Login

Register




Building capacity to help Africa trade better

Time to bring coherence to South Africa’s energy future

Blog

Time to bring coherence to South Africa’s energy future

Time to bring coherence to South Africa’s energy future

By the end of March, the route plan for South Africa’s return to energy security was looking more murky than ever with possible plans for gas, renewables and nuclear jostling for position in the race to replace the currently dominant coal paradigm. There are even still new coal power plant initiatives emanating from the Department of Mineral Resources and Energy despite there being every indication that this technology can no longer be financed. In March this year, Standard Bank became the last of the major South African banks to announce that it would no longer fund coal-fired power plants.

President Cyril Ramaphosa, speaking at the third South Africa-Mozambique Bi-National Commission, referred more than once to using Mozambiquan natural gas to sort out South Africa’s energy crisis. Gas has long been mooted as the obvious alternative to coal for baseload power. Earlier this year, a consortium of Business Unity South Africa, the National Business Initiative and Boston Consulting Group released a report arguing that gas was the least cost route for South Africa to net zero carbon emissions by 2050.

The consortium argues that gas-to-power plants are the optimal way of providing future base load power. Rather than piping gas in from Mozambique, it advocates using Liquified Natural Gas (LNG) in combination with floating regassification units located at some of South Africa’s major ports. This is a different process to the controversial and not implemented Turkish Karpowership project, contracted under the 2020 Emergency Power Procurement plan.

But in the same week that President Ramaphosa spoke about gas from Mozambique, Public Works and Infrastructure Minister Patricia de Lille, released Infrastructure Plan 2050 which suggested the plan was to shift from coal generation to nuclear. The minister said, ‘the role of nuclear energy in achieving net zero goals cannot be overemphasised’.

The nuclear option has a patchy recent past in South Africa. In 2017, a procurement process and cooperation agreement between the government of then president Jacob Zuma and Russia’s Rosatom, was struck down by the Cape High Court on legal and constitutional grounds. Although anti-nuclear activists claimed a victory on environmental grounds, it was clear that the court’s ruling was based on procedural considerations, especially the lack of an open tender process.

Gas and nuclear generation are of course not incompatible. But these different thrusts have been articulated against a fast-moving background. 79 percent of South Africa’s electricity (in 2019) was generated by Eskom’s coal fleet which is subject to frequent and seemingly increasing breakdowns. Researchers at the Council for Scientific and Industrial Research (CSIR) found that 2021 was the worst year for loadshedding on record, with 1 169 hours of national outages (about one-eighth of the year).

When loadshedding occurs ‘peaking’ open cycle gas turbine (OCGT) plants – intended originally for use only during the hours of highest demand – have to be utilised, alongside pumped hydro storage schemes. There are 20 such plants in South Africa and, despite their name, all are powered by diesel, not gas. In March 2022 they were using nine million litres of diesel per day. According to the CSIR, the projected cost, based on the Eskom fleet’s 2021 performance, could be as much as R15 billion for 2022.

There is also renewable energy, a growing sub-sector in the South African economy. According to Minister de Lille, 12 percent of South Africa’s energy was provided by renewable sources in 2019, mostly wind and solar photovoltaic (PV) but also including the Koeberg nuclear reactor. The country’s 2019 Integrated Resources Plan (IRP2019) anticipates 20 400 megawatts (MW) of wind and solar PV generated power by 2030, not much less than half the total available capacity from all sources at the moment (43 000MW). But much of this capacity has yet to be commissioned.

Lifting of the limit on renewable energy self-generation (from 1 to 100 MW) in 2021 has also changed the game. At the time, Minerals Council of South Africa CEO Roger Baxter said mining companies had plans to install 3 900 MW of capacity in the pipeline. More recently, in March this year, diversified miner Anglo American signed a memorandum of understanding with French-based EDF renewables to power all its South African operations with renewable energy by 2030. This will probably require the installation of between 3 000MW and 5 000MW in new capacity by that date.

Apart from the mining sector, there is considerable potential capacity in areas which can harvest solar energy, including shopping centres, commercial farms, public buildings and other industries. Amazon’s 10MW solar plant in the Northern Cape, intended in part to power cooling systems at its data centre in Cape Town, is already up and running.

The reason these various elements of the South African energy system are pulling in different directions is inadequate macro-planning. IRP 2019 is already out of date. The original integrated resource planning process, initiated in 2010, was designed to produce a rolling document, updated every two years. But it took nine years to generate IRP 2019 and the final document was very different to that which was presented for public participation purposes. By the logic of the original process, it should have been updated last year.

At some point after public consultation on IRP 2019 – inside the National Economic Development and Labour Council (Nedlac) – the original gas allocation (8 100MW) was reduced to 3 000MW, probably at the insistence of the coal lobby.

A more recent event – the lifting of the limit on self-generation – has changed IRP2019’s 4 000MW target for ‘other distributed generation‘ (by 2030) which now looks likely to be massively exceed by private initiatives. So too has South Africa’s deadline for net zero carbon emissions, set in its national contribution to last year’s COP26, at 2050. The burgeoning availability of ‘green’ finance and the technical ease with which gas infrastructure can be utilised by green hydrogen should it become available in adequate and cost-effective quantities have also shifted the game since IRP2019 was so laboriously assembled.

It is certainly time for coherence in South Africa’s energy planning. Citizens, businesses and potential private investors need much greater certainty going forward. The IRP needs updating but the government might also consider drawing up an Integrated Energy Plan (IEP), required by the 2006 National Energy Act, but never published. The law requires the IEP to be updated every year. Twelve months may well be a useful deadline for bringing coherence to the issue.

About the Author(s)

David Christianson

David Christianson is a consultant. He has previously been a political scientist, NGO researcher and development banker. He entered business journalism in 1997 and was Diageo African Business Writer of the Year in 2006.

Leave a comment

The Trade Law Centre (tralac) encourages relevant, topic-related discussion and intelligent debate. By posting comments on our website, you’ll be contributing to ongoing conversations about important trade-related issues for African countries. Before submitting your comment, please take note of our comments policy.

Read more...

Contact

Email This email address is being protected from spambots. You need JavaScript enabled to view it.
Tel +27 21 880 2010