ESI-Africa posed the question to South African National Energy Association (Sanea) chairman Brian Statham, who represents the country on the World Energy Council, and his response was in essence, no, not really.

Over the past one or two years, seemingly a lot has happened in South Africa’s electricity sector, but in reality actual progress can be pared down to a few concrete items. Construction of the country’s first new major power stations in decades, Medupi and Kusile, is underway, whereas even a year ago there was uncertainty regarding the latter in particular. And the country has produced its updated electricity sector road map, the Integrated Resource Plan (IRP 2010) that looks forward up to 20 years.

In addition, it is true that Eskom, under the leadership of Brian Dames, has improved some of its key performance statistics.

Statham also sees as positive that the National Electricity Regulator of South Africa’s (Nersa) key people have been reappointed for the next five years. “It means stakeholders get to deal with a known entity and people who have already gained experience in that role.”

Also positive is Statham’s view of the IRP process as having been pragmatic and fair. “We have a map, one that has left room for all energy generation technologies without demonising any of them.

“However, on the negative side, the IRP does not deal with the challenge of the provision of electricity to the rural poor.” After South Africa’s impressive earlier success in increasing access to electricity for its population to the mid-70% range, there has been stagnation in terms of further progress.

Another unfortunate side to the IRP process is that it has raised expectations beyond realistic levels about the ability to predict the way forward. “It is at best a guideline, an indication of intent, for no-one can accurately predict what the world will be like in 20 years’ time, and people who are expecting the IRP to accurately hit a moving target are being foolish,” he says.

Statham’s view that, in general, South Africa’s electricity sector is not in better shape than it was a few years ago comes back to the fact that while electricity demand has rebounded after the global financial crisis, little will have changed on the supply side, prior to the new power station units coming online. To keep the lights burning, which Dames has assured the public will happen, Eskom is running its generation plant harder than it knows it should, and is unable to do the necessary maintenance it knows it should, which includes making up a backlog. Thus in making promises to keep the lights on, the fear is that Eskom executives could be compounding the maintenance problem and their successors may have to deal with the repercussions.

“On the distribution side, the Regional Electricity Distributor (RED) model has been abandoned, but all that does is put us back where we were a decade ago, with a large maintenance and extension backlog and no obvious indication of how progress will be made, taking into account resource and skills constraints,” Statham says.

“In transmission, the attention being spent on the independent buyer model for the sector is an illtimed further distraction, particularly in a supply-constrained situation where whoever the buyer is will take whatever is available.

“Over the past year or two some of the key fundamentals have been put in place for South Africa’s electricity sector to progress, but we still need to see real leadership and decisions made around the implementation of IRP 2010 in particular.”

The fear is that this will not happen, that no-one will risk taking a decision that could prove in time to be flawed, or not totally ideal. “If no decisions are taken then we will probably default to Coal 3 for the next big power generation station after Kusile and the repercussions in terms of South Africa’s credibility will be severe.”

Put another way, while obviously it is important to cost things as accurately as possible, and take into account risks and repercussions as much as is realistically possible, Statham believes it is pointless polishing the numbers beyond a certain point. “If you consider that people are willing to make individual commitments to buy homes without knowing what interest rates will be in the future, without knowing if they will be still married in 20 years, without knowing where they will be working, and considering how much of their personal wealth is tied up in such a decision, we need to be willing to deal with similar uncertainties as a country.”

If South Africa is serious about attracting foreign direct investment, the state of its infrastructure including social infrastructure, with companies needing to be sure their employees will be satisfied and have a decent living environment before they leap, is critical. “We need Private Public Partnerships (PPPs) to enable this and this should be a priority. We also need to remove the roadblocks for Independent Power Producers (IPPs).”

It can be argued that South Africa as a country has in fact taken one major decision, that of prioritising renewables as much as is prudent. There is a definite move away from coal. However, the apparent change of direction, reflected by the IRP and government positions, and the hype around South Africa hosting the 17th Conference of the Parties (COP 17) later this year as being 2011’s equivalent of the soccer world cup, has yet to manifest itself in a tangible form.

Here, Statham believes that Nersa has made a mistake in amending the previously announced Renewable Energy Feed in Tariff (Refit) rates, and it is a setback for the country’s electricity sector. “By changing the Refit it has changed the biggest input parameter relevant to all the plans and modelling of the developers; it means a massive amount of work has to be redone. It has probably delayed the implementation of many projects,” Statham says.

