1. Preliminary Comments on the Draft Integrated Resource Plan 2018
Niveshen Govender
17 October 2018
Parliamentary Portfolio Committee on Energy

2. Introduction
SAPVIA welcomes the opportunity to present our preliminary comments on the draft Integrated Resource Plan (IRP) 2018 to the Parliamentary Portfolio Committee on Energy.
The South African Photovoltaic Industry Association (“SAPVIA” or “the Association”) is a non-profit industry association that aims to promote, develop and grow the Photovoltaic (“PV”) sector as part of the wider renewable energy industry in South Africa.
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3. Introduction Our understanding of the Draft IRP 2018.
SAPVIA supports a power-system that:
is based on the least cost – which allows the fiscus to be prioritized to Government’s core service delivery requirements;
facilitates greater energy access at affordable prices – which creates and catalyses a nett gain of jobs anticipated by the energy transition and;
encourages economic stimulation through localization and manufacturing
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4. Introduction
In support of the announced Presidential Infrastructure Plan, renewable energy will be a sector that will help stimulate the economy through the provision of low-cost, low-carbon electricity that has a sustainable energy demand to support.
Wind and solar in partnership with gas and battery storage can provide the stimulus for the growth of the Green Economy. (water reclamation; intensive farming, agri-processing etc)
The global energy transition makes economic sense with its investment and shift to low-carbon technologies and solid socioeconomic footprint.
The NDP specifically articulates the need for South Africa to decarbonize its economy, and the latest IPCC has highlighted the need for governments to take urgent and decisive action to combat the current trajectory of global warming.
The inclusion of a policy constraint on greenhouse gas emissions, in line with our commitment to the Paris Agreement is supported.
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5. General Comments on Draft IRP 2018
SAPVIA acknowledges and accolades the DoE on achieving a draft IRP where;
the approach was rational in nature,
the least cost scenario were considered as a basis,
the growth forecasts were more appropriate,
the transparency was far greater that previous versions,
the clearly defined scenario descriptions were presented, and
“value for money” could be seen through the costing of scenarios
The flexible approach proposed through frequent reviews of the IRP to manage the pace and scale of new capacity is welcomed. This flexibility is required to ensure that we do not plan for stranded assets.
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6. General Comments on Draft IRP 2018
Through our review process, we have considered a number of key questions which we would like to share with this Portfolio Committee on Energy;
Decommissioning of coal-fired power stations linked to Air Quality Act requirements – though this requirement for at least 6 stations is mentioned, these stations are not reflected in the decommissioning schedule in appendix 6.
What if the load availability is less than assumed in the IRP 2018 at 80% (currently at around 73,4% What if existing Eskom plants are decommissioned earlier than planned due to technical and/or environmental compliance requirements?
What if Medupi and Kusile come online later than assumed or if it is decided not to complete the remaining units of these stations?
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7. General Comments on Draft IRP 2018
There is a “sunk cost” economic logic of Medupi and Kusile.
The ability of the 2 coal IPPs being able to overcome the legal and financing challenges facing them to reach financial close.
The affordability of the Eskom decommissioning plan being used for the IRP 2018 analysis.
The medium-term system adequacy due to issues around the timing and availability of the new build assets and coal IPPs as well as primary energy constraints.
Whilst the IRP forecasting in rational in its choices, we would like to point our a few optimistic assumptions in our opinion;
A critical concern is that the IRP comments are to be submitted before publication of the ‘now delayed’ ESKOM MTSO Report. We request commenting on the IRP 2018 be extended to allow for the consideration.
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8. General Comments on Draft IRP 2018
SAPVIA believes that there are several key disruptive risks that the IRP has not considered adequately:
The effect of EV penetration on electricity demand
The future deployment of battery storage
The pent-up demand in the small-scale embedded generation (SSEG) market. SAPVIA is aware of the existing backlog at NERSA which will exhaust the entire allocation for the next 4 years.
We would therefore propose
Increasing the 2019 allocation for SSEG to 500MW and ramp up over the next 5 years
Quantifying the backlog at NERSA awaiting approval and deal separately.
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9. General Comments on Draft IRP 2018
Aspects not detailed in the modelling:
SAPVIA’s view is that this detail is important in better
understanding the contribution of solar PV
Cost and technical parameter tables (“as used” in the model) are not made available – cost assumptions for Solar PV fixed tilt and tracking are expensive and out dated
The recommended plan does not report energy shares (only capacity) which makes it difficult to assess how much gas volumes are required in the recommended plan
Very conservative assumptions make the cost differential between scenarios seem smaller than they are
Very high costs assumed for the grid connection of renewables, very low costs for coal/nuclear
Very low-cost reduction assumed for renewables until 2050
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10. Specific Comments on Draft IRP 2018
The Renewable Energy Independent Power Producer Procurement Programme;
The programme achievements are clearly reported by the DoE’s IPPO
The 2-3 year delays have devastated the industry as a collective - this has not been an issue of policy, but rather an issue of implementation
Unfortunately, it has been local development and manufacturing companies that have borne the brunt of these delays. At least 4 solar PV manufacturing plants have opened and closed its doors over the last 5 years, and many electronics component factories have shut down lines.
