Draft Integrated Resource Plan 2018: roundtable discussion

Energy

30 October 2018
Chairperson: Mr F Majola (ANC)
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Meeting Summary

The Chairperson said the Committee wanted to hear everyone’s views - all the differing views had to be heard and common ground had to be found. He asked presenters to focus on the core issues where there were differences on the draft IRP. They did not want a rehash of what was presented to the Committee in earlier engagements - only a concise summary of the important issues such as what was happening to nuclear, the 1000MW of new coal, the cost concerns and the Inga hydro power option.

The meeting was attended by a diverse contingent of representatives from government and environmental and other community stakeholders, energy experts from the University of Cape Town, Eskom, CSIR as well as the  Department of Public Enterprises.

DoE gave a summary of the draft IRP noting that the electricity landscape had undergone significant change since the 2010 IRP - costs had increased and renewables had come to the fore. DoE had to ensure the changes and technology advances were incorporated in the new electricity plans for the country. Technology was rapidly changing and that because of this, the IRP may require more frequent updates. The new IRP had to be flexible, adjustable and cost to consumer had to be as low as possible. Key deliverables of the IRP were to provide electricity generation plans that ensured security of supply, lowered cost of supply, minimised water usage and reduced emissions. Policy certainty was required on electricity generation options up to 2030. Huge volumes of gas were required in the plan and this would require more detailed analysis and work. The draft IRP contained build limits for renewables up to 2030. More analysis was required on clean energy sources (clean coal, hydro, nuclear and others). It had to also conduct a detailed socio-economic impact analysis on the decommissioning of the old coal fired power stations. The various energy scenarios modelled had required expertise using the tool PLEXOS.

Some of the comments and views raised by organisations at the meeting were:

The Free Market Foundation represented the Truth in Energy Campaign (TiEC) and said that there was no need to saddle Eskom with the risk of procuring and supplying additional energy like gas - it would be better to let this be done by private companies and shift the risk from the state to private companies. Mr Andrew Kenny commented that nuclear energy was the most affordable option for the country.

UCT’s Electrical Engineering Department said that unless there was robust debate on this draft IRP it would have the same weaknesses as the 2010 IRP. A key problem was that the demand projections (4-5% growth) were unattainable.

SALGA said that the input from local government on demand projections was important as around 40% of the country’s demand was from municipalities.

The Nuclear Industry Association of South Africa (NIASA) said that nuclear energy should fill the gap in energy provision that would result from decommissioning Eskom’s old coal power stations.

The SA Faith Communities’ Environmental Institute (SAFCEI) said that DoE had to take note of their concerns on coal and nuclear. The decommissioning of coal power stations had to be fast-tracked as this would improve the air quality of communities living in an around those facilities such as in Mpumalanga. A Just Transition including job creation was now urgently required.

GroundWork was concerned that not all externalities had been considered by DoE in the IRP. Aspects like carbon dioxide and other harmful substances needed to be factored in. Lives of people matter and DoE had not done enough engagement with people on the ground.

The CSIR said that all the scenarios modelled by DoE were technically and economically viable. The future energy system and energy mix of low coal and low water was the least costly for the country.

The Centre for Environmental Rights (CER) asked if the coal independent power producers (IPPs) were value for money, as the R23bn needed for this was not in the best interest of the country and its people. Secondly they asked if NERSA (National Energy Regulator of SA) was consulted on the draft IRP.

UCT’s Energy Research Centre was concerned about the demand projections in IRP. Both over and under supply projections would be costly for the country, so a realistic and more appropriate approach was necessary. It supported a small modular approach that was flexible and could easily be adapted.

Eskom said that an important aspect that DoE had to consider in the IRP was security of supply such as the risk associated with using imported gas for gas fired power stations. Coal fired power stations used coal in close proximity to them so the risk of supply was greatly reduced.

The Khoisan community made a strident appeal to government to include its community in their plans. Its voice was not being taken seriously and had been ignored by government.

The Public Health Association of South Africa reiterated that the pollution of water, soil and the air was detrimental to public health and so coal had to be excluded from the IRP.

