Citizenry gets a say as things hot up in energy
The public can at long last weigh in after the government this week announced its preferences for South Africa’s energy landscape. Jan-Jan Joubert looks at the options
VERY few policy issues have gripped the South African imagination over the past few years in the way that energy has.
Insecurity of electricity supply, its contribution to economic stagnation, job losses and increasing inequality, and the clear and present danger that an enormous, crooked nuclear deal posed for the country, have turned energy from a technical to a very hot topic laced with venomous criticism.
The relief was therefore visible on the face of Energy Minister Tina Joemat-Pettersson when she revealed South Africa’s Integrated Energy Plan and Integrated Resource Plan to an expectant audience in parliament’s Imbizo Centre this week.
Soon, the public will also have their say. The plans are already available on the Department of Energy website, energy.gov.za. Consultation forums will take place in Gauteng, KwaZulu-Natal and the Western and Eastern Cape between December 7 and 15, and in other provinces in January.
The plans will be discussed by Nedlac in February and the cabinet is expected to finalise the process in March.
Energy security, environmental obligations, infrastructure capabilities, cost, demand and supply of energy must be taken into account in any new plan.
Basically, South Africa’s energy supply must consist of a mix of renewables, coal, oil, gas and nuclear, with the focus firmly on renewables and, increasingly, gas.
Gas and renewables are dependent on the installation of new capacity for the use of these energy resources until 2050. Significant reduction in installed capacity from coal is foreseen.
That said, while installed capacity for the use of coal would have decreased, coal and nuclear will still contribute most of the energy mix until 2050, because renewables and gas start from such a low base.
In this regard, it is important to remember that several coalfired Eskom power stations will start reaching the end of their working life imminently, which is why progress with the new Medupi and Kusile plants, as well as the Ingula, a pumped storage scheme, is so important.
In drawing up the energy plan, a number of macroeconomic assumptions were made. First, the discount rate (the rate of return used in a discounted cash-flow analysis to determine the present value of future cash flows) remained unchanged at 8.4%.
Second, the country’s GDP projections were brought in line with 2016 budget vote projections. Finally, changing coal, crude oil and natural gas prices were taken into account.
Much of South Africa’s focus has been on the opportunities and the dangers of the proposed nuclear new build programme with its distinctly Russian flavour — which, if pursued to the initial extent of 9 600MW, could cost up to a trillion rands, bankrupting the country.
Importantly, the resource and energy plans work from an assumption that additional nuclear power would only be required from 2037, meaning construction of the nuclear new build programme need only start in 2025 — granting South Africa respite both financially and from any immediate undue Russian influence.
Indeed, Joemat-Pettersson made it clear this week that although her department recognises that Eskom is the owner, operator and procurer of nuclear power and the nuclear corporation, Necsa, would play a role, the Department of Energy will continue to set policy. At that point, presumed Eskom crown prince Matshele Koko looked as if someone had taken his lunch.
Actually, Joemat-Pettersson played the politics of nuclear astutely. As DA MP Gordon Mackay noted, she dealt Eskom and some in cabinet’s preference for an extensive nuclear deal a serious blow.
“Should the plans be adopted in their current form, she would have essentially delivered a statutory and legal framework against which any nuclear acquisition by Eskom or by the government can be measured and tested for rationality in a court of law,” said Mackay. The effect was immediate. Eskom’s counter-move in the high-stakes power game took less than 24 hours to materialise.
Koko, who is expected to take over the power utility now that CEO Brian Molefe is leaving in disgrace, announced that Eskom would issue a request for proposals for nuclear new build within the next month.
“Given this extended timeline, it is grossly premature and potentially irrational for Eskom and master of the dark arts Mr Matshele Koko, Eskom’s spindoctor-in-chief, to call for the finalisation and issuance of the request for proposals by the end of the month,” said Mackay, laying the foundation for a potential legal challenge, and showing that anyone taking their eye off the energy ball for even a day risks being caught napping.
This fight is far from over.