Integrated Energy Plan (IEP) Project: Department of Energy briefing


01 November 2010
Chairperson: Ms B Tinto (ANC)
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Meeting Summary

It was announced that the former Chairperson had recently been promoted to Deputy Minister of Trade and Industry. The Department of Energy briefed the Committee on the Integrated Energy Plan (IEP) which had been formulated in the wake of power outages in 2008, and in recognition of the fact that security of energy supply was a problem to be addressed by everyone in South Africa, necessitating proper planning mechanisms and costings. It was linked to Integrated Resource Planning. The Integrated Energy Plan would be addressing electricity, liquid fuels and gas infrastructure. South Africa was one of the highest emitters of greenhouse gases, and it was necessary to diversify supply and primary energy sources, and to move from an energy-intensive to a knowledge-based economy, whilst also recognising that access to electricity for all was a prime concern. The IEP would have to carefully balance the needs and requirements. The governance structure and reporting lines were outlined, and the functions of the different stakeholders and working groups were described. The strategy would include formulation of methodology, setting up appropriate structures, and using and testing the experiences gained to develop better and more efficiently. The methodology would need to be transparent and fully explained to stakeholders, and it would distinguish between non-technical and technical processes. It would enable a structured and systematic approach, that also included the testing of various policy options. Some plausible future scenarios had been drawn up and would be tested. Drivers included socio-economic factors, and the global environment, including issues around funding, technical support, stability in the region and other factors. The scenarios recognised that the future was uncertain, and set out a number of options depending on how matters panned out. There were also a number of policy options, and it was stressed that existing policies would be re-evaluated and assessed, not merely replaced. The processes that the IEP still had to follow were outlined, and it was stressed that public participation would play an important part.

Members were concerned about the time taken so far to compile the recommendations, and were worried that the Integrated Resource Planning and Integrated Energy Planning might conflict, or have inherent limitations. Members asked how the members would be appointed to the technical working groups and stressed that they should comprise individuals, not companies. Members were critical of the extent to which the Department had participated in the Integrated Resource Planning workshops, and thought that greater commitment must be shown, including commitment to the public participation processes. Members questioned the time frames, and asked about the planned dates and the scenario planning. They also noted the problems around the Regional Electricity Distribution, at both national and local government levels, asked whether there were likely to be administrative problems, and to what extent contractual arrangements around job creation and industrial policy had been met. They noted that there was nothing on the website of the Department about public participation, urged that plans must be drawn, taking into account the climate change issues, and recognise the greater flexibility that was sometimes present in the private sector, whilst also ensuring that public participation produced meaningful results.

Meeting report

Acting Chairperson’s opening remarks
Ms B Tinto (ANC) noted that she would be acting as Chairperson, since the Committee’s Chairperson, Ms E Thabethe, had been promoted to Deputy Minister of Trade and Industry. She would be bidding a formal farewell to the Committee at a later stage.

She also tabled apologies, including that of the Minister of Energy.

Integrated Energy Plan (IEP) Project: Department of Energy (DoE) briefing
Ms Nelisiwe Magubane, Director General, Department of Energy, noted that power outages had begun in January 2008, leading to upheaval in the country. On 15 May 2008, an energy summit had been organised between business, labour and civil society. Energy was no longer limited only to a government concern, but affected everyone in South Africa, and everyone needed to come up with appropriate planning mechanisms and cost estimates. Integrated Resource Planning (IRP) was a solution to deal with the problems of energy, particularly the electricity supply, and climate change issues. The input of Committee Members was important.

Ms Tshilidzi Ramuedzisi, Chief Director: Energy Planning, Department of Energy, tabled the presentation of the Department of Energy (the Department or the DoE) on the Integrated Energy Plan (IEP). There were three functions of the IEP, which were the Integrated Electricity Plan (IRP), the Liquid Fuels Plan, which was a work in progress that had to be finalised at the end of this financial year, and the Gas Infrastructure Plan, which concerned piped gas. She noted that importing gas was a start to diversifying pricing, with E-Gas involvement. Although her presentation did not show the strategy and regulations in respect of Liquid Petroleum Gas (LPG) gas, there were some problems around the supply.

The Department was working on regulation and availability plans. The Department did not want to have an energy strategy with a number of drivers and pressure points. The challenge was to ensure energy security and to change the economy so that it depended less on non-renewable energy.

