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Overview of South Africa's Updated Integrated Resource Plan Released for Public Comment

  • July 2014
  • 45 pages
  • Frost & Sullivan
Report ID: 2241896

Summary

Table of Contents

Scenario Planning for South Africa’s Electricity Generation Capacity

The Integrated Resource Plan (IRP) is South Africa’s master plan for new electricity generation capacity. The Integrated Resource Plan was developed by South Africa's Department of Energy (DoE) and the document sets out the projected demand for electricity in South Africa and then addresses how this demand is going to be met, in terms of electricity generation capacity, for the period to 2030. South Africa's DoE had the intention to update the Integrated Resource Plan biennially and, in 2014, an update to the original Integrated Resource Plan of 2010 was released for public comment. The final iteration of the document is expected to be published by the end of 2014, setting out the required power generation capacity additions and which technologies they will stem from.

Executive Summary
-The Integrated Resource Plan (IRP) 2010 is South Africa’s master plan for new electricity generation capacity for the period until 2030.
-Developed by the Department of Energy (DoE), it sets out the projected demand for electricity and then addresses how this demand is going to be met, taking into account the economic and political framework within which it operates.
-Since the initial version of the IRP 2010 was released, there have been many developments that affect its underlying assumptions and the intention of the IRP Update is to highlight the most significant of these, specifically those which might affect electricity generation capacity planning.
-Most notable is that the electricity demand forecast in 2030 has been reduced to between and terawatt hours (TWh), from the original TWh forecast in IRP 2010.
-This reduces the requirement for peak generating capacity from MW down to MW.
-The IRP Update is based on an annual economic growth rate of % until 2030, seen as a requirement by South Africa’s National Development Plan (NDP) to reduce unemployment and alleviate poverty.
-However, this is an aspirational objective and economic growth is unlikely to reach that rate, especially over the short term, and this brings with it the risk of overbuilding generation capacity.

The IRP Update summarises that:
oThe nuclear procurement decision can be delayed, as no new nuclear capacity is required until after 2025. Due to lower electricity demand, which seems likely, no new nuclear capacity will be required until 2035.
oThere are alternatives to nuclear power, such as regional hydro, that can fulfil the generation requirement and allow time for exploration of the shale gas potential in South Africa.
oBetweenand MW of new fluidised bed combustion (FBC) coal generation capacity should be procured, preferably based on discard coal.
oRegional hydro projects in Mozambique and Zambia should be completed.
oRegional coal options are attractive as the emissions will not be attributable to South Africa, and in cases where pricing is competitive with domestic options, they would be preferred.
oRegional and domestic gas options should be pursued and shale gas exploration expedited.
oThe existing Renewable Energy Independent Power Producer Procurement Programme (REIPPP) should be extended to procure a further MW of photovoltaic (PV) and wind capacity and MW of CSP annually. Hydro should be procured if available at a competitive cost.
oA mechanism should be developed by the DoE for power purchases from embedded generators.
-Electricity consumption patterns and technology costs have changed considerably during the past three years and will continue to do so. Therefore, the IRP should be updated regularly and allow for flexibility in decision making to ensure 'decisions of least regret'.

Changed Conditions from 2010—Technology Options and Costs Update
Technology Options and Costs
-The technology costs used in the IRP 2010 were largely based on the 2010 EPRI report 'Power Generation Technology Data for Integrated Resource Plan of South Africa'.
-This cost data was used for all generation technology options, except:
oSolar PV, which was provided by the Boston Consulting Group’s report: 'Outlook on Solar PV',
oSugar bagasse, which was provided by the sugar industry,
oPumped storage, which was provided by Eskom, and
oRegional hydro, gas and coal options, which were based on data compiled in previous Southern African Power Pool (SAPP) plans.
-The IRP Update uses technology costs based on the 2012 EPRI report: 'Power Generation Technology Data for Integrated Resource Plan of South Africa'.
-For PV, sugar bagasse, and regional options the 2010 costs have been inflated with South African consumer inflation rates, while Eskom updated the pumped storage costs.
-The overnight capital cost of new nuclear capacity has been set at $/kW for the IRP Update, although there is much uncertainty about this.

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