IRP update makes a step-change to informed decision-making

The 2013 update of IRP 2010 is very good technically – and more than that. In several respects, I think it is a significant improvement on the previous electricity plan, moving from presenting a single ‘preferred plan’ to decision-making under uncertainty. Nuclear and concentrating solar power (CSP) are to be reconsidered, in relation to actual demand, shale gas and cost (a threshold for nuclear, and learning for CSP).

To explain which document I’m referring to: The Integrated Electricity Plan (IRP 2010, published in 2011) has been updated, with a document released on the Department of Energy (DoE) web-site in early December 2013. Overall, the 2013 IRP update of the IRP presents clear information, and that enables informed debate on important matters of public policy.  The more flexible approach to decision-making, given the multiple uncertainties, seems prudent – and I hope policy-makers take it on board.

To expand on two key examples: For nuclear power, the update suggests that nuclear procurement be re-examined in 2015, if demand exceeds 270 TWh and there is no shale gas development, it might go ahead. Nuclear costs are still assumed, as a central case, at a low $5800 / kW; but a more realistic $ 7000 / kW is a sensitivity analysis (with no new nuclear coming in at this cost). In the decision-making approach, it suggests that in 2015, even if demand is high and there is no prospect of shale-gas power plant, that if nuclear costs exceed $6500 / kW, then the procurement programme should be abandoned.  The update effectively indicates that a decision about nuclear is not needed now, but ten years before it comes into the highest demand scenario in 2025 (in principle confirming a key finding of ERC’s Towards a New Power Plan).

Apply a similar approach to key a renewable energy technology, CSP, applies the criteria of checking actual energy demand  (280 TWh), and shale gas – again. The key cost consideration is technology learning, i.e. speed at  which solar costs (in terms of $ / kW installed) come down as global cumulative capacity increases. Note that PV and wind come into the modeling in all variants, and the policy implication drawn is that they should continue to be implemented.

It seems that under lower demand forecasts, neither nuclear nor CSP will be needed to meet energy demand, but both are needed to meet our GHG mitigation goals (peak-plateau-and-decline; Copenhagen). The update does suggest that, if the price of nuclear went above $6500 / kW, the procurement programme should be abandoned.

Electricity  demand projections have been adjusted to more realistic levels, sensitive to recent past and future goals. The trade-offs become clear between aspirations to development and the assumptions that it is led by high GDP growth; and more realistic, lower economic and electricity demand. The higher growth scenarios are combined with shift to less energy-intensive industry – an important transition in itself.

This is sensible, following the financial crisis and persistently low economic growth. The update includes several demand scenarios (in itself good practice). It acknowledges that some assume high GDP growth rate (5.4%), and makes clear that this demand would materialize if the goals of the National Development Plan are to be met, which it calls “aspirational”. The IRP update now projects electricity demand in a range of 345-416 TWh in 2030, significantly below the 454 TWh of the original.

Mitigation goals are based on 45% of our peak-plateau-and-decline trajectory, and analysis of both carbon budgets and the carbon tax are presented. The 45% share of the national carbon budget is down from the 50% assumed in IRP 2010. That is more line line with the electricity sector’s share in our national GHG inventory.  The carbon budgets derived from our national policy are very clearly stated (in para 6.14 of the update, and similar to what ERC has also derived).  The range for aelectricity sector is given as 6.1 to 9.6 Gt CO2-eq for 2013-50; derived from a national total under peak-plateau-and-decline (13.5-21.4 Gt CO2-eq). The update then looks at a single number towards the high end of that range (9.4 Gt CO2-eq for the period 2013-2050), and looks how different scenarios do against it. It is clear that only the “Advanced Decline” carbon budget at 9.4 Gt CO2-eq for 2013-50 stays below the upper end of the range of the carbon budget for the electricity sector.  The “Constant Emissions” and “Moderate Decline” scenarios way exceed the sectoral carbon budget.

A carbon budget approach allows reductions in emissions somewhat later than “Advanced Decline”, but requires deeper cuts later. This is because reductions can be achieved over a number of  years, so that a slight rise above the budget in one year can be made up by greater reductions in a later year. This illustrates the flexibility of timing that a multi-year carbon budget provides.

While good and clear information is presented on GHG emission reduction goals for electricity, there is still room for further  improvement – on the shape of electricity sector carbon budgets and the emissions path up to 2030 (and what is assumed, as distinct from model results). But these detailed questions illustrate again that the IRP update enables an informed public debate, on the technical issues.

It seems that the update now considers “Coal 3”, which had been politically announced some time ago, not as another 4500 MW mega-plant (like Medupi and Kusile). Instead, it includes 1000 to 1500 MW of fluidized bed combustion plants, which use discard coal.

What is not certain is how the updated IRP will relate to Ministerial determinations, either additional renewables or baseload. Ministerial determinations are forced into the base case – but only for committed plants. How the rest of the determinations – including the entire baseload IPP determination – would relate to the updated IRP is not clear. More broadly, it would be of concern if the good technical information in this update were ignored in political decision-making.

Energy efficiency and demand side management (EEDSM) has not been updated for per unit costs – but at least this gap is clearly acknowledged. However, the update does refer to structural change to less energy intensive sectors (in ‘Green Shoots’ demand projections) and calls to “formalise funding for EEDSM programmes and secure the appropriate mandate for the national entity to facilitate these programmes”.

The most significant down-side, in my view, is on process. IRP 2010 had run a participatory process, with opportunities for many stakeholders to make inputs; this was not repeated, with the update treated as a technical exercise. To ensure that good technical planning has broad support, the next full IRP must return to transparent process.  Having said that, there is a suggestion in that updates be done annually, which provides an opportunity for running a full transparent and participatory one year, and a more technical update every other year.

An overall, this update presents good information, and an important step forward. South Africa’s energy challenges required informed decision-making, and it is crucial that all electricity generating technologies – coal, nuclear, gas, renewables – are debated publicly, based on clearly presented information on the choices.