk of energy shortages. Non-performing units at three of Eskom’s older power stations may need to be retired earlier than expected. New power stations Medupi and Kusile have also been ‘de-rated’ – as they are unable to provide the full complement of energy for their rating. The risk of energy shortages gets worse when considering that many of Eskom’s plants do not comply with environmental standards and are unlikely to meet the deadline for compliance due to the utility’s constrained finances and project execution delays, notes the report. If non-compliant power stations were to be shut down, ‘the reality of power disruptions manifests significantly from 2019 onwards’, the IRP says. Distributed generation refers to small-scale, onsite, power generation for own use. While the IRP says that increasing the distributed generation allocation presents an opportunity to address the immediate energy shortage, it is short on further detail. Lifting regulatory barriers for distributed electricity generation is simple. It requires the Energy Minister to gazette an amendment to schedule 2 of the Electricity Regulation Act that exempts small projects up to 10MW from having to obtain a licence from the National Energy Regulator and instead require the regulator to institute an efficient, automatic registration system. The government could also issue directives to Eskom and municipalities, backed by more explicit requirements in transmission and distribution licences, for grid-connection and wheeling procedures to be expedited.