Ms Ramuedzisi said that South Africa was one of the biggest emitters of greenhouse gases, which had an impact on climate change. Therefore, it was necessary to have a diversity of supply and to diversify primary energy sources. She gave the examples that it was possible to use other sources for light and heat, rather than electricity, including biomass for disadvantaged communities. She mentioned the need to address diversification at all levels, to educate people to be safe, the cost of energy and social economic development. As South Africa’s development was being managed, it was moving from an energy intensive economy to one that was knowledge-based economy, and responded to demand management. Access to electricity was a primary aim for all, and the IEP must achieve a balancing act. All factors needed to be taken into consideration for an energy mix, as referred to by Ms Magubane.

Ms Ramuedzisi mentioned the IEP governance structure, the stakeholders who were included, and the communication impact. Intergovernmental reporting would be done through Cabinet, as recommended by the Minister of Energy, through the Director-General: Energy and the IEP Steering Committee. There were policy elements, testing and recommendations to the IEP. The Technical Working Group would be doing a variety of work, including modelling and data analysis, and all stakeholders would work closely together. The strategy consisted of setting up the structures, formulating the methodology, considering the process to be followed and the experiences gained, and then formulating improvements.

She noted that the Working Group stakeholders would work in an appropriate manner, including through these Committee meetings. Stakeholders included the Minister and Cabinet, and there would be public engagement. The IEP Report strategy concerned the use of a forum, and the old framework could thus be disbanded.

Ms Ramuedzisi said that the IEP Methodology was transparent and had been clarified for stakeholders, and she set out the distinction between conceptual (non-technical) and technical processes (see attached slide). The scenario-based methodology was a hybrid with different externalities. It enabled a systematic and structured approach to consideration of the complex and competing objectives, and forced the stakeholders to consider only those key variables that had the most significant impact. The structured approach allowed for testing of various policy options.

She then discussed the National Objectives slide, and noted that some options had been highlighted. The intention was to use energy in the most sustainable way, and to choose the best options. She identified key variables such as defining plausible futures and defining policy options. A great deal of work was required on the energy model and outcomes.

She tabled the slide on the Plausible Futures. Four options were presented. They were premised on the principle that the future was unknown and an indeterminate set of futures could unfold. This allowed for a focus on those factors that affected the economy which could have the most significant impact on the realisation of objectives. The demand trajectory would be shaped by the assumptions which described a particular future. The drivers were a combination of socio-economic factors and the global environment. There was high competition and driving technology, but limited energy supply options in this case. Supply options were high, but there was little sharing around research & development (R&D). She outlined that for Plausible Future 4, there was unfavourable socio-economic development, but a relaxed global environment. In addition, there was low economic growth and the cost of funding was higher. For Plausible Future 3, the scenario was very diverse. This showed a relaxed global environment and favourable socio-economic development. There were good interactions between countries and good economic growth.

She noted that the Key driving forces (Socio-Economic Factors) slide was shown for illustrative purposes only. It looked at poverty levels and local economic growth. The quantitative values were put into a model, and the results were published by the Office of the Presidency in 2008. Low economic growth was linked to Gross Domestic Product (GDP). The key driving forces in the global environment included international and regional stability, and levels of global competition for technology, as well as funding available.

She stressed that energy planning was about making choices, often between imperatives with competing objectives. Policies were divided into existing and implemented policies, those that, although approved, were not yet implemented or effected, and new and future policies still to be considered. The most appropriate set that would achieve the objectives must be chosen.

She noted that the IEP introduction and background had not yet been tabled to Cabinet. However, the publishing of actual figures and approval had been followed. Public participation workshops would be undertaken. Scenarios would be finalised and test cases would be considered in the IEP. In addition, technical work would be conducted and the analysis would then be presented. She summarised that the IEP draft recommendations were similar to the process followed for Integrated Resource Planning (IRP).

Mr L Greyling (ID) mentioned his concern over the two years taken thus far around the IEP legislation, and thought that the IEP was following the wrong approach, and should be focusing on the incentives for the future. The IRP was proceeding, with 20 years of projects, and he noted that it would not be possible to break the contracts, with the introduction of the IEP. The IEP would thus experience some limitations in terms of what it could do.

Mr Greyling had questions around the governance structures, the IRP process and the technical working groups, particularly asking how people were to be appointed to the technical working groups. He stressed that any technical working group should be comprised of individuals, and not big mining and energy companies with different agendas. There would need to be a transparent process.

Ms Ramuedzisi said the Council for Scientific and Industrial Research (CSIR) modelling and technical work would be incorporated. There was key data that could be put into a model.

Mr Greyling noted that the IRP had not involved DoE workshops, and pointed out further that the DoE had only been at one workshop, and had not attended workshops in Durban and Polokwane. He had serious concerns about the IEP commitment.

