Keep Energy Affordable

Keep energy affordable by using the least-cost approach in the IRP, says SAPVIA


The public participation period for the update to the Integrated Resource Plan (IRP) 2016 Update for Electricity comes to a close tomorrow [Friday 31 March]. The IRP serves as a roadmap for South Africa’s energy planning future and will decide how much nuclear, coal, and renewable energy is included in South Africa’s future energy mix.

“The biggest issue with the draft IRP2016 is that it artificially limits the amount of renewable energy that can be added to the grid over the next 20 years with no rationale for imposing them,” says Mike Levington, CEO of SAPVIA and a member of the Ministerial Committee on Energy. “Under this constrained scenario there will be a greater allocation given to nuclear and coal in the IRP at significantly more expensive cost than new solar and wind energy. This constraint will ultimately mean that the South African consumer will end up paying more.”

Rapid advancements in renewable energy have meant that the cost of new-build solar and wind energy have plummeted from R3.65/kWh in Round 1 to R0.62/kWh in Round 4. This price is significantly lower than the tariff prices for coal from IPPs (R1.03/kWh), Eskom coal (R1.10/kWh) and nuclear power which is estimated at between R1.17kWh to R1.30/kWh.

SAPVIA has recommended that the least cost unconstrained scenario of the IRP be adopted as the Base Case Scenario. This will ensure that the mix of technologies included in the IRP2016 is chosen according to those that are most cost-effective and reliable. They also recommend that the cost of any deviation from this least cost scenario is made public so that it can be debated and interrogated by government and other stakeholders.

Recent models released by the Centre for Scientific and Industrial Research (CSIR) show that solar PV and wind energy now provide the cheapest new sources of generation capacity.

“The limit on the allocation to solar PV in the draft IRP2016 are also totally in contradiction to government’s ambitions for local industrialization of the sector,” explained SAPVIA chair, Davin Chown. “We know from existing solar PV projects that they are crucial to delivery of key policy objectives around the Green Economy, the sustainable development of SMMEs and Black Industrialists and access to affordable energy,” Chown says. “The economy simply cannot afford to ignore such an important industry.”

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