The recent comment period on the draft Integrated Resource Plan 2018 (IRP 2018) proved useful in bringing to the fore a number of important issues relating to the future of electricity generation in South Africa. The process also represented a refreshing departure from previous failed attempts at updating the plan in that it was more transparent and the conversations were increasingly technical in nature, rather than being clouded only in politics. Instead of nuclear intrigue, debates turned to the rationality – and cost – of the continued inclusion of arbitrary new-build limits on the amount of variable renewable energy that could be installed yearly. There were equally robust exchanges on the technology cost assumptions, as well as the prudence of the demand assumptions used in the draft document. And the logic of the policy adjustments proposed in the recommended plan was contested frankly.
The final outcome is not yet known, but the draft IRP 2018 and the comments mostly point to a return to rationality in electricity planning, following years of less-than-honest power brokering. This rationality was evident upfront in the document’s open acknowledgement that the cheapest way to meet South Africa’s future demand would be to take advantage of the steep fall in renewable-energy costs and build the power system around the country’s world-class solar and wind resources, with support from flexible generation solutions, such as gas.
The statement is remarkable in light of the fact that the country’s electricity system has, hitherto, been built on low-cost and abundant coal. It also represents a material departure from the assumptions used when the IRP 2010 was drafted. At that stage, the main policy adjustment related to a decision to support the inclusion of what were, at that stage, extremely expensive renewables. The changes that have swept the electricity world since then have been dramatic. Happily, they are playing to South Africa’s natural advantages and have the duel benefit of unlocking the country’s renewables resources that will enable it to meet its climate commitments in the absence of any price premium for consumers.
Nevertheless, the highly political and emotive topic of employment, especially in the coal sector, was not satisfactorily addressed in the update process, despite it being partially ventilated. This is not the fault of the IRP 2018, as the document is a long-term electricity-sector plan and not a social or labour plan. Therefore, once adopted, it is going to be essential for government to lead an inclusive process designed to forge labour and social plans that are not only fully aligned with the energy transition but also alive to the concerns of those being negatively affected.
The good news is that the traditional trade-off between cheap and clean electricity is disappearing, leaving headroom for future policy adjustments that focus primarily on cushioning those most vulnerable to the transition. The other piece of good news is that, overall, the renewable-energy technologies being proposed are more jobs- intensive than either coal or nuclear. Thirdly, there are already some international ‘just transition’ templates emerging, which could offer useful lessons for South Africa.
Indeed, the ingredients are all there for a win-win jobs compact in the electricity sector. Without one, though, the transition to a more sustainable system could come unstuck.