Ms Magubane said that civil society was not a homogenous group, and that support was needed from the broader civil society. It was not that government lacked the willingness to participate, but rather that an appropriate forum was needed. It would take the DoE a year to get the methodology together, and then to present it to the appropriate meeting. She said that the current IRP was not just a public participation problem in Pretoria, but everywhere. She said public participation meetings would be held in Cape Town and KwaZulu-Natal respectively. She further noted that there were some issues around the funding, and here again, maximum participation was needed, from as much of civil society as possible.

Ms Ramuedzisi added that the IRP had an impact and had existing policies and plans. Development of the Integrated Energy Plan for the electricity sector would inform the whole energy process. If there was strong feeling from the public on IRP, then the DoE would take cognisance of it. The assumption was that the IRP would inform the IEP.

Mr S Motau (ANC) said that the IEP should become an important part of the IRP. He wanted to know how the IEP was to going to impact on the IRP time frames, especially in regard to the start and finish dates, and the scenario planning, and thought that the planning was rather “fickle”. He asked about the scenario planning, and the path chosen, and what could be done if the plan was too late.

Ms Ramuedzisi mentioned that there were time frames for starting and ending. The IEP development had a number of phases, and there was an effective tool on the policy process. The methodology and framework had already been drawn. She noted that the time frames envisaged completion by the end of 2011. In regard to Scenario planning, Cabinet had approved government policy, forums and government’s Programme of Action. However, private sector inputs were needed, and the regulatory tools would depend on recommendations.

Mr Victor Sibiya, Director, Department of Energy, said that Scenario planning had been done, in a similar way to the private sector, on a monthly basis, for IRP and renewable energy. There was 7 000 Megawatt (MW) included in the IEP through government investment decisions, and this was reviewed periodically. He said that it was necessary to follow a path and test assumptions, similar to how the SA Reserve Bank operated, and to do monitoring.

A Member noted the problems around the Regional Electricity Distributors (REDs) and distribution and public participation, and said that the problems around the REDs concerned both national and local government levels. It was possible to amend the constitutions of municipalities, but this might be problematic. However, he enquired where the REDs consideration was at the moment – whether with the Minister, Presidential office or Cabinet.

Mr Sibiya noted that the REDs plan was presently with Cabinet. The legislative framework needed to be adhered to, otherwise the DoE would be breaking the law.

Mr J Selau (ANC) wanted confirmation of dates and processes.

Ms Magubane responded that the programmes had been documented.

Mr Selau commented that even the plans for RED1 had got stuck, and he wondered whether the IEP was likely to have the same problem.

Mr E Nchabeleng (ANC) said that IEP implementation would be an administrative problem. He wanted to know which scenarios were the most sustainable.

Ms Magubane noted that it was important to consider what the IEP was seeking to achieve. It would use monitoring tools, mechanisms and recommendations. There were blockages and additional interruptions for government’s programme of action. There was also the question of plausible scenarios and recommendations by the DoE to be taken into account. This was about creating context and painting the picture of not having one particular person’s input, and not proposing a particular scenario. She noted that IEP aimed to ensure energy supply. Consultations with municipalities were needed regarding waste energy projects. Municipalities thought that they could generate their own energy.

Mr Greyling asked to what extent contractual arrangements had been met with regard to job creation and industrial policy. He also wanted to know how to get out of lock-in contracts, through the IRP. He stressed that the IEP should be informed by the IRP and public participation. He said that although Cabinet was talking about a 20-year energy plan, there was nothing on the DoE’s website about public participation and civil society involvement. The IEP needed to be acknowledged, sorted out and done properly.

Mr E Lucas (IFP) agreed that a plan was needed to address the energy problem. It was important for South Africa to look at what it was doing, and to learn from experiences. The future of energy was very important, especially since climate change issues were so serious. Climate change was caused by first world countries. He said that legislation should be encouraged around climate change, and the use of coal. He urged that everyone needed to open their minds to the energy problem.

Mr Motau said issues of strength in IEP or IRP may work in one case, but not in others. The private sector had more flexibility than government and this should be recognised.

Mr Selau said that South Africa could not repeat past mistakes. He agreed with Mr Lucas’s points, and added that planning was the key to success. Energy was not a matter for a few stakeholders but for every South African, and it was necessary to find a way to do things better, and to ensure that public participation resulted in something meaningful and effective, which meant that government had to draw a list of those to be invited, and give the dates, so that the right representatives would attend meetings and public hearings. He said that meetings could be advertised in the media. He wanted to know how to achieve or engage in public participation in rural areas.

Ms Magubane responded that this meeting was intended as the first step to sharing IEP engagement information with the Committee.

The meeting was adjourned.


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