Greater policy commitment is key to the survival of the industry and the attraction of foreign investment.
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11. Specific Comments on Draft IRP 2018
The Renewable Energy Independent Power Producer Procurement Programme;
The GAP in the roll out of both Solar PV and Wind provides little confidence to investors and local payers entering this industry.
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12. Specific Comments on Draft IRP 2018
RECOMMENDATION
We request clarity on the 1800MW determined by the Minister of Energy for round 4.5 turned round 5 which is not evident in the IRP 2018 draft
We request clarity on the awarded SPP projects which are not committed or allocated in the Draft IRP 2018
To create the viable market that RE is capable of, consistent commitment is required year on year.
We propose an even distribution of the Solar PV allocations over the next 12 years until 2030 thereby eliminating the vacuum
We propose additional comments be considered post the release of the Eskom Medium Term result projections and that the situation around the Coal IPP, be evaluated and a decision of their future be made.
The Renewable sector is the only one, with the ability for accelerated uptake, and this should be noted as an optimal path in the IRP
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13. Specific Comments on Draft IRP 2018
Small Scale Embedded Generation 1 to 10 MW
SSEG creates an opportunity for greater local participation beyond the current supply industry model.
It stimulates economic activities in the manufacturing sales and installation of renewable energy products.
Commercial and residential customers are now able to realise savings from monthly electricity bills.
It encourages new innovative ideas in the manner of how electricity distributors service their customers (new revenue streams)
We believe partnerships between utilities, individual customers and private businesses reduce the impact of electricity costs and enhance job opportunities.
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14. Specific Comments on Draft IRP 2018
Small Scale Embedded Generation 1 to 10 MW
We need to consider the distribution infrastructure which will deal with the cost of unserved energy, forecasting and maintaining the demand and supply balance, and the location of generation.
SAPVIA believes that municipal owned renewable energy connected directly to their grids, renders energy dispatchable and will be of significant benefit to municipalities to reduce the cross subsidy required for the low-income residential sector.
SSEG renewables coupled Energy storage will alleviate the expensive ramp-rate issues.
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15. Specific Comments on Draft IRP 2018
RECOMMENDATION
In the attempt to quantify this market segment, SAPVIA requests the SSEG allocation viewed as a tracking placeholder rather than a CAP. The market should not be constrained.
We propose a 500MW allocation that is escalated over five years and will be instructive in informing the supply and demand balancing requirements, as well as informing future modelling of IRP revisions.
There should be a separate allocation across technologies for Municipalities that wish to generate and could be linked to NDP and IDP target expectations i.e on a percentage basis of total energy which is incremental.
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16. Specific Comments on Draft IRP 2018
The job creation debate clarified;
The combination of Solar and Wind creates 31% more jobs than coal
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17. Summary Comments on Draft IRP 2018
SAPVIA believes that It is cost-optimal to aim for 85% renewable electricity share by 2050
Potential Policy adjustments required to achieve this;
Promote RE Infrastructure in Declining Mining Regions
Deploy new energy infrastructure where the old energy infrastructure will ramp down, retrain and migrate jobs gradually
it is expected that higher tariffs will be compensated by reduced grid-integration costs thereby reducing overall costs; will make the socio-economic transition much easier
Other Domestic Technologies (CSP, biogas, (pumped) hydro, batteries) should be flexible and dispatched by the System Operator
Ramp down of the existing coal fleet must be done in a controlled manner
Priority must be given to build new optimal mix (solar PV, wind, gas)
SA could realise reduced carbon emissions and lead the African transition and create a low-cost, low-carbon energy hub.
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18. Summary Comments on Draft IRP 2018
As an association, we value the opportunity to give our comments and contribute to improving the country’s energy system.
We firmly believe in the Just Energy Transition path and actively promote transformation in the sector.
In general, the success of this IRP plan depends on the restructuring of the industry which is currently unsustainable.
Solar PV, wind and flexible power generators (e.g. gas, hydro, biogas, demand response, batteries, fuel cells) are the cheapest new-build mix for the South African power system from a pure cost perspective, no new coal, no new nuclear, any deviation from that would require a subsidy.
In an uncertain world where electricity demand cannot be accurately predicted in the years ahead, and where disruptive new technologies are emerging, the IRP should also provide enabling flexible planning decisions of least regret.
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19. Thank You
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