Our Burning Planet

POWER(LESS) OP-ED

Big black holes emerge in South Africa’s Integrated Resource Plan for Electricity — coal is not the answer

Emissions rise from a tower of the Eskom Kusile coal-fired power station in Mpumalanga on 23 December 2019. The author says that the DMRE appears to be pushing ahead with a new procurement process from 2022 for new coal-fired power in South Africa. (Photo: Waldo Swiegers / Bloomberg via Getty Images)

Deep flaws, significant delays and unnecessary additional costs are becoming evident in the outdated IRP 2019, published by the Department of Mineral Resources and Energy in October 2019.

Big holes are emerging in the national electricity plan as 2 x 750MW of new coal-fired power scheduled for 2023 and 2027 respectively, and 2,500MW of hydropower from the DRC Inga Project scheduled for 2030, are increasingly unlikely to materialise.

In addition, the Department of Mineral Resources and Energy’s (DMRE) public procurement processes, in the form of the so-called “emergency” Risk Mitigation IPP Procurement (RMIPPP) programme is stalled, while the Renewable Energy IPP Procurement (REIPPP) programme and the Gas-to-Power programme are running late.

In the meantime, Eskom has indicated that to bring an end to ongoing load shedding, it urgently needs some 4,000 to 6,000MW of new generation capacity to fill the supply-demand gap resulting from the declining performance of its coal-fired fleet of power stations, and the delays in the DMRE’s public procurement processes.

The previous Coal Baseload IPP Procurement programme launched in 2014 failed as, one by one, banks pulled out of funding the Thabametsi and Khanyisa coal-fired power projects that had been announced as preferred bidders by the DMRE’s IPP Office in 2016, amidst growing opposition to new coal-fired power from financial institutions and civil society.

However, inexplicably, the DMRE and its IPP Office appear to be pressing ahead with a new procurement process, commencing in the first quarter of 2022, for 1,500MW of new coal-fired power in South Africa, despite every indication that this cannot be financed.

A new study report released by the Energy Systems Research Group (ESRG) at the University of Cape Town has found that the DMRE’s plans to procure this 1,500MW of new coal-powered electricity will cost at least R23-billion more than a least-cost optimal electricity plan for South Africa, and will result in 25,000 economy-wide job losses by 2030.

Interview of Jesse Burton, Energy Systems Research Group, University of Cape Town.

In addition, the DMRE’s plan to procure 1,500MW of new coal-powered electricity generation will increase greenhouse gas emissions to levels that are incompatible with South Africa’s commitment to reduce its emissions under the Paris Climate Agreement.

If South Africa intends to meet its revised climate targets (350–420 MtCO2e) by 2030 and still go ahead with its plans for 1,500MW of new coal-fired power, it will cost an additional R74- to R109-billion.

Even in meeting SA’s less ambitious and inadequate target of 420 MtCO2e, to which it has committed, power system costs for South Africa would increase by R74-billion compared to an optimised electricity system without 1,500MW of new coal-fired power.

The expert analysis by ESRG investigates two scenarios to assess the consequences of building the new coal capacity targets contained in IRP 2019.

The first scenario, or reference scenario, takes into account recent trends in the decline of economic growth rates, the economic impact of Covid-19, lower electricity demand, and Eskom’s fleet performance, to closely reflect current and projected reality in South Africa.

The second, or climate policy scenario, assumes that South Africa has revised its Nationally Determined Contribution (NDC) to be compatible with the global goals contained within the Paris Agreement to limit warming to well below 2°C and pursue efforts towards 1.5°C.

An addendum also models the impact of building this 1,500MW of new coal-fired power in light of the recently revised stricter emission targets in the NDC of September 2021.

“Our modelling shows that under the two scenarios tested, new investments into coal-based power generation are costly and unnecessary for South Africa. Building the planned 1,500MW of coal-fired power would both increase greenhouse gas emissions and power system costs,” explains Jesse Burton, a researcher at ESRG and co-author of the study report.

In each scenario, the models were run with and without the 1,500MW of new coal capacity forced in, to note the differences in various indicators when new coal plants are included in the system, relative to when coal plants are excluded from the power system.

The results were clear that forcing new coal into a plan that meets electricity demand consistently to 2030 and beyond would incur additional costs of at least R23-billion in the reference case, with job losses of around 25,000 by 2030 across the economy.

Furthermore, when ESRG ran the model using South Africa’s recently updated greenhouse gas emission targets in the NDC, 1,500MW of new coal-fired power would increase costs by between R74-billion and R109-billion.

