Energy forecasts too high, says expert
SA’s Integrated Resource Plan repeats past mistakes.
Intellidex expects average growth up to 2030 at maximum of 2%.
South Africa’s much-anticipated Integrated Resource Plan (IRP) announced on Friday repeats the past mistake of assuming a demand for electricity that is far too high, says Peter Attard Montalto, head of capital investments at Intellidex.
The IRP provides for 1 500 megawatts (MW) of new generation from coal, 2 500MW from hydro, 6 000MW from solar photovoltaic (PV), 14 400MW from wind, 2 088MW from storage and 3 000MW from gas.
Own generation will be encouraged by removing certain regulatory requirements for projects between 1MW and 10MW and government will urgently embark on emergency procurement of around 2 000MW to plug the current supply gap that has resulted from the poor performance of Eskom’s generation fleet.
In the document that was approved by Cabinet last week, government admits that the growth in demand for electricity anticipated in the earlier IRP 20102030, which was promulgated in 2011, did not materialise.
According to the analysis, the actual electricity sent out declined at an average compound rate of -0.6% over the past years, compared to the expectation of a 3% average growth rate in IRP 2010-2030. In 2016, for example, the difference was a massive 18%.
The document also points to a possible structural change in the economy to be less electricity intensive, which would be reflected in a decoupling of growth in electricity demand from GDP growth.
In its demand modelling, the authors had to adjust the 2018 demand, which is the starting point. The 2018 actual recorded demand was about 3% lower than that assumed, even in the draft IRP that was published for comment late last year.
The upper forecast maintains the current economic structure and assumes average annual GDP growth of 3.18%. It forecasts 2% average annual growth in the demand for electricity by 2030 and 1.66% by 2050.
The median forecast is based on average annual GDP growth of 4.26% by 2030, but assumes significant structural changes in the economy. It results in 1.8% average annual growth in electricity demand by 2030 and 1.4% by 2050.
The low forecast is based on 1.33% average annual GDP growth by 2030, which results in 1.21% average annual growth in electricity demand by 2030 and 1.42% by 2050. This is based on a view that mining will continue to grow, but other sectors will suffer due to lack of investment, should there be further credit downgrades for the country.
Montalto says Intellidex expects average GDP growth up to 2030 at a maximum of 2%, and the average annual growth in electricity demand at no more than 1%.
He says the too high assumptions made it possible for the planners to accelerate coal decommissioning and insert new coal and nuclear in the long term.
The IRP provides for the extension of the design life of the Koeberg nuclear power station by 20 years to 2044, which will also see a slight increase in its capacity.
Government has also adopted the position that, considering the long lead times, preparations will start immediately for new nuclear build beyond 2030. It will, however, move away from mega fleets of nuclear reactors to affordable modular units close to end users of electricity.