The South African Independent Power Producer Association (Saippa) believes that the draft update of the Integrated Resource Plan (IRP) fails to adequately cater for the introduction of private power generation to address what it believes to be “artificially suppressed” demand – demand that could return over the medium term should supply-side confidence be restored.

Saippa MD Doug Kuni acknowledges that power consumption has fallen since the load-shedding crisis of 2008. But he tells Engineering News Online that the document confuses electricity consumption with demand, with consumption having been constrained directly by actions taken by Eskom to stabilise its tight system.

The IRP update is premised on the aspirational economic growth target of 5.4% contained in the National Development Plan, which its drafters extrapolate should yield average yearly electricity demand growth of 2.7%.

Some observers believe both figures might already be too optimistic (at least over the short term), owing to the fact that the South African economy is growing at levels of closer to 2%, while electricity consumption has fallen to levels last seen in 2006.

But Saippa management committee member Brian Day argues that it remains uncertain whether the lower levels of consumption have been driven primarily by economic circumstances and greater energy efficiency, or by the shortages of electricity and the associated price increases and demand-dampening programmes. “If the power crisis had not happened what would consumption have been?”

Day accepts that not all pre-crisis demand would return, as projects have been shelved or relocated. But conflating consumption with demand leads to “flawed” assumptions, which also tend to conflict with other policy goals, most notably the desire for higher levels of industrialisation and beneficiation. There is a case to be made for higher levels of investment in infrastructure to catalyse economic growth and industrialisation, he argues.

“The IRP’s emphasis on the transition to a lower-energy-intensity economy may come at the expense of downstream beneficiation and South Africa completing its industrialisation journey.”

To illustrate the scale of this conceivable suppressed demand Kuni and Day cite a recent example of a Saippa member receiving interest from private consumers representing two times the proposed plant’s anticipated output. The project did not proceed, however, owing to regulatory constraints, most notably the lack of clarity on competitive wheeling tariffs. From this example and other analysis conducted, the organisation estimates there to be a 4 000 MW to 5 000 MW deficit in the system, which is not reflected in the IRP update.

Kuni says the document also fails to offer credible supply-side remedies to mitigate the prospect of Eskom failing to meet its already revised schedule for introduction of power from the Medupi and Kusile power stations.

In July last year, Eskom announced that the start up of Unit 6 had been delayed until the “second half of 2014” from its already deferred start of the end of 2013. The postponement was attributed partly to the failure of boiler protection system (BPS) factory acceptance tests, as well as problems relating to boiler welds and persistent labour strife.

Outgoing CEO Brian Dames has reaffirmed the current schedule, notwithstanding the group’s recent decision to appoint Siemens to replace Alstom as the BPS supplier for Medupi Units 6 and 5 – a move that has raised fears of further delays, owing to the interface challenges posed by such a hybrid software solution. These project interfaces are being managed by an Eskom technical team, which will supervise the execution of the system for the two units.

“As things stand, there are two crucial projects that are not going to come into the system as outlined in the IRP. My question is: ‘What is South Africa’s Plan B,” Kuni muses.

He argues that the final version of the plan needs to take account of both schedule slippages and demand suppression by having a larger allocation for cogeneration and private baseload projects. However, he is quick to add that few, if any, of these projects will materialise unless the regulatory constraints to the introduction of independent power producers are removed.

Saippa is also unhappy with the low level of consultation that has surrounded the update process, as it believes there should have been more opportunity to engage with the assumptions and the model used to generate those assumptions. Such a platform would also have enabled it to raise weaknesses with the central-planning approach being pursued, as well as interrogate the current delays relating to the release of requests for proposal for private baseload and cogeneration projects.

Broader consultation would have also created an opportunity for new thinking on issues as diverse as risk mitigation in the instance where Eskom’s large megaprojects experience further delays, to the prospect of catering for greater consumer choice. “Couldn’t there be an opportunity for a wine producer, for example, to choose to be supplied from renewable-energy providers in an effort to improve its environmental credentials in domestic and foreign markets,” Day asks.

Nevertheless, Saippa will make a submission by the February 7 deadline and will eagerly await the publication of the final IRP, which is scheduled for sometime in March.