The current draft of the Integrated Resource Plan (IRP2010) does not adequately factor in electricity distribution costs, says nongovernmental organisation Sustainable Energy Africa (SEA) director Mark Borchers.
“The IRP2010 is a capacity expansion plan that is not the most economically efficient way forward for the country. “One reason is that it does not factor in the cost of upgrading the distribution system to enable it to absorb the new generation capacity that will be implemented in the coming years.
“[An amount of] R50-billion to R100-billion is needed to absorb the new generation capacity mentioned in the IRP2010. “This will increase the cost of the overall balanced scenario proposed in the IRP2010 and will ultimately have to be borne by the South African economy. “If we invested in energy efficiency more determinedly in the IRP, which is known to be the least-cost option for meeting energy service needs, distribution infrastructure expansion costs would be vastly reduced,” adds Borchers.
He says that, by factoring in the cost of upgrading the distribution system, decisions to invest in new generation capacity are likely to change.
Maintenance of Grid
“Maintaining the electricity grid has not been an urgent priority within cities because they are all cash strapped and often have urgent service delivery priorities that trump this need in the short term. These cities distribute a huge component of the national grid power.
“The distribution infrastruc-ture is slowly degrading because not enough money is being spent on maintaining it. This is a real problem for cities because they are reliant on electricity sales as a source of income to fund other municipal operations,” says Borchers.
As a result, the ability to deliver electricity to end-users will deteriorate over time and the SEA expects that this will seriously affect the overall finan- cial soundness of cities and the ability to deliver other services to their populations.
He believes that government needs to set criteria that state that a certain proportion of municipal budgets needs to be spent on upgrading and maintaining the distribution grid.
“An emphasis on energy efficiency will also reduce the need to spend on upgrading the distribution capacity. “It is also the most effective way to meet end-user needs,” concludes Borchers.
• The Department of Energy was not available for comment at the time of going to press.