Draft Integrated Resource Plan 2018: public hearings

Meeting report

The meeting was attended by a large contingent from the Department of Energy (DOE) led by its Director General, Mr Thabane Zulu. Various NGOs, members from the nuclear and renewables industry, academics from the University of Cape Town and the media attended as well.

The Chairperson said that the Committee wanted to conclude its work on the Draft IRP as soon as possible and did want its progress to be delayed within the Committee. The Committee would adhere to the agreed timelines in finalising the matter in Parliament. He indicated that there would be minimal engagement and discussions with presenters to enable it to conclude its programme and that it would interrogate the submissions at a later date.

SolarReserve/STASA (Solar Thermal Association of South Africa)
Mr Terence Govender: Africa Vice President of Development, SolarReserve gave background on STASA, a brief explanation of what Concentrated Solar Power (CSP) was, success stories in the country, views on the global status of renewable energy (RE), comments on the IRP and some ideas on the way forward.

STASA was established in SA to promote CSP technology and to highlight the benefits of its inclusion in the energy mix of the country as a sustainable energy source and to promote its technological benefits. Members included SolarReserve, Engie, Bright Source, University of Stellenbosch, Bokpoort CSP and SAREC (South African Photovoltaic Industry Association) members.

CSP uses sun tracking mirrors to concentrate the sun’s energy on a solar thermal receiver (liquid molten salt or water, heated to around 600°C). The heated liquid was passed through a heat exchange to generate steam which is then used to drive conventional steam turbine generators to generate electricity. Currently CSP use is constrained in SA and the country only has around 600MW CSP power generation facilities under construction or in place, all in the Northern Cape such as Khi Solar (50MW), Xina Solar One (100MW) and the Kathu Solar Park (100MW). The 600MW was the result of 5 rounds of bidding in SA. By comparison, Dubai had a single award bid of 700MW. CSP projects are constrained in that it was capped at 100MW and received limited policy support from government (only 2 projects per procurement bidding round) with a total cap of 600MW which was far lower than elsewhere in the world where similar solar power generation conditions existed. South Africa has one of the best solar resources in the world and was second only to Chile, so there was ample opportunity to exploit the resource more optimally.

Globally, CSP power was expected to grow by 87% (4.3 GW) by 2023 with China (1.9 GW), Morocco (1 GW) and the Middle East (1 GW) leading the charge. Chile and Australia also had plans for plants.

Mr Govender said that the decommission of 12000 MW from Eskom had to drive the IRP forward. It was important that the stimulation of the (RE) economy could not wait for Eskom to decommissioning its power stations and that the sector had to drive its own plans to support economic growth. The needs of the Draft IRP had to be balanced with the National Development Plan, Just Transition, emissions commitments and the procurement of power. Low cost energy was a critical consideration for power generation in the Draft IRP, but the CSP data used in the IRP was not correct according to STASA and it requested DMR to share the information with them to enable a better understanding of the cost modelling. The cost of CSP reduced depending on the size of the facility - 50MW was just below R3.5 per K/Wh and 200MW was below R2.00 per Kw/h and was reducing further.

STASA recommended that the Draft IRP not limit investment in SA and that all types of technologies had to be considered, the IRP should not prescribe technologies. CSP power plants had to be considered for base load programmes. CSP could stabilise the network, reduce emissions and contribute positively to climate change mitigation. The Draft IRP had to be updated every two years to track the latest technology changes and the energy supply had to stimulate growth in the country.

Centre for Environment Rights (CER) submission
Ms Robyn Hugo and Ms Nicole Loser said that CER were activist lawyers that helped communities and civil society organisations in SA to get constitutional justice in terms of environment issues that affected their lives negatively, such as “ Life After Coal Campaign”.

 The submission highlighted CER concerns and objections to the Draft IRP and comments on other matters such as the protection of jobs, environmental concerns and some recommendations.

CER said according to Section 24 of the Constitution all South Africans had a right to an environment that was not harmful to their health or well being. The State had a duty to take reasonable legislative and other measures to give effect to this right.

The current IRP was a better document that the 2010 and 2016 versions, but there were still some problems: • CER objected to the inclusion of 1000MW new coal capacity which was unnecessary and harmful - the plans for Thabametsi and Khanyisa would merely exacerbate pollution and increased water usage in a country that was already severely water constrained. According to the Energy Research Centre at UCT, this would cost an additional R19.8bn and inevitably lead to large increases in Eskom’s electricity tariffs - this was not in the best interests of the people of South Africa.
• The failure to convey the urgency with which we need to transition from fossil fuels and eliminate harmful greenhouse gas emissions.
• The Draft IRP contained extensive provisions for new gas capacity without including important information on its source or a comparison with other new technologies like battery storage
• Some of the assumptions for demand projections and costs were inaccurate
• Failure to conduct adequate consultations with stakeholders, especially affected communities.
 