Members asked if there were plans to decommission the Koeberg Nuclear Power Station. What were the plans for Medupi and Kusile power stations? There was a concern that the decommission of coal plants would increase unemployment. It was better to use coal compared to other energy sources that we did not have in the country. Was it possible if clean coal technologies could be deployed to continue the use of coal fired power stations? It was suggested that nuclear had to be included now and not post 2030. The inclusion of power from Inga in the DRC was unrealistic and this source should be reconsidered.

The Chairperson said that the Committee would carefully interrogate all inputs. Some significant matters had been raised in the submissions. He was particularly touched by the input from community members. DoE was now in possession of all the submissions and views raised in meetings and the Committee awaited the Department response.

Meeting report

The meeting was attended by a diverse contingent of representatives from government, environmental and other community organisations, energy experts from the University of Cape Town and CSIR, Eskom as well as the Departments of Energy and Public Enterprises.

The Chairperson said the Committee wanted to hear everyone’s views - the Committee did not want to come to easy conclusions. All the differing views had to be heard and common ground had to be found. He asked that those present focus on the core issues where they differ with the draft IRP. He did not want to hear all the detail from their previous submissions. There would be minimal engagement to enable the Committee to conclude its programme and it would interrogate the submissions at a later date. He asked DoE to give an update on the key matters pertaining to the IRP, given the diverse views expressed thus far such as its rationale on contentious matters like the new 1000MW of coal, nuclear, cost concerns and the Inga hydro power option. He did not want a drawn out presentation but merely a summary of the relevant and important issues of the draft IRP and the DoE rationale for these.

Department of Energy (DoE) Draft 2018 Integrated Resource Plan update
DoE Director General, Mr Thabane Zulu, said that the Department’s work on the draft IRP was guided by the Electricity Regulation Act of 2006. The electricity landscape had undergone significant change since the 2010 IRP - costs had increased and renewables had come to the fore. Electricity demand was no longer captive via the national grid and there had been an increase in own power generation. Against this background DoE had to ensure the changes and technology advances were incorporated in the new electricity plans for the country. Technology was rapidly changing and due to this the IRP may require more frequent updates. The new IRP had to be flexible, adjustable and cost to consumer had to be as low as possible.

DDG Jacob Mbele gave an update on the draft IRP. Its key deliverables were to provide electricity generation plans that ensured security of supply, lowered cost of supply, minimised water usage and reduced emissions. Some key changes that influenced the Department’s work on the 2018 draft IRP versus the one for 2010, were lower GDP, lower electricity demand and decreased electricity intensity. In addition, energy efficiency had increased. Other scenarios modelled were gas, renewable energy and the reduction of emissions. A key driver for future power generation would be technology as although price would remain important, the technology used would be key.

Some of the conclusions from their study were that policy certainty was required on electricity generation options up to 2030 and that beyond 2030 further work was required. Huge volumes of gas were required in the plan and this would require more detailed analysis and work as well as for clean energy sources (clean coal, hydro, nuclear and others). DoE also had to conduct a detailed socio-economic impact analysis of the decommissioning of the old coal fired power stations.

Other aspects he commented on were that the plan contained build limits for renewables for the period up to 2030, the plan contained two new coal fired power plants (1000MW), hydro power from Inga (RSA-DRC treaty), adoption of 200MW allocations for own use power generations and that new power generation technologies would play an important role. Plans up to 2030 would be clear but beyond 2030 would be finalised later.

The DoE team that modelled the various energy scenarios had the required expertise and knowledge. The tool used for the scenarios was PLEXOS which was also used in Australia and the USA and locally by Eskom. The study input was independently verified by CSIR and a USA based organisation called NREL.

He clarified the term “least cost” and said that for the country to develop and to maximise local beneficiation, electricity costs had to be low. In the IRP, 'least cost' referred to the cost associated with the cheapest combination of generation technologies to meet the projected electricity demand.

Discussion
The Chairperson thanked the Department for their input and for attendees comments and views.

Mr Leon Louw from the Free Market Foundation said he was representing the Truth in Energy Campaign (TiEC) and said the current draft IRP was a huge departure from the previous IRP. He said that there was no need to saddle Eskom with the risk of procuring and supplying additional energy like gas - it would be better to let this be done by private companies and remove the risk from the state. The period post 2030 was uncertain and so a balanced approach was needed (not just wind and solar) - other sources of energy had to be considered as well.

