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NrG’s Response to the Request for Comments concerning the Draft Integrated Response Plan 2018

Next Renewable Generation (NrG) welcomes the action taken by the Department of Energy (DoE) to revise and update South Africa’s existing Integrated Resource Plan (IRP), addressing some of the uncertainties concerning the future of the country’s energy sector. However, we would like to draw attention to the following points which we believe require further consideration:

  • Given the significantly lower growth in South Africa’s energy demand than what was forecasted in 2010, NrG agrees with the emphasis on short-term planning leading up to 2030. However, input technology costs modelled should reflect current and true costs, and not use averages or revised figures from previous datasets that could produce misleading outputs and incorrect conclusions.
  • The decommissioning of the country’s coal power plants is set to be the primary catalyst behind the increased inclusion of solar PV, onshore wind, and gas technologies into the country’s energy mix. While NrG supports a future energy mix containing a greater share of sustainable and clean energy technologies, we question the rationale of adding 8 100MW of gas when the import of gas fuel is subject to pricing and supply risks beyond the control of the South African government. With no further investment linked to new projects for other clean flexible energy generation or energy storage technologies, such as concentrating solar power (CSP) or pumped storage hydropower, South Africa could find itself increasingly exposed to volatile commodity markets.
  • Given the commitment shown to a future energy mix of solar PV, wind, and gas technology, NrG questions the decision to proceed with the coal baseload IPP Programme. The inclusion of these coal projects appears to be the reason behind the absence of solar PV and wind projects from 2022 to 2025. We understand the need to soften the number of job losses in the coal sector, yet would argue that the implementation of job migration strategies aimed at reskilling coal sector-linked workers for employment in other industries may be of greater benefit to the country.
  • Eskom’s debt, and drastic need for structural reforms in both the state utility and South Africa’s energy sector, should not be considered, nor addressed, in isolation to the updated IRP. The future of Eskom will have a significant influence on the future of the country’s energy sector and future generation mix. These challenges demand urgent attention, and need to be resolved quickly to assist South Africa’s transition towards a low carbon economy.
  • The provision for an annual embedded generation capacity of 200MW is likely to be exceeded, as Eskom and municipal tariffs increase, and businesses become more familiar and comfortable with on-site generation from renewable energy sources. To assist the growth of distributed energy generation sources, NrG encourages that the DoE and Eskom examine, and improve, the means by which the wheeling and trading of electricity across the national grid can be facilitated to a greater extent, thus strengthening the business case of such projects, contributing to economic growth, and allowing for the generation of clean energy at a lower overall cost.
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