Some transition from coal was already underway including further job losses unless government implements clear, credible and well communicated plans to support workers and diversify the economy to absorb them in other areas, such as in the RE industry where there was potential for extensive employment. Coal mines do not need further support, it was better to directly support workers via retraining and reselling them for other jobs.

There was an urgent need to address the climate crisis. Parts of the country will become drier with significant impacts on human health, agriculture and water intensive economic sectors - further reliance on fossil fuels like coal in the Draft IRP exacerbated the problem. According to James Hansen, a climate scientist, coal was the single greatest threat to civilisation and all life on our planet.

CER concluded by stressing that there had to be an urgent transition away from coal. New coal power plants needed to be abandoned and the decommissioning of the country’s ageing coal plants had to be expedited. An IRP that still included coal fired power stations was unconstitutional and would be challenged.

Ivy Asset Management submission
Mr Brian Main, an Ivy Director, focused on the opportunities afforded by battery storage as an energy source to reduce South Africa’s reliance on imported oil and other fossil fuels. Battery storage technology was rapidly growing globally, especially in countries like the United Kingdom, EU countries, USA, Canada and Australia. South Africa had the scientific expertise (such as CSIR) and importantly, abundant raw materials (lithium, vanadium, nickels, cobalt and graphite) to build a robust battery storage facility. The Bushveld Igneous Complex of rocks, north of Johannesburg, contains the richest vanadium deposits in the world.

Battery storage technology could be used in the car manufacturing industry and as more electric cars are being manufactured, this would provide new growth in this sector (R165bn export industry for SA). China was currently constructing a 200MW vanadium redox flow battery system to take advantage of new opportunities to move away from conventionally fuelled vehicles.

Batteries had an added advantage that they did not have to be synced into the grid (like other sources, such as gas) as its power availability was instantaneous. A vanadium redox flow battery storage system would have a life of 20 years.

South Africa already had some capacity and expertise - Mr Fortune Mojapelo was the CEO of Bushveld Minerals an integrated vanadium producer that the supplied solar and wind power industry as well as automotives. It recently announced that it would diversify into battery production (a vanadium-based electricity storage device) for Eskom.

LANDROSA (Land Rights organisation of SA) submission
Mr Vusumizi Ngqokomashe, LANDROSA President, said that the drive for economic sustenance had impacted negatively on the environment and the quality of life. This was mainly impacting on the poor while only a few benefited economically. There were fundamental failures in the IRP for the protection of citizens from an environment that was harmful (Section 24 of Constitution) - referring to the continued dominance of fossil fuels in the Draft IRP.

There would be negative impacts on food and water security and eventually the economy. Failure to adequately address the harmful effects of green house gases (GHG) would result in increased food prices affecting mainly the poor. Farm indebtedness would also increase. Agricultural productivity would be severely impacted by the continued effects of harmful GHG and increased water scarcity, leading to further job losses.

South Africa was not committed enough to reduce GHG emissions, citing the new coal fired infrastructure programmes planned at Thabametsi and Khanyisa. The only way to reduce GHG was to reduce power generation from coal and transition to renewable sources like wind and solar.

There was not enough comparative data in the Draft IRP to enable one to have clear understanding of the benefits of switching from coal to renewables. The information presented need more clarity. South Africa had to celebrate the decommissioning of the coal fired power stations as our commitment to reduce GHG.

Western Wind/Evergreen Renewable Energy submission
Mr Paul McNaughton said that he represented small RE developers. In 1996 Eskom had 40 000MW generation capacity. A request to build new capacity to augment the 15% reserve capacity and ageing power stations was turned down by government in 2007. Today Eskom’s capacity had shrunk to about 30 000MW and the main reason the country had not experienced more sustained power shortages was due to large users like aluminium smelters exiting the grid. The reduced power had impacted negatively on economic growth and some economists indicated that the economy could have grown by an additional 10% if it were not for the electricity constraints.

Government had to be credited with the introduction of the REIPPP programme (Renewable Energy Independent Power Producer Procurement) as it offered clean, environmentally friendly energy. RE used little water, there was no ash pollution, had lower operating costs and importantly had shorter lead times to bring the facility into production (two years vs. ten or more years to bring a Medupi -type coal plant on line). REIPP used private capital and does not require any government funding. In addition it led to the improvement of the land (such as removal of alien vegetation like Port Jackson during construction). RE prices have also reduced from R1.14 per kWh to 62c per kWh.

