The head of State-owned power utility Eskom has called for urgent “guidance” from Energy Minister Dipuo Peters on the implementation of South Africa’s Integrated Resource Plan (IRP) for electricity, including the role that Eskom will play in the execution of the plan, which runs from 2010 to 2030.
The State-owned utility said greater certainty was required if South Africa was to avoid the “mistake” of the recent past, when it began adding new capacity “too late” to meet growing demand.
Speaking at African Utility Week, in Johannesburg, CE Brian Dames acknowledged that there had been material implementation progress in the area of renewable energy.
This progress had taken place under government’s Renewable Energy Independent Power Producer Programme, through which South Africa was procuring 3 725 MW of new renewables capacity, to be introduced to the electricity mix between 2014 and 2016.
To date, the Department of Energy and the National Treasury had selected 47 preferred bidders during two bid windows. These bidders collectively represented renewables capacity of 2 459.4 MW and a likely combined investment into the South African economy of around R70-billion. Overall, the programme was expected to attract investment of around R100-billion between 2012 and 2016.
“[But] it is the big base-load decisions that need to be made early,” Dames warned, noting that it took up to ten years to implement some base-load projects, such as nuclear energy projects.
The IRP anticipated the addition of 9 600 MW of new nuclear capacity by 2030, with the first 1 600 MW meant to be added during 2023. However, Peters had already warned of a year delay, owing to the work conducted on nuclear safety following the Fukushima nuclear crisis, in Japan.
Eskom’s Kusile coal-fired power station project, Dames said, would be completed by around 2019. But future project implementation certainty was required soon “if the next power station needs to operational by 2020”.
“What is very important is that the decisions to implement this plan [the IRP] be made very soon, as the electricity industry is a long-term industry [and] you don’t just dream up power stations, or investments in power stations. It takes, sometimes, ten years to build new base-load power stations.”
Dames forecast that the South African electricity sector would evolve into a “hybrid” industry, embracing both large systems and elements of distributed power, whereby small producers and even households could feed into the grid.
The future mix would still embrace coal, but would have far more renewables and nuclear, with the addition of natural gas, or shale gas, as a possible “game changer”.
Eskom, which had a mandate to supply 70% of future generation, had the “full intention” of remaining a “dominant” electricity supply industry participant and would expand its role in the African electricity supply sector.
But to play such a role, decisions around the selection of base-load projects and the allocation of those projects to developers was required.
“As a country, we should not make the same mistake again of starting too late. We need to keep thinking ahead and keep on investing in infrastructure. We need the policies and the long-term price path to support the public and private sector in making the necessary investments in these long-term assets,” Dames asserted.