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Cape Town – A Ministerial Advisory Council on Energy (Mace) working group report on South Africa’s future energy plan explains that by removing policy adjustments and keeping the plan at a least cost level, the need for nuclear energy falls away.
The report was presented by Mace member Mike Levington on Wednesday, as part of the Department of Energy’s (DoE's) public consultation workshop for the Integrated Resource Plan (IRP) and Integrated Energy Plan process.
Levington is also the director at Kabi Solar and is chairperson of the South African Photovoltaic (PV) Industry Association.
“A least cost IRP model, free of any artificial constraints and before any policy adjustments, does not include any new nuclear power generators. The optimal least cost mix is one of solar PV, wind and flexible power generators,” it recommended.
The proposed IRP base case presented by the DoE last month constrains renewable energy, which results in new nuclear energy being needed by 2037. However, Eskom has a different view and believes nuclear should be built as soon as possible - as per the current 2010 IRP - so it can go online in 2025. The final IRP will be presented to Cabinet in March 2017 after the public consultation process.
READ: Nuclear buzz as request for proposals looms
Energy Minister Tina Joemat-Pettersson and Public Enterprises Minister Lynne Brown have come out in support of nuclear energy as a big part of the eventual IRP, but critics have warned that nuclear energy's inclusion will be a political decision and not based on scientific fact.
The Mace report recommended that the “annual new-build limits for solar PV and wind should be removed” from the base case assumptions, Levington revealed.
“This unconstrained scenario … re-run with correct solar PV and wind cost assumptions, should form the least-cost base case of IRP 2016,” it explained.
“Step by step constraints or policy adjustments scenarios (for example annual new-build limits for solar PV and wind) should also be financially modelled and the total cost per year of such constrained scenarios compared with the revised least-cost Base Case to assess the cost effectiveness of such interventions,” it said.
The Mace committee said nuclear energy is not a least-cost option in the current 2010 IRP.
“In IRP 2010, nuclear was not the least-cost option,” they said. “It was a policy decision to include nuclear in the plan to cater for uncertainties around the forecasted cost reduction of renewables, as at the time it was unclear whether they would materialise in the magnitude and as quickly as anticipated in the IRP 2010.
“These adjustments led to the model building nuclear under very specific constraints, where the amount of required CO2-neutral electricity could not be supplied entirely by renewables because of these annual new-build limits.”
Looking ahead, it said a “least cost IRP model, free of any artificial constraints and before any policy adjustments, does not include any new nuclear power generators".
“The optimal least cost mix is one of solar PV, wind and flexible power generators (with relatively low utilisation).”
The Mace working group said that consistent with the approach used in IRP 2010, the scenario that forms the base case “must be least cost and free of any policy adjustments”.
“The working group therefore recommends that the annual new-build limits imposed on solar PV and wind are removed and this unconstrained scenario… forms the base case for the IRP 2016.
“The input costs assumed for solar PV and wind in the IRP 2016 are significantly higher (in real terms) than what was assumed in the IRP 2010, despite the fact that tariffs actually achieved in the Renewable Energy IPP Procurement Programme (REIPPPP) are lower than what IRP 2010 had assumed,” it showed.
“This apparently is a result of technical mistakes made when converting average tariffs achieved in Bid Window 4 of the REIPPPP into model input costs, combined with a reduced cost reduction potential for solar PV compared to IRP 2010. It is therefore recommended to adjust the currently assumed costs of both solar PV and wind downwards to correctly reflect South African actual tariffs as well as anticipated cost reductions as per IRP 2010 in the case of solar PV.
“Any policy-adjustment to or the imposing of a constraint on the least-cost unconstrained base case will increase the total cost of the power system and therefore the average tariff to the consumer.
“The working group recommends that the cost differences between the least-cost unconstrained base case and each alternative scenario be reported so that a value for money case can be assessed by all stakeholders when a certain policy decision or a constraint is proposed,” it said.