Western Wind and Evergreen were funded by partners in Estonia that would have resulted in a positive inflow of money to the country if it had not been for the three year RE stalemate when no new power purchase agreements were signed by Eskom. This was a lost opportunity for new investment in the country and his company had a RE project in the Western Cape that would benefit local communities (R350m over the 20 year life of the project), provision of jobs and access to cheaper electricity. In addition it would eliminate some of the severe electricity losses (15-20%) as a result of Eskom’s ageing assets where there was power loss during the transmission from Mpumalanga to the Cape.

He was delighted that REIPPP had been reinstated and that their partners were ready to invest but he was concerned that bidding would only open in 2023. The industry had already waited eight years and another five years would mean that investors would once again go elsewhere with their money. He asked that the bidding window be shifted forward to 2019 to help promote investment in the renewable energy sector now and not in eight years' time.

Greenpeace submission
Mr Happy Khambule represented Greenpeace and said that his organisation wanted to give a “human face” to the impacts of Draft IRP and not just the technical and financial aspects. The impact on people was important and they wanted to ensure that social and environmental justice was not lost in the overall debate.

A key theme that ran through the Greenpeace submission was the impact on the lives of people and it emphasised no more coal, no nuclear and wanted to highlight the impact on water resources. It was concerned about process uncertainty in the IRP and wanted the Committee to continue its oversight role on the IRP including its finalisation and implementation - especially ensuring that communities were informed on the process and that there was good governance.

Greenpeace was concerned about the negative impacts of the continued use of coal on climate change and asked that DOE include the latest information (IPCC panel of 8 October 2018) on climate change in the Draft IRP modelling. Escalating food prices caused by drought and water scarcity was a real concern if we continued to use coal. The least Parliament could do was to stop activities that added to the problem. DOE had to stop coal use in the Draft IRP and fast-track the transition to renewable energy. Including coal in the new IRP was irresponsible and put the lives of future generations at risk. The 1000MW new generation as well the Units 5 and 6 of Kusile had to be removed from the Draft IRP.

UCT’s Department of Electrical Engineering submission
Emeritus Professor C. Gaunt, supported by some of his colleagues, noted that demand for electricity had declined steadily since 2009 when load shedding was introduced by Eskom. More work was needed on the Draft IRP and he raised the following matters:

Electricity consumption depended on economic growth. There were five scenarios - High growth, full recovery from the impact of load shedding, full recovery with increased energy efficiency, economic decline and finally the collapse of the economy. Currently growth forecasts were around 200 000 to 250 000 GWh (it was at a pivotal point where growth could either be aligned to the full recovery and increased efficiencies scenario (300 000 - 350 000 GWh) or if there was economic stagnation, it would stay in the current band. The latter scenario would not address the challenges the country faced  for jobs, growth and energy security. Government policies therefore had to target clear and realistic growth policies, for the benefit of the people.

The proposed power build programme in the Draft IRP from 2018 to 2030 was still dominated by coal but now included nuclear, hydro, pumped storage, PV, wind, CSP, gas/diesel and other (such as biogas, landfill). The installed capacity mix by 2030 would be: coal at 44.6%; PV (photovoltaics) 0.5%, wind 15.1 % and gas/diesel (for peak power) 15.7%. He was concerned about the stability of wind power given the intermittency of winds. The amount of gas and diesel for peak power was perhaps too high. Restoring Eskom as the primary power generator was a better option in the interests of the country as a whole vs. outsourcing power generation to others.

Further and urgent investigation was needed on the following important matters:
• the ability to raise private and public project capital
• the suitability of the private sector and for-profit electricity supply organisations for a developing country like South Africa.
• regulatory changes that supported the outcomes for, and maintaining reliable power supply.
• whether past decisions could be rescinded.
• whether similar or the same technology trajectory should not be procured by Eskom acting in the interests of the whole country and under the control of Parliament through the Minister. Eskom had to remain the supplier of last resort.

Project 90x2030 submission
Mr Richard Halsey said that Project 90 by 2030 aimed to inspire and mobilise a low carbon power generation option for the country. It advocated for the decarbonisation of power generation to meet climate change minimum standards by containing temperature increases to 1.5 °C. It was concerned about the lack of urgency to decarbonise the power generation industry in the Draft IRP.

The submission focused on five aspects - the planning horizon, the lack of urgency to decarbonise the power generation industry, JET (Just Energy Transition), ownership and externalities - these aspects were discussed in relation to the use of coal, renewables, gas, nuclear and hydro options in the Draft IRP.

