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Eskom calls for less haste until IRP in place

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Johannesburg - Eskom has warned against increasing the contribution of renewable energy independent power producers (IPPs) to the national grid without a revised integrated resource plan (IRP).

In its latest salvo in the ongoing debate about renewable energy, which was triggered by Eskom’s apparent discomfort with the cost of renewable energy, the utility’s group executive for generation Matshela Koko warned of the rising economic cost of renewable energy in years to come.

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File picture: Julian Stratenschulte

Koko said it did not make sense to increase renewable energy IPPs until the conclusion of the revised IRP, which was based on accurate costs of the different technologies.

The IRP 2010-30, promulgated in March 2011, determines South Africa’s long-term electricity demand and details how the demand should be met in terms of generating capacity, type, timing and cost.

The document was envisaged to be a “living plan”, which would be revised by the Department of Energy every two years.

“The nuclear industry cost data is the only cost currently outstanding. It is important to note that nuclear cost is dependent on the options available to economic decision-makers and on a range of factors subject to considerable future uncertainty.

“This, therefore, means that building a new plant in Finland, China, the United Arab Emirate, the US, the UK or anywhere else in the world will not cost the same. These arguments give credence to the importance of testing the market before the IRP is concluded. The speculation on nuclear costs without market intelligence is therefore disingenuous,” Koko said.

The country is still awaiting the Department of Energy’s release of the request for proposal (RFP) for the mooted nuclear programme, which was supposed to be released last Friday but was postponed indefinitely.

The RFP would “test the market” and give an indication of the cost of the programme.

Nuclear Industry Association of SA (Niasa) managing director Knox Msebenzi said this week that delaying the announcement of the RFP would not affect the nuclear programme.

Msebenzi said Niasa, which represents the nuclear industry in South Africa and whose members include the energy multinationals expected to bid for the programme, preferred a well-thought out process “instead of rushing only to be stalled by litigation”.

The IRP requires the building of new nuclear power reactors with a generation capacity of 9 600 megawatts by 2030, which would be 23 percent of new electricity capacity.

According to the IRP, the first reactor is supposed to be introduced in 2023. “That timeline has been lost,” Msebenzi said.

Niasa has been pushing for localisation of the nuclear industry.

“There is a perception the National Treasury is going to sign a cheque for nuclear. It is not like that at all,” Msebenzi said. “If that was the case, South Africa would have free electricity.”

He said users would pay for the nuclear power over time.

He said the power stations could be repaid in 20 years.

“Once you have repaid the capital expenditure, you have very cheap electricity.

“Eskom can tell you that their Koeberg nuclear power station produces cheap electricity,” Msebenzi said.

BUSINESS REPORT

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