Important decisions regarding the implementation of South Africa’s Integrated Resource Plan (IRP) 2010 had to be made urgently to secure the country’s power supply, State utility Eskom delivery unit head Kannan Lakmeeharan said Tuesday.

“We have created momentum with the current Independent Power Producer Procurement Programme and Eskom’s new built programme; but, we have to continue with this momentum.”

In addition to ramping up implementation of these programmes, Lakmeeharan said private sector involvement would be important in developing South Africa’s power generation capacity going forward.

“Although we [Eskom] currently supply 95% of electricity demand, we cannot continue doing it on our own. We welcome international private sector involvement, to partner with us in meeting the future electricity needs of the country,” he stated.

Lakmeerharan indicated that Eskom could meet the country’s future power requirements by, among others, considering partnership opportunities in the Southern- and Central Africa regions.

“Africa and South Africa is facing a challenging, but exciting period…Africa is where the growth is, but we need bold and immediate decisions, we have to put infrastructure in place that allows the economy to grow, while ensuring that all sectors of our economy participate.”

South Africa needed a robust transmission grid to create flexibility and allow resources to be accessed from throughout South Africa and the region. “This must be a strategic investment by government,” Lakmeerharan noted.

However, he added that energy storage and smart grid technologies were maturing and would be the key to development in the power sector and meeting residential and commercial power needs.

In terms of funding for renewable energy programmes, Lakmeerharan said South Africa could learn from the US and Europe where such programmes were not sustainable. “We have to create alternative mechanisms to support the sectors and meet the targets,” he noted.

Department of Energy deputy director-general Omphi Aphane said financing of new power generation infrastructure should come from South Africans, either as taxpayers or tariff payers, with the user-charger funding mechanism accepted at the most economically efficient.

However, this would lead to steep electricity tariff increases.

“Apart from inflationary risks, this causes a situation of economic hardship for the poor,” Aphane added.

He said addressing concerns about the poor was primarily a function of how the country’s municipalities determined tariffs at domestic level.

“Mechanisms for cushioning the poor, solar heaters, inclining block tariffs and basic services tariffs can be applied. Therefore, this problem should be isolated from the bigger problem of incorrect pricing to the big energy users who must bare the brunt of the increases.”

He emphasised that tariffs had to rise marginally if South Africa’s industry was to become sustainable and its energy security improved.

Aphane said South Africa’s energy mix going forward would be based on a combination of coal, nuclear and renewable energy, with energy efficiency at its heart.

The gap between electricity supply and demand in South Africa was recently estimated to be about 90 TWh, and is warding off investment.

“The consequence is inadequate investment in generation capacity over the last 20 years, which has now caught up with us. In 2008, this led to widespread load shedding,” Aphane said.

With about 3.2-million people in South Africa still not having access to electricity, substantial capital investment in capacity, including alternative and other environmentally benign technologies, would be required.

However, the recent downgrade by the rating agencies of South Africa’s credit rating also added to investors being hesitant.

Aphane said the downgrade was “unfortunate and misguided”.

“South Africa is a very open investment destination; we have the legal, regulatory, financial and infrastructural systems in place to make it attractive for investment,” he stated.