The Planning Horizon was being compiled with an unsure future (beyond 2030). The Plan had to address human concerns on the access to and affordability of electricity. It had to ensure that environmental factors were managed appropriately (such as climate change, pollution and land degradation). Project 90x2030 preferred small, agile and flexible small scale projects that could be built quickly vs. large mega projects with long lead times and “locked in” aspects over the life of the project. Plans had to contain detail about the short a nd medium term, whilst in the longer term period, required some goals we had to aspire to (such as net zero harmful emissions by 2050).

Although the Draft IRP indicated a shift from fossil fuels to renewables, the transition was not rapid enough. Coal plants were still being built and renewables limited. There was an urgent need to reduce emissions now, to enable the county to achieve the average global goal of a minimum 1.5°C warming increase. The Draft IRP had to be aligned with this carbon budget.

A Just Energy Transition (JET) was to make the progress of shifting to a better (i.e cleaner and more affordable) energy system as fair and just as possible. This had to be done by looking after people in the sector (such as those in the coal sector) who would be negatively affected by the energy transition due to job losses. The economic case for Renewables was improving continually so the justification for its use was stronger than in the past. Government had to urgently develop a Just Energy Transition Plan that ensured aspects like worker transition and re-skilling was in place and this had to be included in the Draft IRP.

Current ownership in the power generation industry was based on two main groups - government (Eskom, the monopoly state owned entity) and the private sector / Independent Power Producers (IPPs). Globally there are increasing models of successful public, social and community ownership models and he advocated for a shift in current models to the latter for the benefit of ordinary SA citizens.

Some of the externalities raised by Mr Halsey were that the Draft IRP did not consider all of the costs associated with GHG - water, ecosystems and climate change impacts were ignored. Technology and fuel costs formed a major input into the Draft IRP as well as nitrogen oxide, sulphur oxide and particulate emissions - however other externalities like the costs to society that resulted from the actions of a third party that resulted in social, health and environmental degradation - were not considered. These had to be included in the Draft IRP as well as the impacts on water (usage and pollution), climate change emissions (methane and nitrous oxide) and ecosystem impacts ( such as land damage, loss of biodiversity and soil degradation).

The need for an additional 1000MW coal was not supported and it would be more economic to cancel the construction of Kusile Units 5 and 6. In addition, the decommissioning of the older coal plants had to be fast-tracked, to enable earlier savings (R12b estimated). This would allow a faster transition to a low carbon electricity sector. The EMSEZ coal plant should only be allowed if was low carbon. EMSEZ - the South African Energy and Metallurgical Special Economic Zone, a joint venture between SA and China, was planning the construction of a coal fired power station in the EMSEZ zone in Limpopo.

The information on gas was very scant in the Draft IRP and more information was needed - such as would gas derived from fracking the Karoo be used (this must not be allowed due to the danger of contamination of ground water in the Karoo). Would the source be local or offshore, and was the use of biogas explored.

Project 90x2030 did not support nuclear in the Draft IRP as the county had better power generation options than that of outscored nuclear on various aspects like costs, construction time, non-hazardous waste, flexibility, scale and risk. Similarly it did not support that power be sourced from the Inga Hydro Project as there were far too many risks and uncertainties associated with it and the planned 2500 MW could be costly.

The Draft IRP was an improvement on the 2016 version but it still contained many aspects that had to be addressed. Project 90 x2030 and other civil society organisations were willing to work with government to produce a plan that was best for the people of South Africa and the environment.

Mitochondria Energy (MITO) submission
Mr Fana Marivate, CEO: Mitochondria Energy, briefed the Committee on his company’s plans in relation to the Draft IRP. He was supported by Mr Jan van der Merwe, a fuel cell engineer at Mitochondria. Mitochondria was formed in 2012 and Terracotta Resources owned 60%. Mashudu Ramano was the Chairperson of Terracotta Resources, a 100% back owned company. The Industrial Development Corporation (IDC) owned the other 40%.

Mr Marivate highlighted some of the key benefits of fuel cells and why this had to be a critical part of the Draft IRP. Mitochondria had installed a fuel cell for the Chamber of Mines (now called the Minerals Council of SA). It was a platinum based 100 kW fuel cell with 80/40 kW base load capacity. Fuel cells were highly reliable and more efficient than other technologies as it contained no moving parts but relied on chemical processes to create energy. It was very versatile and could use other source material like methane from coal, biogas and natural gas. It was cleaner than other technologies - no harmful substances like sulphur and nitrogen were produced. Another positive aspect was that it produced water rather than used it.

