Pragmatism and common-sense in energy planning



 

The Department of Energy released its revised version of the Integrated Resource Plan (IRP) 2030, which has been updated to cater for South Africa’s energy needs up to 2050, on 22 November 2016.

TC Madikane, SAIEE president

Preliminary results shared by the Department of Energy (DoE) show that some quality work has been done by the interdepartmental team. Many stakeholders take strong positions in one direction or the other, most of them very emotional.

This is understandable seeing that energy planning inherently results in the largest capital investment a country can make. Where billions of dollars are involved, there are vested interests. Furthermore, climate issues have come strongly to the fore in recent years, in a way unimaginable a few decades ago. Energy has become more than a matter of science and engineering; it is now a social science matter.

The SAIEE is a voluntary association recognised by the Engineering Council of South Africa, a body established under “The Engineering Profession Act” which is in turn envisaged by the “Council for the Built Environment Act”. It directly represents 7000 electrical engineering members, many of them working directly in the energy generation, transmission and distribution fields. Many more work in these fields but are not our members. It is imperative therefore that the Institute provides guidance to the process of energy planning in an unemotional manner.

The process of long-range energy planning is a complex mathematical least-cost optimisation exercise involving a variety of variables and scenarios, such as demand projections, required reserve margins, imports/exports, energy efficiency, demand response, decommissioning of plant, all available primary energy options, ancillary services, capital and operating cost trajectory, transmission grid integration costs and constraints such as coal availability, emissions (NOx, SOx, CO2), water use, grid stability and daily plant flexibility. All valid permutations are considered. Variables are easy to identify but the subjectivity is in predicting the future. Here stakeholders must table credible views without necessarily forcing a consensus view.

A secondary benefit of the least-cost optimisation approach is that it gives indicative future prices of electricity. Effectively, the elusive long-term price-path that we have been lamenting the lack of is made available in this way.

Energy options available for South Africa are traditional coal, clean coal, nuclear, renewables, hydro and gas amongst others. South Africa’s growth, at an affordable price, comes first. Our commitments to reducing green-house gas (GHG) emissions must be met. This means that every effort must be made to meet the COP21 targets by transforming the energy sector, which is the biggest contributor to emissions. Here hydro, nuclear and renewables become attractive. But again, to avoid a one-dimensional non-optimal approach, the contributions of these technologies will only be determined by the optimisation model.

A key outcome to strive for is in this exercise is ‘market-clearing’, where all the product supplied is consumed and there is no left over supply or demand. Energy demand modelling will need to be more reasonable this time around, as opposed to the IRP2010 exercise that took government’s aspirations of 6% GDP growth as a given.

One trap to avoid, which we unfortunately have seen many stakeholders fall head-first into, is to make rash statements about choices. It is incorrect to say “Nuclear is expensive”, “Renewables are expensive”, “Coal must be eliminated altogether”, etc.

In fact, it is downright irresponsible. Nuclear is the only credible base load option that is low-carbon (at about 1% of coal). Renewables costs are steadily reducing and challenging grid parity, while storage will make them better at supporting base load. Coal is abundant in South Africa. Clean coal technologies are now available, with a potential for low emission solutions in the near future. All options are on the table. Only a well-constructed model with the right parameters and reasonable assumptions can provide a credible answer.

A criticism that has been levelled at the current process is that it has lacked transparency. Some interested parties with knowledge of modelling methodologies have requested to see the source code and data set assumptions. This is a reasonable request. Denying these requests has the unintended consequence of eroding trust in the process. Government may be perceived to be pre-judging the outcome of the studies in favour of some biased position.

It is the Institute’s view therefore that for this revised IRP to have some credibility, a few factors have to be complied with, these being:

  • Developing and sharing publicly a credible multi-criteria decision making model
  • Publicising the variables used in the model
  • Sharing and interrogating the range of possibilities of the variables
  • Sharing and interrogating the constraints placed on the model
  • Presenting a reasonable number of least-cost options, in a hierarchical fashion

The bulk of the effort in the consultation process should be devoted to the model, parameters and assumptions. Once reasonable agreement has been reached in these areas the model must be run and all role-players should live with the results. Reiteration must preferably be avoided so that biased outcomes are not forced into the results.

The SAIEE remains convinced that a credible least-cost energy plan that meets the requirements placed on the country can be produced if these factors are taken into account. We remain ready to avail the wealth of knowledge and experience at our disposal, in a credible and thorough process.

In the long-term, the government should establish a specialisation centre for energy planning. This centre must be tasked with refining the model on an annual basis and publishing the results, as required by the National Energy Act of 2008.

Policy announcements must be made every five years for use in revising capacity determinations to be issued by the minister of energy.

Open-source platforms have been used successfully in developed countries to enhance transparency and must be the first choice for this centre.

Send your comments to energize@ee.co.za

 

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