Publications
Partners
Cape Town – South Africa is currently adding electricity to the national grid, which is more than what is required, said Public Enterprises Minister Lynne Brown.
Responding to a parliamentary question by the Democratic Alliance’s (DA) Dean Macpherson, Brown said the current capacity that’s being added is based on an economic growth trajectory of close to 6%.
South Africa’s GDP has grown at a substantially lower rate since the 2009 economic recession and will this year expand by only 0.5% according to the latest projections.
READ: Treasury cuts SA's economic growth forecast
“The biggest risk with having too much (energy generating) capacity is what happens to plants that will potentially become stranded,” Brown said in her response.
In his question, the DA’s Macpherson wanted to know if the Department of Public Enterprises has taken any steps to secure investment in green independent power production in the country, following former Eskom CEO Brian Molefe’s refusal to sign a purchasing agreement with the independent power producers earlier in the year.
Brown responded, saying the Department of Energy takes the lead in the domestic independent power producer strategy, including the sourcing and contracting component of these arrangements. "This strategy is driven by the Integrated Resource Plan (IRP) which is the country’s plan for electricity," Brown said.
In August this year, Molefe, who has since announced that he will step down as CEO with effect from 1 January 2017, declined to sign an agreement with Acwa/Redstone, which had won a bid for a solar energy project in the Northern Cape.
At the time, Molefe also made utterances that independent power producers and the renewable energy they provide are too expensive and too unreliable for base load energy requirements.
READ: Why Eskom’s resistance to Renewable Energy is irrational
Since his utterances, government, including Energy Minister Tina Joemat-Pettersson and Minister in the Presidency Jeff Radebe, have rushed to reassure the energy sector that renewable energy is still part of South Africa’s energy mix.
However, in Brown's response to the parliamentary question, she said having excess energy capacity would mean Eskom would have to collect the same amount of revenue to cover the incurred costs.
“This is particularly critical at a time where Eskom's balance sheet is highly indebted due to the build cycle,” Brown said.
“So with low volumes, the price of electricity will have to rise to sustain the required level of revenue, meaning consumers will have to pay more for electricity. These Eskom assets belong to the South African public and I have a responsibility to safeguard these and ensure that South Africans derive maximum value. The current trajectory will potentially be detrimental to consumers,” she added.
Brown's response came on the back of an updated IRP that was released for public comment on Tuesday November 22.
READ: Renewable sector wants constraints dropped on wind and solar
According to the updated IRP, which looks at scenarios based on energy demand and the cost of various generating technologies, South Africa would need 5.5GW of wind and solar energy by 2050.
The IRP was criticised by stakeholders in the renewables sector for placing a limitation on the amount of solar and wind power plants that can be built.
Chris Yelland, independent energy analyst said the limitations placed on renewable energy by the IRP were baseless.
