HomeIndustry SectorsFinance and PolicySAPIA offers alternative to South Africa’s IRPs prescriptiveness

SAPIA offers alternative to South Africa’s IRPs prescriptiveness

In its submission on South Africa’s draft integrated resource plan update, the South African Independent Power Producers Association (SAPIA) says that the central planning nature of South Africa’s integrated resource plan (IRP) constrains the private sector from investing in power projects. It proposes that the IRP process be broadened to incorporate all sectors of South Africa’s power industry more fully, and to remove the requirement for the award of new generation licences to be conditional on projects “being included in the IRP”.

It has been a paradox of the recent past that while Eskom have been declaring emergency conditions in being hard pressed to meet the country’s power demand, the national energy regulator of South Africa (Nersa) has not been approving generation licences from applicants who want to sell their power outside of a national procurement programme. Nersa has been citing that the power falls outside the IRP 2010, and therefore reasons for the deviation have to be provided, and a motivation provided for a ministerial determination from the Minister of Energy. This concerning trend raises a number of important issues:

  • Nersa is applying the IRP 2010 new generation requirements as a regulatory framework, and not the planning guideline for which it is intended.
  • Nersa has been ignoring the Medium Term Risk Mitigation Plans (MTRMP) contained in the IRP 2010 that make specific provision for IPP power up to 2016.
  • The regulators are making the wrong decisions, as borne out by the South Africa department of energy (DoE) advising it that its stance on IRP 2010 compliance was incorrect, and
  • Nersa’s independence is questioned, where it is happy to refer issues to the minister of DoE when it should be regulating the industry as an independent body.

For the current update to the IRP to contain sufficient allowance for IPP generation, particularly outside the national procurement programmes, SAPIA suggests that say 1,000 MW per annum be allowed under “Other Generation” to relieve the constraints currently being imposed by Nersa.