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27 June 2017
Article by: Terence Creamer - Creamer Media Editor
Energy Minister Tina Joemat-Pettersson
Energy Minister Tina Joemat-Pettersson
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State-owned power utility Eskom indicated on Tuesday that it planned to move ahead with a controversial request for proposals (RFP) for nuclear before the end of 2016, despite the base case in a draft Integrated Resource Plan (IRP) update indicating that the first reactor would only be required by 2037.

Speaking at the long-awaited release of the draft IRP base case, head of generation Matshela Koko dismissed arguments that the base case lowered the urgency for the issuance of the nuclear tender.

He also made a distinction between testing the nuclear market and actually signing a contract, noting that Eskom issued a Nuclear 1 enquiry in 2008, but had never actually contracted with either Areva or Westinghouse, the two vendors invited to participate, for any new reactors.

Koko argued that Eskom, which was recently confirmed by Cabinet as the procurer, as well as the owner and operator, of any new nuclear capacity, needed to plan for a scenario of even tighter carbon constraints and for limits on how much new renewable energy could be added in a single year. The model limits solar PV additions to 1 000 MW a year and wind to 1 800 MW a year.

Under this hand-picked scenario, which is one of many that will be debated ahead of the finalisation of the new IRP in the early part of 2017, Koko argued that the model showed that 1 359 MW of new nuclear would be required by the end of 2025. For this reason, he insisted that Eskom could not delay in testing the market by going out on enquiry.

“We need a ten-year lead time [to plan for nuclear],” he said.

By contrast, the IRP base case, which includes the same self-imposed limits used in the IRP 2010 for how much renewables can be introduced in a single year, outlines the introduction of the first 1 359 MW of new nuclear only in 2037, climbing to a total of 20 385 MW in 2050. It uses a cost assumption of R5 400/kW installed.

It also caters for the addition of 17 600 MW of new solar photovoltaic (PV) capacity between 2021 and 2050 and 37 400 MW of onshore wind over the same period.

The South African Photovoltaic Industry Association (Sapvia) described the 17 600 MW for solar as a “step in the right direction”. However, it added that the allocation fell short of the immense potential South Africa had to offer in this sector. “Independent modelling, based on up-to-date figures from South Africa’s REIPPPP bidding rounds confirm that renewables are the best policy choice in order to meet South Africa’s energy needs at the least cost, while still maintaining our carbon obligations,” Sapvia said in a statement.

New coal-fired capacity is limited to 15 000 MW and hydropower to 2 500 MW, while 13 332 MW and 21 960 MW have been allocated to open-cycle gas turbines and combined-cycle gas turbines respectively.

Interestingly, no provision has been made for concentrated solar power, or CSP, a technology that is the subject of a dispute between Eskom and the developers of the 100 MW Redstone CSP project in the Northern Cape. The project has been adjudicated and approved, but Eskom is refusing to sign off on a power purchase agreement, citing affordability concerns.

Southern Africa Solar Thermal Electricity Association chairperson Pancho Ndebele described the exclusion of CSP in the draft IRP 2016 as demonstrating a lack of appreciation of the value CSP plays in providing clean and dispatchable baseload, mid-merit and peaking power.

"The CSP community is reviewing the IRP documents and we will engage policy makers and participate in the forthcoming IRP consultations to demonstrate that the final draft IRP 2016 does require CSP as part of our country’s  future energy mix and creating long term sustainable jobs for the youth," Ndebele said.

Under the base case, gas and renewables make up the largest chunk of new installed capacity by 2050, but coal and nuclear contribute the most, by volume, to electricity supply by 2050.

However, Department of Energy deputy director-general for policy, planning and clean energy Ompi Aphane stressed that the figures changed materially from scenario to scenario and indicated that at least 12 scenarios would be tested before the IRP was finalised. One of these would include an option for “unconstrained renewables”, which could exclude, or at least diminish, the role of nuclear in South Africa’s future mix.

In a recent study, the Council for Scientific and Industrial Research found that a future mix comprising 70% solar PV and wind and backed up by natural gas would be the cheapest for the South African power system. It argued, too, that this “re-optimised” mix would be almost R90-billion-a-year cheaper by 2040 than the business-as-usual scenario, which relies more on coal and nuclear.

In an IRP scenario that adjusts the base case to the implementation of carbon budgets and eliminates constraints on renewables, the contribution of solar PV and online wind rises to 50 060 MW and 106 100 MW respectively by 2050, while nuclear’s contribution declines to just 5 436 MW.

Energy commentator Johan van den Berg, who previously led the South African Wind Energy Association and who sits on the Ministerial Advisory Council on Energy, which has been critical of the inclusion of nuclear, said the IRP appeared “robust” in terms of the assumptions used.

However, he stressed that these assumptions included that of major constraints on the deployment of renewable energy, which, if loosened, would materially alter the IRP.

“The assumptions could have been more optimistic on renewables and we could have moved more towards an unconstrained base case, but I am confident that will get discussed,” Van den Berg said.

Even given what was outlined in the base case, which was described as a “starting point”, he still expected a “high penetration” of renewables in the future mix, owing to the fact that costs were falling and the solutions could be added incrementally, rather than in large chunks.

On moving ahead with a nuclear procurement in the absence of a final IRP Van den Berg quipped: “If you were even-handed, you would also plan for an unconstrained renewables future and you should put out similar [procurement] documentation for renewables by the end of the year.”

Eskom’s decision to release the nuclear RFP ahead of the final IRP was not contradicted by Energy Minister Tina Joemat-Pettersson, who shared a podium with Koko at the release of the draft IRP and Integrated Energy Plan (IEP) documents for public comment.

She did so despite opposition from her own Ministerial Advisory Council on Energy, which raised questions about the role of nuclear in the plan.

“The Ministerial Advisory Council on Energy has provided us with very important information and that information has been taken into consideration in our planning processes. The Department of Energy will continue presenting the country with policy options and objectives and the Cabinet has agreed that Eskom will be the procurer, the owner and the operator of the nuclear power plants,” Joemat-Pettersson said.

Nevertheless, the decision to proceed with the nuclear tender in the absence of a final IRP is likely to face opposition, with the Organisation Undoing Tax Abuse, or Outa, having already written to Joemat-Pettersson, The Presidency, the National Treasury and the National Energy Regulator of South Africa demanding that any new build nuclear project be placed on hold, until the IRP is “credibly updated and subjected to public input”.

Joemat-Pettersson said the release of the IRP and IEP signalled the start of the public consultation process, which would include provincial roadshows in December and January.

Department of Energy deputy director-general Jacob Mbele indicated that these consultations, which would include engagements at the National Economic Development and Labour Council, would continue until February.

Thereafter, the IRP would undergo “policy adjustments” within government in March ahead of its adoption and promulgation, once approved by Cabinet.

Edited by: Creamer Media Reporter
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