Minister in the Presidency Mondli Gungubele
A new report into the progress government is making in implementing the current five-year Medium-Term Strategic Framework, from 2019 to 2024, has confirmed that energy unavailability represents the single biggest risk to doing business in South Africa, by undermining investor confidence and constraining industrialisation.
It also concludes that government should commit to “solid timeframes” for the review of the Integrated Resource Plan of 2019 (IRP2019) so that electricity demand projections and generating scenarios are more aligned to prevailing circumstances, which have changed materially since the publication of the IRP2019.
Department of Planning, Monitoring and Evaluation (DPME) director-general Robert Nkuna said that, in drafting the report, it became evident that “too many things had happened since 2019” which had affected the relevance of the IRP2019.
“So we can’t continue on the same trajectory, including the work that we're doing on the just energy transition, [without these being] factored into the IRP.
“So, we are going to be engaging with the department concerned to ensure that we attend to that issue,” Nkuna said, noting that such interactions required Cabinet to first approve the DPME report, a milestone that was achieved two weeks ago.
Mineral Resources and Energy Minister Gwede Mantashe has confirmed that the IRP2019 – which is widely considered to include outdated demand, coal fleet energy availability factor (EAF), decarbonisation and technology cost assumptions – would be reviewed.
However, no firm timeframe has yet been set for the finalisation of the update, nor for the initiation of public consultations on the plan, which makes specific technology allocations and also outlines by when those technologies should be introduced.
Such determinations are activated through the publication of a Ministerial determination and technologies not included can be built only if an exemption is secured from the department, with the concurrence of the National Energy Regulator of South Africa.
The DPME report also concludes that the method for procuring electricity from independent power producers should be updated too allow for a consolidation of bid windows and to reduce project lead times.
No specifics were provided on what the new procurement framework would involve, but the call for an update comes amid serious procurement delays that have afflicted both the fifth renewables bid window and the so-called risk-mitigation procurement round.
INDEPENDENT EAF ASSESSMENT
The report also says that an independent assessment of Eskom’s EAF should be undertaken to review the target, the recovery of which is a feature of the energy action plan announced by President Cyril Ramaphosa in July to address intensifying loadshedding.
The new Eskom board has set a 75% EAF target, which energy commentators have described as both unachievable and open to manipulation.
Eskom executives have dubbed the target as “daunting” and have outlined plans for an EAF recovery to about 60% over the coming year. For the year to date, Eskom’s EAF has slumped to about 58%, with the coal-fleet-only EAF having fallen to about 53%.
The slump is central to what has been South Africa’s worst-ever year for loadshedding, the risk of which had increased further in recent weeks as Eskom confirmed that it had exhausted its diesel budget and was nevertheless preparing to move ahead with the extended maintenance of the Koeberg nuclear plant, which would leave it a unit short for most of 2023.
Minister in the Presidency Mondli Gungubele said having greater certainty of the EAF was also crucial for the updating of the IRP2019, as the EAF assumption affected the supply/demand outlook.
He also argued that, while “Eskom is not a good story” the other components of the energy action plan, which was being overseen by the National Energy Crisis Committee (Necom), were making headway, including the lifting of the current 100 MW ceiling on embedded generation plant.
That market reform, he added, had already stimulated about 80 projects by large private electricity consumers.
Gungubele acknowledged, however, that Necom’s activities were not currently visible and made a commitment that the committee’s reports be collated and shared with the South African public.
“And I think that should be done as a matter of urgency,” the Minister added.