“Building new coal into South Africa’s electricity system will raise costs even when climate goals are not considered, and it also makes the achievement of the country’s fair share contribution to climate change vastly more expensive. If a new least-cost plan were to be adopted, it would not contain any new coal power investments,” Burton says. “This is because building new coal plants, with today’s realities, simply does not make economic sense, when compared with more affordable, feasible and cleaner alternatives.

“Proponents of new coal often argue that it is cheap, that it is important for jobs and that power systems require coal plants to provide reliable power. In fact, our investigation shows that coal power is no longer competitive or technically necessary, and that a high coal future actually leads to significant job losses in the country compared to a renewables-dominated build plan,” Burton says. DM

Chris Yelland is managing director at EE Business Intelligence.

© Copyright 2021 – EE Business Intelligence (Pty) Ltd. All rights reserved. This article may not be published without the written permission of EE Business Intelligence.

 

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All Comments 27

  • I would love to know how much weight the scenarios put into the private (behind the meter) solar PV market. The numbers are huge and probably account for more than the reduction in Eskom GWh sold of last few years.

  • Thank you very much for this very informative assessment of the current proposals by the Department of Mineral Resources and Energy to procure significant new coal power, at horrendous cost, both from a budgetary and an environmental perspective. Minister Manatashe and the DMR have been pursuing their own agendas since Minister Mantashe was appointed, and the delays in rolling out access to independent power producers has significantly contributed to the worsening of the energy crisis that South Africa is facing. He has intentionally impeded the development of renewable energy, in favour of continuing to push coal, which is economically unviable to pursue, as well as natural gas and nuclear. As a result of this agenda, South Africa also supported India and China at the CoP 26 Conference, opposing wording that referred to the phasing out of coal. This has earned the enmity of many other developing countries, particularly the Pacific Island States, that are already facing devastation from the climate crisis.

    The country cannot afford anything more than the most effective, least cost model for energy, which also happens to be the option that will enable South Africa to achieve carbon reduction commitments, and which does not include any new coal. It also seemingly will produce many fewer job losses than if coal is continued to be pursued, so overall, the least cost option is the most beneficial and implementable from all perspectives, and so it must be pursued urgently!

    • Thanks JB for phrasing, expressing it so nicely. Everybody who has been following the developments in the energy sector will absolutely NOT be surprised by these numbers of the ESRG, Jesse Burton research study.
      Gwede Mantashe must abandon office, together with his stooges at the department and in NERSA.
      NERSA and ICASA under the ANC are far from fair, balanced, independent sector regulators.

  • Reading an article like this just evokes this incredible anger within me. Why, in a country, that is suppose to be a democracy, can’t political leaders for once listen to real experts in a particular field, in this case energy supply. But perhaps the notion of being in a democracy is just a hope, and not a reality.

    • Coen – That will in effect mean that the anc has to move away from the feeding trough that is kept full by the (foolish) willing taxpayers of SA.

  • Vested interest in coal by government decision makers is the only logical reason for the continued drive for more coal fired power stations.

  • The ‘Big black hole’ is the ANC and its cocktail of BEE policy, corruption, cadre deployment and mismanagement.

    The legacy of BEE and procurement through BEE (meaning that the Black Owned coal producers and oil/fuel suppliers) don’t give a damn about the sustainability of the entity Eskom, the nation or the environment.

    They just want their monetary gain, much of which is ill gotten.

    Therefore coal is forcing the sunsetting of BEE and the ANC don’t like that.

  • Jessie didn’t mention factoring in the local environmental costs of wrt water and pollution, air quality, roads, and site remediation. These would push the new coal option even further into the red. These costs would be borne mostly by the poorer local communities, but they don’t seem to count any more…
    I was impressed by the statement that the model required full supply reliability something that is often glossed over when stating renewable energy costs by neglecting time-of-use. Good work.
    Maybe we will see some evidence-based policy making emerge from the DMRE. Put Karen Bruitenbach (sp?) back in charge please.

  • Excellent research, and an anger-provoking article, as someone has said. But there is no mention of pebble bed nuclear energy. I don’t know much about this, butI would like to know how this could, if at all, fit into the equation of SA’s future energy needs.

    • I think we sold all the IP to the americans and the engineers that developed it also emigrated….