Another successful installation of fuel cells, combined with solar, was used by the Department of Science and Technology at a school near Vryburg. In this process, HySA (Hydrogen South Africa) converted water pumped form a borehole using solar power and separated the hydrogen molecules in the water to feed a hydrogen fuel cell that created electricity. Electricity was available continuously.

A fuel cell industry in SA would ensure self sufficiency for the country and would enable us to create a niche in a booming world market. Japan and China were planning large fuel cell projects by 2030 and 2050. As the fuel cell industry expanded in the country it would lower costs and it would also aid local mineral beneficiation and job creation.
 
Mr Jan van der Merwe sad that South Africa had the potential to create a similar infrastructure zone as Silicon Valley in the USA - a Fuel Cell Valley - in and around areas contains platinum group metals (PMG) and zirconia (catalysts) and chrome and iron used in the inter connecting plates of fuel cells. South Africa had the largest resources of PMGs and chrome globally, second in zirconia and sixth in iron. Some of Eskom’s decommissioned plants could be replaced with fuel cells. It would result in significant local employment, 75% less carbon emissions and would save about 145bn litres of water.

Some Committee members wanted to know where the school near Vryburg was as they wanted to visit it.

Mr Marivate replied it was outside Vryburg in the North West and was called Pualani Secondary School. Mr van der Merwe said that the technology used at the school could be scaled up to a larger project.

Gas Agency and Trading Exchange (GAtx) submission
Mr Sello Rasethaba briefed the Committee on his organisation’s views on the Draft IRP. GAtx was a new agency that was established to promote the use of gas. He was very supportive of the Draft IRP and was critical of those that criticised Eskom. He was greatly concerned about the reduction of coal in power generation and the effect it would have on the employment of people around the areas where plants were scheduled to be closed. Meeting acceptable carbon emission targets may well result in ghost towns in the Mpumalanga region. He did not think that the renewable energy industry would be able to create jobs on the scale of Eskom (i.e. the coal power generation industry).

Eskom ranked amongst the world's top 15 entities in terms of power generation and 9th in terms of sales. It had the highest B-BBEE spend in the country. Eskom had to be given a portion (“free carry”) of the new build programmes to compensate it for decommissioning its coal plants. Eskom’s 2035 strategy had to be clear on how land, bulk services and infrastructure of decommissioned coal fired power stations could best be re-engineered. Eskom had to be supported to meet its goals of electricity supply to the country.

Black Energy Professional Association (BEPA) submission
Ms Meta Mhlari said BEPA was concerned about the exclusion of black professionals in the energy industry and that its goal was to advance the participation of black people in the country’s energy sector. She was critical about the lack of access for black professionals in the energy sector.

She raised the following aspects about the Draft IRP: It fell short in terms of broad alignment to the country's goals, such as the NDP. The Draft IRP had to be aligned to eradicate poverty and reduce inequality. It represented a significant deviation from previous IRPs - it looked more like a new plan than an update of the 2010 IRP. The new draft removed key technologies that had high job creation potential, industrialisation, localisation and the development of the country’s economic potential.

Other aspects and concerns raised by BEPA were:
• the geopolitical risk of using hydro power from Inga in the Democratic Republic of Congo.
• what was the type of PV and CSP technologies that SA required.
• there was an abundance of wind but one had limited control over its constant availability and use.
• gas was important but there was no resource in the country at present.
• coal was an important constituent of the Draft IRP, it was an in situ local resource and we had to use it.  BEPA felt that the costs were overstated by 40%. It was important that we exploit our own resources to our advantage.
• the country had to do a public tender on nuclear to get an accurate and more realistic indication of costs. Nuclear was important to the country.
• Environmental sustainability and conservation of water was important.

She concluded that whatever technologies were used in the Draft IRP, it had to transform the economy. Black people had to be given greater access and opportunities in the energy industry. The goals of the NDP had to be incorporated in the Draft IRP to eliminate poverty and educe inequality. Lastly, she felt that nuclear and coal had to play a greater role in the Draft IRP.

Final comments by Chairperson
The Chairperson thanked all presenters and said that the Committee would carefully interrogate these inputs. Some significant aspects had been raised in the submissions. The Committee would not delay the progress of the IRP but it had to take time to properly assess all the views received. The DG and his team had a difficult task to incorporate all these differing and important views in the Draft IRP. Some of the big issues that had to be considered were - if we needed more or less coal, what to do about nuclear, the capping of the renewable programme as well as the use of gas, solar, wind and others. If required, the Committee might need to meet with some stakeholders again to get a better understanding of issues that were important for the country.

The meetings was adjourned.