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IRP demand assumptions are ‘far too high’

SA’s long-term energy plan is based on 4.3% average GDP growth over next decade.

South Africa’s much anticipated long-term energy infrastructure plan that was 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.

Read: SA cabinet approves power plan

The plan, known as the Integrated Resource Plan (IRP), maps out the scale and pace of new electricity generation capacity to be commissioned over the next decade and specifies the technology mix.

It 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.

Read: Expert panel proposes new renewable energy zones

In the document that was approved by cabinet last week, government admits that the growth in demand for electricity anticipated in the earlier IRP 2010-2030, which was promulgated in 2011, did not materialise.

This, it states, was the result of among other things “lower economic growth; improved energy efficiency by large consumers to cushion against rising tariffs; fuel switching to liquefied petroleum gas (LPG) for cooking and heating; fuel switching for hot water heating by households; and the closing down or relocation to other countries of some of the energy intensive industry”.

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 huge 18%.

Expected electricity sent out from IRP 2010-2030 vs actual

Source: IRP2019, Statistics SA and promulgated IRP 2010–2030

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.

Expected electricity demand forecast to 2050 – IRP2019 provides for three scenarios:

Source: IRP2019

The upper forecast maintains the current economic structure and assumes average annual DGP 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.

Attard Montalto says Intellidex sees 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.

New nuclear build

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.

In the risk analysis that forms part of IRP2019 the authors acknowledge that actual demand “is more likely to be lower than forecast, because of grid defections for various reasons”.

It proposes mitigating the risk by managing the pace and scale of implementation of the new generation capacity the IRP provides for – by accelerating or slowing down the ministerial determinations without which such developments cannot go ahead.

It has to be noted that Eskom in the past has based the demand forecast in its tariff applications on the IRP assumptions. The fact that actual demand turned out to be much lower left it with a revenue deficit that it is still fighting to recover by challenging the decisions made by energy regulator Nersa in court.

IRP2019 – the emerging long term plan

Source: IRP2019

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E-skum 1st needs to stabilise it’s balance sheet, reduce its debt and prove that it can once again become a solvent entity capable of carrying out its sole mandatory purpose before pursuing any ambitious new projects.
It needs to pull all of this off without driving away consumers, with ridiculous price increases (as has become frequent), as they simply can’t afford it or will seek out alternatives.

To even consider nuclear builds is ludicrous…it’s a well known fact that it’s the most costly. Track record provides little faith in feasibility, since we already have 2 mostly dysfunctional and incomplete coat stations at a price more or less the same as what nuclear would’ve cost.

and get rid of 27000 unnecessary non-productive employees, – just calculate the effect of it even if they earn a salary of just R10 000 per month.

e-skum works on the basis that financially, there will be always somebody to help of the technical-, financial- and operative mess they themselves together with the help of the current government work themselves into the ground or is it the grave.

They still do not understand how a business is managed in real life – especially financially – they assume “we will be saved be a government which can’t distinguish between arthur or martha themselves but utilizes the taxpayers money to keep them afloat. technically we see the direct effect of bee and pathetic /low /sub standard quality control on contract work, sub standard coal, bad welding work – steam pipes leaking etc etc etc – eskoms own solution to this massive problem is just annual increase electricity to the cost of the taxpayer once again

Can’t do with without enough cost effective capacity. Obviously.

Kusile has one unit that is “operational”. The remaining 5 units are supposed to deliver 800 MW each when they “eventually” become active, but due to faulty design are unlikely to deliver as much. Let us be generous and assume each will “eventually” deliver 500 MW.

The the above 1 500 MW of new coal generation must mean that Kusile units 2-4 will be “completed”, and that units 5-6 will be abandoned?

Anyone contemplating a new nuclear build is clearly suffering from Alzheimers.

“affordable modular units close to end-users of electricity” is naieve on two grounds:–

A Modular nuclear is LESS affordable than conventional.|

B No end-user wil assume the risks associated with being close to an easily sabotaged reactor

The entire ANC are a mistake.

So I wont bother reading their plan that they likely paid a comrade’s daughter to do and likely haven’t read themselves.

Agreed. I trust the article is based on the correct report after they released the wrong one. Then the Honorable rabble rousing minister says there is no crisis just a problem which needs to be addressed – which he and his party and its cadres will be responsible for identifying and finding a solution.
I imagine we are going to have to migrate to another country or if not possible, to charcoal and solar and for a large portion of the population complete darkness.
Wind and gas would work fine if we could harness the products of the gang sitting in parliament – they produce enough rubbish light up the entire continent.

Wouldn’t we rather have an excess of power instead of the loadshedding that we’re currently experiencing. Take the excess and sell it to our neighbors who we know need it drastically. Additionally, its reasonable to assume that the current short fall in forecasted demanded is due to the lack of supply – Eskom can’t reliably supply therefore new businesses are not being established. Had Eskom done their job and kept of electricity supply well stocked, more new businesses would have opened and the IRP2010 projections may have been spot on, but no one wants to invest in business when they’re uncertain about whether they’ll have the electricity to even run it.

Wouldn’t we rather have an excess of power instead of the loadshedding that we’re currently experiencing. Take the excess and sell it to our neighbors who we know need it drastically. Additionally, its reasonable to assume that the current short fall in forecasted demanded is due to the lack of supply – Eskom can’t reliably supply therefore new businesses are not being established. Had Eskom done their job and kept of electricity supply well stocked, more new businesses would have opened and the IRP2010 projections may have been spot on, but no one wants to invest in business when they’re uncertain about whether they’ll have the electricity to even run it.

Yes, that’s my view. What demand rate should they target over a decade? 1%? It’s a dumb article.

Whaaaaaaaaaaaaaaaaaaaaaat? No CSP? not even one watt? I was looking forward to the registration of “HetNoordKalahariGekonsentreederZonnenKragMaatskapy”

PJ where are you when we need you to sort these ANC guys out once and for all?

This article is ill informed I feel. Assuming near flat demand to match the near term GDP growth profile would be a ridiculous thing to do. You would plan to build capacity like you never intend to achieve high growth again. The trade off between not having enough power or building too much power is obvious. You lose a huge chunk of value through load shedding whereas paying a bit extra for additional capacity which may be surplus is costly but if a fraction of the lost value from halted production.

Electric vehicles are already a thing, demand for electricity will escalate at the expense of liquid fuels.

Some great comments. The faster the renewable IPP with win and solar implements at R/ kWh below Eskom cost of coal the faster the Hendrina etc power stations can be shut down.

PS what happens to all the scrap metal?

What most of the projections miss is displaced kWh caused by self consumed solar. It might not change peak kVA but it sure as hell wipes out kWh from the graph.

Other than for off-grid loads, we probably need a way to sort out the issue of less kWh needed from a grid that must still at times carry the same kVA…

If batteries can halve in end user prices, AND hybrid inverters can drop also by half, then we can probably handle 2040 with 2010 grid capacity. And deal with loadshedding

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