Industry association responds to draft IRP

The public participation process for SA’s Integrated Resources Plan 2016 update report (IRP2016) is an ideal opportunity for South African citizens to sway the long-term investment choices that will serve the country up to 2050. We don’t often have an opportunity to influence government policy, so this is a significant moment, not just for the energy industry, but for all South Africans.

The opportunity for public comment on the IRP2016 draws to a close on Friday 31 March and is expected to include valuable insights and opinions from organisations in the energy sector as well as the broader public. The IRP2016 is about three years overdue, which is a significant period considering that energy technology changes at a rapid rate. While the IRP2010 was last updated in 2013, that report was never confirmed and so the country has been working with an outdated energy plan for far too long. Having invited public input, the Department of Energy (DoE) has a moral obligation to consider all recommendations received. The general public have become well informed as to the long-term implications of various power supply options and are thus well-placed to influence the energy investment choice pathways up to mid-century.

SAREC’s submission indicates that the IRP process should be a purely techno-economic exercise providing rational input into the policy debate. The 2016 update process itself has detracted from the valuable capacity of the IRP modelling tool to identify the cost-optimal build and technology mix for the South African economy; this mix could result in electricity price competitiveness and tariff affordability.

The Renewable Energy Independent Power Producers Procurement Programme (REIPPPP) in South Africa has contributed significantly to the country’s economy since the publication of IRP2010, leading to massive direct foreign investment, job creation and socio-economic dividends. This alone demonstrates the importance of getting the IRP correct and creating market confidence. However, the past two years have seen significant delays to the REIPPPP which have dented confidence in South Africa as a serious destination for green energy investors, developers and equipment suppliers.

SAREC believes that renewable energy can play a significant role in the re-industrialisation of the country, transitioning away from the carbon-based minerals energy complex towards a more sustainable future. A scheduled, consistent renewable energy programme, which includes all available renewable energy technologies combined with a gas-build programme provides an opportunity to drive and sustain a power system which re-skills mineworkers to undertake 21st century jobs and economic opportunities.

Achieving a sustainable future requires a shared commitment from government, citizens and the industry – a commitment that extends beyond policy and planning, into practice. South Africa’s renewable energy industry is ready to take up the challenge.

Specific SAREC inputs to the IRP2016:

SAREC recommends that the IRP model should deal with the following factors:

  • The IRP process should adhere to predictable timelines and should draw on the best possible independent modelling resources. For instance, the continued lack of explanation for adoption of the IRP2013 Update report is unacceptable; independent research institutions should be included in the modelling process.
  • We note that concentrating solar power (CSP) was completely excluded and there is no allocation for CSP in the draft IRP2016 generation mix up to 2050. This seems to have been based on modelling assumptions that are outdated, do not reflect the current market reality, and do not acknowledge the dispatch ability and operational flexibility of CSP power stations.
  • Rational methodologies should be applied to the various generation technologies used in the IRP pricing assumptions. The current process effectively imposes a policy-adjusted scenario on electricity stakeholders and customers, with no allowance for transparent engagement on long term tariff effects. This could be regarded as an attempt to stifle debate and could result in undermined public confidence in the veracity of the IRP process.
  • DoE has failed to set out a credible argument for the use of annual build limits for wind and solar PV.
  • Any limitations imposed by the DoE on the annual build of renewables should be accompanied by rational explanations. Wind and solar PV were the only technologies with annual build constraints in the IRP update base case.
  • Modelled scenarios deviating from the least-cost, unconstrained scenario should be published by the DoE, in order to facilitate an informed debate.
  • The least cost, unconstrained scenario of the IRP should always be the default base case scenario. This does not mean that it should be the final policy adjusted version, but it is the one against which all artificial or policy-imposed constraints can be robustly measured.
  • Externalities such as decommissioning costs
  • A review of the setting of price assumptions for various technologies in the IRP
  • The risk of cost overruns and time delays, particularly on mega projects
  • The potential for public investment savings on embedded generation vs investment in mega projects

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