While it is admirable that the regulator desires to be firm and do its job, to ensure that the people of South Africa get a fair deal in terms of electricity pricing taking into account that the Refit programme is in essence a subsidy, this is also unfortunately too narrow a viewpoint.

“In the context of South Africa’s electricity sector, the overall difference in the price of electricity represented by the change in the Refit for the first tranche of projects is measured in percentages of decimal places. It is not important whether a few early movers gain 20% more profit above what they might have – that is after all the benefit of being an early mover. As long as it is made clear that the Refit will be adjusted for the next generation of projects, as technology and other factors evolve, we should have gone ahead with the existing Refit rate. It is more important at this stage for the first projects to go ahead and prove or disprove the cost and performance projections for these power generation options in South Africa. It is also important to determine whether the desire to build these projects is in fact there to the extent claimed, since it is always possible that when the doors do open we could find that there are fewer takers than anticipated.”

While the IRP process has been inclusive of all electricity generation technologies available, if there has been a loser in this process it has been coal. Statham says: “To some extent the fossil fuels lobby in South Africa was complacent.” There has been and is the coal roadmap process, but it has progressed slowly, and to some extent it may be argued it has been overtaken by events.

“For the most part it was business as usual for the coal sector. Prices have been good, demand has been good both locally and internationally, there is Medupi and Kusile, and little seemed to have happened to change the view that those whose careers are in coal will see such opportunities extend well beyond their working lives. But the coal sector has suffered a blow,” Statham says.

And to be blunt, the complacency was understandable. “Coal will form part of the future. China, India, and the USA have large coal reserves and it seems inevitable these will be used, though technologies will evolve to ensure this is achieved in as benign a way as possible, with viable clean coal and carbon capture technologies likely to emerge. Just as photovoltaic and concentrated solar power technologies will evolve, so too will those related to power from clean coal.”

However, that aside, the question is why is South Africa suddenly pursuing the green energy policy direction with such enthusiasm? To suggest an answer, Statham says one should understand the motivations of South Africa’s leadership. South Africa has aspirations well beyond those of a typical developing country, aspirations of being relevant and influential on a global stage. “The leadership in South Africa wants to sit at the top table with the developed world leaders and to do so they want to be seen to have a green energy sector as opposed to having to say we are just another backward, fossilfuel burning, developing nation.”

This is reflected in the announcement of the ambitious 5,000 MW northern Karoo solar energy park. “However, such ambitions do not take into account the difference between science and engineering, and the difference between conceptual engineering and detailed bankable feasibility work.”

South Africa does have a pioneering mentality and aspirations, which are both good springboards for innovation. However, it does raise the question as to why a proposed massive solar park near Upington should end up any differently to the failed Pebble Bed Modular Reactor (PBMR) project? The concentrated solar power (CSP) park is a pioneering project and it needs to take into account numerous issues. One example is the large daily temperature differentials and their effect on the engineering requirements, and the associated cost, compared with concentrated solar power facilities in Europe where the temperature swings over the course of a day are far smaller.

For that matter Statham believes the PBMR was never really a starter, as opposed to a missed opportunity by the country. “Firstly, there was the overoptimistic assumption that the small and developing countries to which South Africa wanted to sell the reactors would be able to obtain nuclear licences. South Africa was also competing in a technology field with very major entities such as the US and France and trying to do so with far fewer resources.”

The regulatory infrastructure for nuclear technology is very expensive in its own right, which is part of the reason Koeberg is so expensive, even with the help of EdF. The upside for South Africa with its future nuclear plans is that these overheads are already in place and costs can be mitigated for future nuclear plants, something that adds to the appeal of this option.

“However, we are misplacing our innovative energy. Instead of searching for solutions like rural electrification, which the first world countries are not doing, and for which we have a real need, we are trying to do things such as set up electric car manufacture and compete in such fields with very strong well-resourced entities, against whom we have no obvious competitive advantage.”

Part of the reason for South Africa’s apparent current policy direction is that rural electrification is not seen as being particularly sexy, which green energy is seen to be.

The World Energy Council, of which Sanea is a member, has as its philosophy the approach that the world should have developmental priorities for humankind, which incorporate goals to alleviate climate change factors. Instead, it seems as if the world, driven by the priorities of developed countries, is pursuing climate change mitigation objectives with some developmental goals included. The question remains open whether South Africa by following this approach will best serve the needs of its people now and into the future in terms of developing its electricity supply infrastructure.

However, the biggest risk of all remains the possibility where no decisions at all are taken, and much-needed progress regarding the country’s electricity infrastructure becomes bogged down in bureaucratic gridlock.