News that bid documentation is finally being prepared for the so-called emergency procurement of 2 000 MW of electricity generation from independent power producers (IPPs) is incredibly ironic.
For one, this ‘emergency’ was confirmed all the way back on October 18 last year at the release of the much-delayed 2019 edition of the Integrated Resource Plan, or IRP 2019. At the time, the Department of Mineral Resources and Energy (DMRE) indicated that they would be seeking urgent solutions to deal with a supply gap of up to 3 000 MW, but then took no immediate action.
By December, Eskom was again resorting to the frequent use of load-shedding to prevent a system collapse, even taking the unprecedented step of declaring Stage 6 load-shedding on December 9. Two days later, the State-owned utility warned of a 5 000 MW shortfall that would endure for at least two years while it took steps to address a coal-fleet maintenance backlog.
On December 13, the DMRE finally released a request for information to inform the procurement of between 2 000 MW and 3 000 MW of power generation capacity that could be “grid connected in the shortest time at the least possible cost”. It set a response deadline of January 31.
In parallel, business, municipalities and the IPP industry continued to urge government to simply implement the IRP 2019, using the document’s open-ended allocation, up until 2023, for distributed generation to facilitate self-generation investments. Not only could these be introduced at speed, they could be built without burdening government’s increasingly threadbare Budget.
Instead, in late February, the DMRE requested the National Energy Regulator of South Africa’s (Nersa’s) concurrence on two Ministerial determinations in line with Section 34 of the Electricity Regulation Act. The first related to the 2 000 MW of emergency power and the second to the technologies allocated in the IRP 2019. As with the department itself, Nersa showed little urgency, giving itself three months to concur with the first determination and six months to concur with the second.
Had it not been for the Covid-19 pandemic, South Africans would have been in for a cold dark winter, with ongoing load-shedding. The pandemic-induced demand collapse has not done away with the fundamental need for new generation, which will be required even in the absence of growth, owing to planned coal plant decommissioning.
The short-term gap is, thus, arguably no longer the problem it once was, with Eskom’s opportunistic maintenance having helped reduce partial load losses. In addition, the utility is at an advanced stage of securing 917 MW in supply- and demand-side relief, including 129 MW from industry and 128 MW in surplus supply available from existing wind and solar farms.
The real emergency lies not in the procurement of expensive short-term generation, but rather with the continued delays in implementing the IRP 2019.