Eskom IRP

Massive grid investment needed to unlock IRP’s 30GW-by-2030 vision

Massive grid investment needed to unlock IRP’s 30GW-by-2030 vision

Photo by Creamer Media

20TH OCTOBER 2020

BY: TERENCE CREAMER
CREAMER MEDIA EDITOR

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State-owned electricity utility Eskom is warning that a significant and accelerated expansion of South Africa’s grid infrastructure, beyond that catered for by its current R118-billion investment plan to 2030, is required to integrate the 30 GW of mainly wind and solar generators that will have to be introduced by the end of the decade to ensure security of supply.

Group executive for transmission Segomoco Scheppers confirmed on Tuesday that Eskom’s grid-related investment plans had been “moderated” in light of financial constraints and that a significant amount of additional investment would be required to accommodate the new generation outlined in the Integrated Resources Plan of 2019 (IRP2019).

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Speaking during consultations with stakeholders on Eskom’s latest yearly Transmission Development Plan (TDP), which will be published by the end of November, transmission grid planning manager Leslie Naidoo said that, based on network requirements for sustainability, R143-billion should be invested over the coming ten years.

Instead, the utility’s “realistic” capital expenditure plan to 2030 was premised on investments of only R118-billion, made up of capacity expansions (R87-billion), refurbishments (R19-billion), production equipment (R674-million), environmental impact assessments and servitude acquisitions (R3-billion), new telecoms infrastructure (R4-billion) and strategic spares (R4-billion).

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Naidoo said the IRP2019 required an accelerated TDP execution plan, especially for the coming five years, owing to the fact the generation plan envisaged the integration of 9.8 GW more generation between 2022 and 2025 than had been indicated in the draft IRP2018, on which its previous TDP had been based.

Underlining the scale of the challenge, senior manager for grid planning Ronald Marais said that, over the coming decade the grid would need to integrate nearly 32 GW of new energy generation, mostly in the form of wind and solar photovoltaic, and additional dispatch capacity, including battery storage.

These additions were required irrespective of demand, which had moderated owing to weak economic growth and, more recently, because of the Covid-19 pandemic, as nearly 9.5 GW of old coal and gas plant would be decommissioned by 2030.

“Such a generation build would be 69% greater than the country’s previous decade of maximum build, which occurred between 1981 and 1990, when nearly 19 GW was added. It is also 105% greater than the previous decade’s build, between 2011 and 2020, when 15 GW was added,” Marais explained.

“Transmission expansions are critical to create access for these new energy sources, many of which will also be in locations where there is no or limited grid infrastructure currently.”

Marais reiterated that the spatial footprint of South Africa’s generation sources would shift materially in the coming decades, as renewables generation, in the south, replaced coal plants, in the north.

There would be surplus grid infrastructure available in Mpumalanga as the coal plants were decommissioned. Nevertheless, he questioned whether it would be fully absorbed given that the yields of wind and solar generators in the province (and thus their competitiveness) would be materially lower than those located in areas with better wind and solar resources.

Therefore, the development of new south-north transmission corridors – able to transport the renewable electricity produced in the Eastern, Western and Northern Cape provinces to the areas of large demand, such as Gauteng – should be prioritised.

“Ideally, this buildout should be performed strategically in order to ensure that the grid infrastructure is in place ahead of time so that those wishing to build generators able to deliver the lowest-cost renewable energy are not prevented from doing so.”

Marais said that several funders, including those offering “green finance” to accelerate South Africa’s transition from coal to renewables, had already expressed an eagerness to fund the development of the country’s grid infrastructure.

Such funding could only be unlocked, however, once such lenders felt confident that South Africa’s electricity tariffs were adequate to cover both the debt and the associated interest.

Naidoo indicated that the previous TDP, released in late 2019, as well as the tariffs received under the regulator-adjudicated fourth multiyear price determination, which governs tariffs until the end of March 2022, were based on the draft IRP2018 rather than the IRP2019 and its front-loaded build schedule.

“However, we hope that, with your support and through collaboration with various key stakeholders, we can all own this plan and promote its funding and execution to co-create an energy future in support of the economic growth of our country,” Scheppers told participants during the virtual release of details to be included in the 2020 version of the TDP.

“There is a clear and compelling case for significant transmission network expansion critical for the connection of utility-scale renewable generation projects, mainly wind and solar, in line with policy direction highlighted in the IRP2019 and the Grid Code, namely, to diversify the country’s energy mix and to provide non-discriminatory access to the grid.” 

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