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No new nuclear in IRP update as time horizon is trimmed to 2030

Energy Minister Jeff Radebe

Energy Minister Jeff Radebe

27th August 2018

By: Terence Creamer

Creamer Media Editor

     

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Integrated Resource Plan 2018 for Public Comment  (3.38 MB)

Energy Minister Jeff Radebe released the much-anticipated draft updated Integrated Resource Plan (IRP) for public comment on Monday, offering stakeholders 60 days to provide written feedback.
 
The comment period was extended from the 30 days initially envisaged after a meeting of the National Economic Development and Labour Council on Friday, where business, labour and community representatives urged the Minister to provide more time for input.
 
Radebe expressed the hope that Cabinet would adopt the ‘IRP 2018’ soon after the culmination of the comment period to ensure that there is certainty around South Africa’s electricity generation roadmap for the next 12 years.
 
Limiting the IRP’s time horizon to 2030 was one of the major adjustments made to the document when compared with an initial draft update released in November 2016, which outlined a base case for allocations until 2050.
 
That draft IRP was heavily criticised for having deviated from a least-cost generation mix by imposing artificial limits on the amount of variable renewable energy that could be introduced yearly.
 
The IRP 2018 draft continues to impose policy adjustments on the least-cost generation mix, including the yearly limits on renewables. However, these adjustments, and their costs, have been fully disclosed.
 
The document also states explicitly that the “least-cost plan” to 2030 contained only solar photovoltaic (PV), onshore wind, and gas and, thus, included no new nuclear and new coal.
 
Nevertheless, five policy adjustments have been made to that least-cost path in IRP 2018, including:

  • The retention of annual build limits on renewables for the period up to 2030.
  • The inclusion of 1 000 MW of coal-to-power in 2023 and 2024, based on two coal independent power producer (IPP) projects already procured by government.
  • The inclusion of 2 500 MW of hydropower in 2030 to facilitate a treaty signed by South Africa and the Democratic Republic of Congo for the Inga Hydro Power Project.
  • The utilisation of the existing solar PV, wind and gas allocations in the plan to enable, through Ministerial determinations, IPP procurement.
  • And, allocations of 200 MW a year for certain categories of 'generation-for-own-use' of between 1 MW to 10 MW, starting in 2018. These allocations will not be discounted off the capacity allocations in the plan, but will be considered during the issuing of Ministerial determinations.

 
As a result, the policy-adjusted plan includes the following new additional capacity by 2030: 1 000 MW of coal, 2 500 MW from hydro, 5 670 MW of solar PV, 8 100 MW of wind and 8 100 MW from gas.

Should the new capacity be introduced as envisaged, by 2030 South Africa's electricity will be made up as follows: 34 000 MW of coal (46%); 1 860 MW of nuclear (2.5%); 4 696 MW of hydro (6%); 2 912 MW of pumped storage (4%); 7 958 MW of solar PV (10%); 11 442 MW of wind (15%); 11 930 MW of gas (16%) and 600 MW of concentrated solar power (1%).

However, owing to the variability of supply from wind and solar PV, 65% of actual energy arising from this installed base will arise in the form of coal, while nuclear will contribute 4% of the electrical energy generated in 2030.

Despite the inclusion of 1 000 MW of IPP coal and the completion of Medupi and Kusile, the IRP 2018 still assumes that South Africa’s coal-fired capacity will fall from 39 000 MW currently to 34 000 MW in 2030, owing to the decommissioning of 12 000 MW of Eskom capacity between 2020 and 2030.

Optimistically, the plan also assumes that the hydro capacity from Inga will be introduced in 2030.

A major new inclusion is 2 600 MW of embedded generation between 2018 and 2030, while the other big winner is gas, the capacity of which is assumed to grow to a material 12 000 MW by 2030.

Radebe said that an IRP to 2050 would still be considered, which could lead to the introduction of other technologies, such as nuclear and clean coal, in future.
 
However, that longer-horizon IRP would also be informed by four studies covering:

  • The socioeconomic impact of the decommissioning of old coal-fired power plants that would have reached their end of life.
  • A detailed analysis of gas supply options to better understand the technical and financial risks and required mitigations for a renewable energy and gas dominated electricity generation mix post 2030.
  • A detailed analysis of the appropriate level of penetration of renewable energy in the South African national grid to better understand the technical risks and mitigations required to ensure security of supply is maintained during the transition to a low carbon future.
  • And detailed technical, cost and economic benefit analysis of other clean energy technologies such as clean coal technology, nuclear and others.

KEY ASSUMPTIONS

The assumptions used in the draft IRP 2018 deviate materially from those employed in the now sorely out-dated IRP 2010, which assumed that 9 600 MW of new nuclear capacity would be installed by 2030.

Firstly, the demand growth assumptions have been overhauled to reflect falling, rather than growing, electricity consumption, as well as a decoupling of gross domestic product (GDP) growth from electricity growth.

Since the IRP 2010’s promulgation in March 2011, actual net electricity energy sent-out declined at an average compound rate of -0.6%, against an IRP-2010 assumption of yearly growth of 3%. As a result, actual net electricity sent-out in 2016 was at 244 TWh compared with an IRP 2010 assumption of 296 TWh – an 18% deviation. A median forecast in the IRP, based on 4.26% GDP growth by 2030, results in electricity demand growth of 1.8% by 2030 and 1.4% by 2050.

Technology and fuel-cost assumptions have also been revised in the draft IRP. The assumptions are based primarily on analysis conducted by the Electric Power Research Institute, as adjusted in January 2017. However, for solar PV, wind, coal and sugar bagasse the costs were derived using average actual costs achieved during procurement programmes pursued by the IPP Office.

Radebe appealed to the public and the stakeholders to engage with the report with the understanding that a “just transition required that, while we move with speed to respond to the changing landscape, we take calculated steps to ensure we leave no one behind”.

Edited by Creamer Media Reporter

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