Electricity and Control January 2020

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Attracting investment in the energy sector Siyabonga Mbanjwa, Regional Managing Director, SENER

Commenting on South Africa’s recently released Integrated Resource Plan (IRP 2019) Siyabonga Mbanjwa, Regional Managing Director of SENER, a global engineering and technology group with a focus on the Southern African energy sector, emphasises the urgency of implementing the next steps in the plan, the risks that the country cannot ignore, and ways to mitigate these with innovative, achievable, renewable solutions.

T he Integrated Resource Plan released in October 2019 by the Minister of Minerals and Energy, Gwede Mantashe, is an encouraging sign that key decisions to provide policy certainty and attract investment into the energy sector are finally being made. It has taken far too long to get to this point, though. Load shedding, unemployment and the depressed economy mean that the Department of Minerals and Energy (DME) has to proceed with greater urgency. Plans with no implementation are as bad as not having a plan at all. The process to procure new generation capacity from independent power producers (IPPs) must start now. The focus must be on these due to Eskom’s high debt levels and weak balance sheet. All in all, though, we are optimistic for now. There is a welcome acknowledgement that the power system is constrained and that there is an urgent need to call for 2 000 to 3 000 MW to be procured on an emergency basis. It should help to alleviate load shedding. Although the IRP and the minister’s explanation of it are welcome, there are risks which cannot be ignored. ■ The inclusion of 1 500 MW new generation from coal is one. Two private sector projects that were awarded to IPPs are being challenged by environmental groups and funders are turning their back on the projects. This might mean that other projects might be needed, and that in a very tight timeframe. ■ It is unrealistic to rely on Eskom’s coal-fired stations that don’t meet minimum emissions standards being allowed to continue operating beyond the initial five-year grace period. The Department of Environment, Forestry and Fisheries (DEFF) may not grant the extension and

environmental NGOs might challenge a possible ‘yes’ in court. ■ Including power from the Grand Inga hydroelectric project is risky. It requires substantial investment, would be done in phases, has been stalled for a long time already, and would have to overcome cross-border transmission challenges. ■ The extension of the Koeberg nuclear plant by 20 years is inevitable because of the present and expected power constraints. There is a vague reference to a nuclear build programme but no clear indication of it being planned. ■ The omission of concentrated solar power (CSP) is a major concern. While the deployment of CSP has been much lower than some more developed renewable energy technologies, its storage and ‘dispatchability’ benefits outweigh its disadvantages. ■ The rollout of natural gas is needed to close a possible gap in power supplies due to the risks outlined above. The government should be bolder by allocating more megawatts towards natural gas than at present. ■ It is a concern, too, that solar PV projects are not scheduled to come online every year (2024, 2026 and 2027 being excluded). Ideally there should be allocations for each year between 2022 and 2030. This would provide policy certainty and attract direct investment. On the other hand, the substantial allocations for solar PV and wind are welcome. This shows a greater sense of urgency in ensuring that greenhouse gas emissions are reduced in line with South Africa’s commitments in the Paris Agreement.

Electricity + Control

JANUARY 2020

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