      CR needs GM as a supporter as one of the “top 6” in the ANC – so GM can pretty much force the issue on coal

    • jeremy : PBMR is not new or South African. Before us Japan, France, Germany and the US looked at it and discarded it as a solution looking for a problem

  • For as long as Ramaphosa retains Mantashe as his Minister of Mineral and Energy Resources, his word is worthless – perhaps not a surprise after all. Mantashe is rapidly qualifying for the dinosaur of the year award. Who is paying him what? It is difficult to believe he is that stupid!

  • New coal generation projects will be challenged in court as irrational and contrary to SA’s carbon reduction obligations. Such plans will go the same way as Zuma’s nuclear ambitions.

  • As well as focusing on the supply side of the electricity equation we also need to consider reduction of the demand side to balance the generation shortfall.
    In SA we have more than 10 million conventional-type households that consume roughly 10 000 megawatts of power (23%×43GW). It is estimated around 40% of power consumption is used to heat water – so in SA we burn coal to heat our water.
    If the department for energy plans to spend about R100 billion to fund 1500MW of new coal generation then 4000MW (10GW×40%) would represent an investment of R250 billion. If that amount was used instead to install solar water heating in 10 million homes then the allocation would be R25,000 each, on average.
    Such a programme would then provide FREE water heating indefinitely, significantly improving living standards. The programme would require highly professional project management skills, a nationwide training programme for an army of new artisans and thus provide tens of thousands of new skilled jobs. A domestic manufacturing industry would be stimulated to provide the hardware required for the rollout, possibly equivalent to our motor industry as export opportunities would emerge for African designed solar solutions.
    The promised donor funds from US/EU+UK could also support this project as it falls directly into their objectives to help decarbonize the SA environment and support a ‘just’ transition from fossil fuels by retraining existing personnel in the coal and related sectors.

    • There was such a program that limped along for many years. The economics were there even in the days of low cost electricity. It eventually collapsed due to mismanagement, although the details are lost in mists of time. I wonder if anyone can recall the details? Driving past settlements such as the east bank of Alex one can see thousands of low pressure roof mounted systems. I wonder how many of those are still working.

      • I seem to recall that those units were cheap Chinese imports and the installation workmanship was equally poor quality so they leaked and probably had a limited useful life. There are literally thousands and thousands of units in storage around the country with storage paid by us ultimately. No one in government cares a continental fig.

        • No, we were and are making solar thermal water heaters in SA.

          But three years ago the program in my area had 55,000 units being warehoused because of project delays.

  • Only reason that the ANC, especially the old fossil Gwede, is pushing coal so hard is because they have mastered the looting process around this. Renewables will be in private hands and then the gravy train derails.

    Cyril on the other hand is pushing hard for renewables because billionaire brother in law will get 50% of the contracts. We just cannot win with these criminals at the helm.

  • If something doesn’t make sense, our government is going to do it. They could try for an inaccuracy, or a mistake, but no… We do blunders exclusively.

    There are excellent reasons why we have the world’s highest unemployment rate.

  • I’ve read the ESRG Report. In summary it envisages 150GW of renewable capacity AND 50GW of “Flexible Generation”. The latter is required because of the variability of renewable energy production, especially the problem of the 4 “windless nights” we have each year.

    It doesn’t explicitly say which technology this “Flexible Generation” uses, but it does say the “Flexible Generation Fuel” will cost R200bn. This implies that they must be talking about gas. The capital cost of this Flexible Generation is given as R225bn which translates to less than R5bn per GW. That seems low.

    But one thing is very clear: if South Africa is to go the renewable energy route, it MUST simultaneously install large scale gas generation to cope with renewable variability.

    If you doubt the claimed variability, do yourself a favour and google “Eskom Total hourly renewable generation”. The first link will take you to real time data on SA’s renewable energy generation. We need something to power the country during the regular, deep troughs seen on that data chart.

  • Off target a little, has anyone seen a simulation model that forecasts how many hours of loadshedding we are going to have in the next 5 years waiting for renewable energy to kick in? This translates to say how many load shedding stage 6’s we will have. Factors could be: sabotage, rock in coal, wet coal, breaking of those long rubbery things (conveyor belts), no wind, no sun, strikes, just pure incompetence of operators, completely ruining one boiler per year, tube leaks ( more ANC Hitachi boiler related), fire on conveyors, silo’s falling down, municipalities saying screw you Eskom, and many more I have not remembered. AdR ducked this question from a newspaper lady at the zoom meeting but we mustn’t let him duck it again. I say they have this simulation model and they are too scared to publish it.