A colleague of his, Mr Andrew Kenny, an independent energy consultant, said that he had two major concerns. The DoE used demand projections that were far too low and that the country had to plan for a higher demand trajectory of at least 5%. He was not in agreement with the cost information used in the plan. He felt that solar and PV were not the least cost energy sources as the system costs associated with using them was too high. According to him nuclear was the most affordable option for the country.

The Chairperson wanted clarity on why the Truth in Energy Campaign was promoting nuclear as the most affordable option when a key challenge was size and scalability - that nuclear was only cheaper in large chunks of at least 500MW or bigger. They all had to work together and help in addressing the appropriate energy mix for the IRP. We have to resolve our differences in order to produce a better document.

Prof Trevor Gaunt from the UCT Electrical Engineering Department said that unless there was robust debate on this draft IRP it would have the same weaknesses as the 2010 IRP. A key problem was that the demand projections (4-5% growth) were unattainable. Similarly the long term projections used in the draft IRP was unrealistic as this had never been achieved in South Africa. He was adamant that “we” had to fix the foundation of the IRP (demand forecasts for the future) and offered his help to address the problem.

A SALGA delegate said that the input from local government was important as around 40% of the country’s demand was from municipalities. The demand forecasts used by Eskom were not correct and that a bottom-up approach from municipalities and metros (that had accurate electricity consumption data) would provide a better estimate of demand forecasts. SALGA was not in favour of self generation options as this would impact negatively on the distribution facilities of municipalities. He asked that some of the self generation capacity be allocated to metros to help address this problem.

DDG Mbele replied that the comments from Truth in Energy Campaign on demand projections would be taken on board by the Department. He said that actual demand projections were perhaps not as important as having an approach that was flexible enough to enable a quick response to changes. Incremental power generation increase options were therefore a better approach than to lock in large blocks of power generation over time. He said the DoE would engage others such as Prof Gaunt, to improve the draft IRP and also investigate other suggestions such as those raised by SALGA.

Mr Gaopalelwe Santswere from the Nuclear Industry Association of South Africa (NIASA) said that a way had to be found to address the gap in energy provision that would result in the decommissioning of Eskom’s old coal power stations. Nuclear offered and excellent opportunity to address this - nuclear was the most affordable option and the best solution for the country’s energy needs. He asked that DoE get more accurate information on the cost of nuclear.

DDG Mbele replied that current electricity demand was about the same as in 2007 whilst expectations had been that the demand would be about 30% higher. Nuclear would only be economical with large procurements of around 6000MW and that the scale was therefore not appropriate for South Africa.

Ms Liz McDaid from the SA Faith Communities’ Environmental Institute (SAFCEI) said that their concerns were also around demand projections and SAFCEI had four main issues they required further clarity on such as how DoE calculated the sectoral customer demand used in the draft IRP. They were concerned about the limit placed on renewable energy (RE). Renewable energy was the least cost energy option so it had to brought forward and could become a positive multiplier and enabler in other sectors of the economy. SAFCEI asked DoE to take note of their concerns on coal and nuclear - the decommissioning of coal power stations had to be fast-tracked as this would improve the air quality of communities living in an around those facilities such as in Mpumalanga. A Just Transition (including job creation) was now urgently required. On Nuclear, SAFCEI had a concern about the safety of nuclear waste and costs. Already Africa was being used as a dumping ground for nuclear waste.

Mr Bobby Peak of groundWork said his organisation was concerned that not all externalities had been considered by DoE in the draft IRP. Aspects like carbon dioxide and other harmful substances needed to be factored in. Lives of people matter and they were also concerned that DoE had not done enough engagement with people on the ground such as those living in Mpumalanga and the Vaal Triangle, Sasolburg and Newcastle that were affected by the continued use of coal. The current approach being taken in the draft IRP would not address current employment. For example, using more coal would not lead to more jobs.

Mr Willie Majola from Eskom said that they supported the least cost approach, however another important aspect that DoE had to consider in the draft IRP was security of supply, for example, the risk associated with using imported gas for gas fired power stations. Coal fired power stations used coal in close proximity to them so the risk of supply was greatly reduced.

