Still more gaps than answers in IRP data
The department of mineral resources & energy has published some of the data that was used to inform the assumptions made to deliver the energy planning scenarios in the draft Integrated Resources Plan (IRP) 2023.
There is just more than a month left for the public to submit written comments on the energy plan, which will be used by the government and Eskom to make decisions about the procurement of new generation capacity and other energy planning matters.
The IRP 2023 has been widely criticised for being flawed, lacking ambition (especially for cutting back on renewable energy procurement), and threatening to trap SA in many more years of load-shedding while procuring too much new capacity from expensive sources of energy such as nuclear and gas.
The data that was published by the department a few days after the draft IRP 2023 was gazetted does provide some insight for the scenarios that are presented in the plan, but there are also still gaps that make it difficult to assess and compare the scenarios. A major gap is the lack of any information about the cost and feasibility of delaying the decommissioning of Eskom power stations.
The scenarios presented in the draft IRP 2023, both for the period up to 2030 and the period from 2030 to 2050, assumes a delayed shutdown plan of 13,000MW being decommissioned by 2034 instead of 15,000MW (as previously planned), and then there will be no decommissioning between 2035 and 2045.
Eskom’s head of generation, Bheki Nxumalo, told journalists last week that Eskom is still finalising a review of the possible costs for delaying the decommissioning of old power plants.
In 2023, the National Treasury commissioned a similar report looking into the feasibility and cost of keeping old coalfired power plants running beyond their end-of-life dates, but this has not been published for public scrutiny. Until this information becomes public it will be impossible to truly understand the electricity tariff and affordability implications of the scenarios presented in the IRP 2023.
Other questions also remain, including plans put forward in the IRP 2023 for SA to build new coal-fired power plants using “clean coal technologies”.
Such technologies remain unproven and, if implemented, are likely to be extremely expensive.
In addition, as was argued in an article published by BusinessLIVE last week by Hartmut Winkler, professor of physics at the University of Pretoria, the credibility of the plan’s costing estimates suffers for not considering the most inexpensive combination of new additional electricity: wind, solar PV and battery storage.
DEMAND ASSUMPTIONS
The demand projection model used for the draft IRP 2023 was commissioned by the SA National Energy Development Institute (Sanedi) and compiled by the Energy Systems Group at UCT. Peak energy demand is projected to grow from about 35,000MW to about 62,000MW by 2050, with little growth expected over the next decade. The electricity demand forecast is based on assumed GDP growth in the medium to long term as well as other considerations such as population growth.
Taking into account projections from institutions such as the SA Reserve Bank, National Treasury, IMF and World Bank, the GDP growth rate projections assume the economys growth
’below rate will expand from 1% at present to average 2% for the second part of this decade. After that GDP growth is expected to increase to an average of 3.2% during the 2030s, and 3.8% during the 2040s and 2050s.
The assumed population growth rate is about 1% a year this decade, before slowing to 0.9% in the 2030s and ultimately to 0.4% in 2050. This implies the population will grow from 60million people to 73.5-million people by 2050.
The GDP growth projections also assume growth will slow down in the mining and agriculture sectors in the 2030s, before picking up slightly in the next 20 years to 2050. They also expect growth in coal mining to start contracting from the 2040s.
SUPPLY ASSUMPTIONS
The department says the supply side cost assumptions were developed using the US-based Electric Power Research Institutes (EPRI) 2020/21 update on electricity supply-side cost assumption (a report compiled for Eskom). The department also used the 2023 annual report on energy costs of Lazard, a leading investment and asset management firm.
Below is a rough summary from the two reports of the levelised cost of energy — a calcula
tion of what the cost would be per megawatt-hour of electricity delivered to recover the full capital and operating costs over the lifetime of a plant, for different technologies.
The costs presented in these reports depend on and vary according to the size of the installation and other variables, which makes direct comparison difficult. Dollar to rand price conversions were made using the R18.13/$ rate used in the IRP 2023.
According to the EPRI the levelised cost of energy per megawatt hour (MWh) of electricity will be:
● Conventional coal-fired power stations: R1,400-R1,600;
● Coal when including carbon capture technologies: R2,500R2,880;
● Small modular nuclear: R2,290 and larger nuclear builds: R2,450;
● Open-cycle gas turbines: R2,650-R5,840;Combinedcycle gas turbines, including carbon capture: R2,100-R2,800;
● Wind roughly R1,200;
● Solar PV: about R1,000 for ground-mounted systems to R3,200 for rooftop systems; and
● Solar PV plus storage: R4,300.
Lazard sets out these costs per megawatt hour as follows:
● Coal (new build): R1,230R3,000;
● Coal from existing plant: R525-R1,340;
● Nuclear (new build): R2,500R4,000;
● Combined-cycle gas turbines: R1,120-R1,830;
● Utility-scale onshore wind: R435-R1,400;
● Utility-scale solar PV: R435R1,740; and
● Utility-scale solar PV plus storage: R830-R1,850. erasmusd@businesslive.co.za