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Could SA eliminate load shedding by 2024?

‘There is no good reason why that limit above which you need a [private generation] licence is set at 100MW. It’s a completely arbitrary choice. It could have been 50, it could be 75, it could be 100, it could be 1 000’: Chris Yelland – Independent energy analyst.

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FIFI PETERS: In the next two years load shedding could be a thing of the past – that is according to think tank Meridian Economics. But for that to become a reality Meridian says that we will need strong leadership from the presidency to see that extraordinary interventions are implemented without delay.

Chris Yelland, an independent energy analyst, joins me for more on the story. Chris, thanks so much for your time. What do you make of the research coming out of Meridian, just forecasting brighter days, possibly, if we do the things that need to be done?

CHRIS YELLAND: I think it was a very, very important report – in fact, two reports that were released today by Meridian Economics.

Read: Intervene now, or load shedding could increase ten-fold

Meridian is one of the most respected economic consultancies in South Africa and has a deep understanding and knowledge of electricity and the power systems and all that is involved. These two reports were incredibly important. The first one is backward-looking. It looks at 2021, using real data and it looks at the load shedding and the load profile of 2021, and it asks the question – and does a complete analysis and modelling to find out – what it would have taken in 2021 to eliminate load shedding, or at least to reduce it to almost negligible levels.

It came to the conclusion that if South Africa had 5 000 megawatts of renewable energy – that is, wind and solar PV [photovoltaic] – in the same proportions as in the renewable energy IPP [independent power producer] programme, we would’ve had virtually no load shedding last year.

That’s a very important conclusion, and it is empirical, it is definitive, based on real data.

The next study report is forward-looking, and it looks at the next five years. Of course a number of assumptions need to be made because now you’re not working with existing real data, but with projected data that hasn’t happened yet, so you have to make certain assumptions. But in doing so one needs to make conservative assumptions and one mustn’t just be over-optimistic. Anyway, it does a similar analysis.

Basically for a start it says that if we do nothing, just carry on the way we are, we carry on procuring the risk mitigation IPP programme, the renewable energy IPP programme – which we know are not going to come to the table for the next couple of years – it works out that load shedding will increase dramatically over the next two, three, four years.

However, it also works out what is needed to avoid load shedding and it presents this data very clearly and concisely.

FIFI PETERS: Let’s get into that – what is needed – because I see that in terms of the extraordinary measures or interventions that are recommended in the report: one of them includes the lifting of the licensing exemption for generation plants from 100 megawatts to 1 000 megawatts. I’m assuming that this relates to the licensing for private power.

CHRIS YELLAND: Yes, exactly.

FIFI PETERS: All right. What do you make of that? I thought 100 megawatts was enough. In fact I thought it was even a whole lot more than the industry had asked for.

CHRIS YELLAND: What I really think is being said there is that all unnecessary regulatory processes that serve no purpose other than to delay things should be removed. There is no good reason why that limit above which you need a licence is set at 100 megawatts. It’s a completely arbitrary choice. It could have been 50, it could be 75, it could be 100, it could be 1 000. The point of the matter is it’s completely unnecessary, it is arbitrary, and there is no rational reason why it was set at a 100 megawatts and not 50 or 200 megawatts.

So the point is that is the kind of unnecessary regulation that can be easily removed without any impact, and it would encourage some of the larger renewable energy plants. Renewable energy plants these days are significantly more than 100 megawatts. So, if you look, Sasol and Air Liquide are talking about procuring 900 megawatts of renewable energy for Sasol Secunda.

So there is every reason why we should not put unnecessary stumbling blocks in the way. I’m not saying there should be no regulation, but there should be no unnecessary regulation.

FIFI PETERS: I see that the reports in fact list in the top spot the elimination or drastic reduction of local content requirements on some solar modules. Would you agree with that? If so, I thought that some of the local content requirements were to ensure that we have a local manufacturing sector that’s also able to benefit from that. So what are the implications of removing the local content requirements on building or supporting the local manufacturing sector?

CHRIS YELLAND: Look, I’m all for local manufacture, wherever possible, wherever it makes economic and business sense. Wherever it adds to the socioeconomic development of South Africa, I’m all for it. But when we are talking about the next two years, one has to remember that one cannot just start and switch a factory on and off like a light switch. It takes time to build local content and to develop it.

There are some developments taking place to manufacture solar PV modules, but the volumes that they can deliver at this point will not even nearly meet the requirements of even the risk-mitigation and the renewable energy IPP programme, let alone the kind of volumes that are being talked about by Meridian Economics in its report.

So yes, we do need to work on and develop that local content, but we must not let that stop us from doing anything in the next two years. To be frank, that is what is happening at the moment.

The local content requirements have been almost set by decree: ‘Thou shalt have such and such percentage local content.’ The point is if there is no factory that can deliver the right volumes and the right quality to meet that local content, it’s going to stop these projects in their tracks. I believe in local manufacture, but in the meantime let’s get on with building renewable energy.

And then, while we are doing this, let’s work on developing a local-content strategy and a local-content industry, the necessary factories and logistics to deliver these components.

FIFI PETERS: All right. Point taken. Let’s deal with the urgent matter right now and, while we do that, deal with others that may hit us further down the track.

Chris, we’ll leave it there for now. Thanks very much for your time. Chris Yelland is an independent energy analyst.

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