Mr James Irlam from PHASA (Public Health Association of South Africa) reiterated that the pollution of water, the soil and the air was detrimental to public health and so coal had to be excluded from the draft IRP.

Bishop Geoff Davies from SAFCEI emphasised that the well being of people and the planet were fundamental and important aspects that the draft IRP had to address.

Dr Clinton Carter-Brown from the CSIR (Council for Scientific and Industrial Research) said that from their perspective, all the scenarios modelled by DoE were technically and economically viable. The future energy system and energy mix of low coal and low water was the least cost option for the country. The main driver behind the draft IRP was the decommissioning of coal power stations (not demand forecasts). New technologies in gas and battery storage could contribute to replacing decommissioned coal. He asked how DoE would incorporate Eskom’s existing fleet of coal fired power stations in further IRP iterations and what process it would follow in the new work planned for the draft IRP.

Ms Nicole Loser from Centre for Environmental Rights (CER) had two questions for DoE - whether the coal independent power producers (IPPs) were value for money, as CER did not think that the R23bn needed for it, it was in the best interest of the country and its people. Secondly they wanted to know if NERSA (National Energy Regulator of SA) was consulted on the draft IRP.

Prof Harald Winkler of UCT’s Energy Research Centre (ERC) said he had a similar concern as others on the demand projections used in the draft IRP. Both over and under supply projections would be costly for the country, so a realistic and more appropriate approach was necessary. ERC supported a small modular approach that was flexible and could easily be adapted should the need arise. He felt more work was needed on energy modelling and demand side management interventions. According to Prof Winkler, there were further aspects that needed to be factored into the draft IRP – such as decentralised power generation options rather than continuing with centralised only. DoE should rethink its coal decommissioning plans, that is, only decommission plants when they become uneconomical rather than doing this “randomly”. Other aspects were that the grid had to be flexible, that a Just Energy transition was necessary and essential. He was concerned about the build limits on renewables. He asked if DoE could share the workings of its Plexos modelling with others and said that the ERC was prepared to work with the Department to address some of the challenges in the draft IRP. The IRP required an update every two years.

A delegate from the Khoisan community made a strident appeal to government to include his community in their plans. The voice of his community was not being taken seriously and had been ignored by government.

DDG Mbele responded to some of the issues raised. He said DoE was still in the process of analysing the public submissions such as externalities impacting on the IRP. Carbon was already constrained in the draft IRP via the choice of technologies used in the plan. He agreed that more work needed to be done on the supply of gas - the Gas Master Plan was being finalised by DoE and this would address the matters raised on supply and other aspects. DoE would reach out to those such as ERC and CSIR that had offered their help. The Department did consult with NERSA and it had made a submission

Comments by Committee Members
Ms T Mahambehlala (ANC) asked if there were plans to decommission the Koeberg Nuclear Power Station. She wanted clarity on the plans for Medupi and Kusile power stations as she was concerned that the decommission of coal plants would increase unemployment in the country. She felt it was better to use the coal versus other sources that we did not have in the country. She asked if the clean coal technologies could be deployed to continue the use of coal fired power stations. She queried the role of nuclear and asked if the DoE cost estimates were correct. She felt that that nuclear had to be included now and not post 2030. The inclusion of power from Inga in the DRC was unrealistic and that it was perhaps time to reconsider its use.

Response by DoE
DoE Director General, Mr Thabane Zulu, responded that Inga was governed by a treaty between the country and the DRC and whilst the treaty was in place, the DoE could not ignore it. If there were changes it would be incorporated in the draft IRP. He said DoE would only finalise the IRP once it had interrogated all matters raised thus far. It would carefully assess all the information received.

DDG Mbele said that the decommissioning of the coal fired power stations would be carefully considered taking all aspects into consideration, including views raised in these meetings. The matter raised on decommissioning Koeberg power station was incorrect and probably based on a misunderstanding.

Final comments by the Chairperson
The Chairperson thanked all presenters and said that the Committee would carefully interrogate these inputs. Some significant matters had been raised and DoE was now in the possession of all input and views raised in meetings and the Committee would await their report.

He said the Committee had heard - and would incorporate all the views communicated to it - and that if required, might need to meet with DoE and other stakeholders again in finalising its report on the draft IRP.

The meeting was adjourned.

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