Mapping out SA's energy future

31 October 2010 - 02:00 By Brendan Peacock
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The Department of Energy is to submit its draft integrated electricity resource plan (IRP) for public discussion in November before making crucial decisions that will define SA's energy road map from early 2011 to 2030.

The IRP 2010 will attempt the delicate balancing act of keeping up with loftier ethical concerns of developed economies while seeking an affordable and secure supply of energy to meet SA's anticipated future demands.

The Department of Energy and an inter-ministerial committee must consider the country's future economic competitiveness while balancing four key elements: cost, security of supply, water usage and carbon emissions.

Not surprisingly, the "balanced scenario" that makes up the IRP 2010 most resembles the lowest-cost scenario, with just enough renewable energy to satisfy potential foreign funders and mollify first-world trading partners keen on reducing the world's carbon emissions in line with the Copenhagen Accord - an international climate change commitment that follows on from the Kyoto Protocol.

The balanced scenario will cost R860-billion, excluding the cost of distribution and transmission network infrastructure. This calls for SA to cut its carbon footprint by 30%, and it is only 8% above the price of the lowest-cost scenario.

Striving for the lowest-carbon scenario and the upper reaches of the Copenhagen agreement would have required an additional R790-billion (nearly 50% more funding), with a 40% cut in carbon emissions.

Likely to cause most public consternation is government's commitment to heavy reliance on coal and nuclear energy - with technologies given time to mature and become competitive from 2019.

It also provides for a medium-term risk mitigation plan (MTRMP), established to deal with possible changes and shortfalls between now and 2016, with the possibility of bringing more renewables into the mix. However, the IRP is loaded in favour of coal and nuclear from the outset.

This is largely because it is unclear how technologies in renewable energy will develop, making it difficult to commit to long-term plans.

Nuclear seems, by comparison, a sure bet because its output capacity and costs as the base load can be more easily calculated.

A significant hurdle for the IRP is that SA will need to start from scratch with any fully integrated energy resource system. A decision on the form and size of the nuclear facilities to be developed is needed as soon as possible, since nuclear developers will need to start work in 2013 to complete the infrastructure by 2023.

The framework for funding, partner selection and procurement must all be laid before 2013.

Other major questions to be resolved are who will fund and build all this infrastructure and Eskom's role within the new IRP.

The nuclear policy is not set in stone yet - it does not exclude the private sector, but the state is keen to be involved and the department is seeking guidance from cabinet on the issue of combining public and private funding.

There are other uncertainties: the growth path outlined in the IRP 2010 depends on assumptions about demand and projected capacity, as well as the intention to migrate to a less energy-intensive economy and become more of a knowledge economy.

The IRP trajectory is intended to support an estimated average economic growth rate of 4.6% over the next 20 years, meeting a projected demand of 52248MW, with adequate reserves. Demand-side management programmes are intended to be effective in a systematic reduction of demand by at least 3420MW.

Regardless of the plan followed, it is inevitable that SA's electricity prices will need to increase to a sustainable level, while still keeping the economy competitive. This will require dialogue with business, especially the Intensive User Group.

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