HomeIndustry SectorsFinance and PolicySouth Africa’s Integrated Resource Plan (IRP) needs a smarter grid

South Africa’s Integrated Resource Plan (IRP) needs a smarter grid

Eskom must build more intelligence into South Africa’s electricity grid if a proper mix of energy sources is to reduce risk and increase flexible capacity generation as part of the Integrated Resource Plan (IRP), says Nathan Venter, GM of Schletter South Africa.

The Department of Energy (DoE) IRP was open to comment as part of a draft update, due for closure on 7th February 2014 and submission by March 2014, and has downgraded the projected reliance on nuclear, coal and wind technologies while increasing solar photovoltaic (PV) and gas.

Yet, there remain many contrasting points of view on just how much electricity the country will need in the future and that has a direct impact on which sources of energy should be promoted.

On the one hand is an argument that, since 2006, demand has been stymied by Eskom’s crisis control due to under-delivery and that, with more power coming online, demand could once more rise outside of trends predicated on recent use patterns. There could be a latent demand for power.

On the other hand is the argument that businesses and consumers have learned to make do with less and demand will not be as high as originally thought when the IRP was first promulgated in March 2011. In addition, the original plan was formulated based on the projected economic growth of 5.4% for the country. Since this has not been achieved, a further cut in demand can be expected. This is not a simple issue though. Economic growth may well have been hindered by lack of reliable and readily available power besides other factors.

The complexity of the situation and an absent clear and faultless predictability model must force the IRP to rely on a more flexible model of sources to meet unexpected demand.

However, ascertaining that grid demand is currently a tedious and slow process. The current Eskom network can only ascertain what usage patterns are by meters at the users’ end of the grid. That information, when it is collected, is fed back to reporting systems used to indicate expected usage. There is currently no means of ascertaining immediate usage patterns based on bi-directional flows of information across the grid, which produces a lag in output and meeting actual demand.

Additionally, when demand rises, existing coal stations must ramp up the flow of coal into the plants – that takes time to combust and therefore generate more electricity; much like putting more wood or charcoal on the braai but on a much larger scale. It takes time for the new fuel to release the full potential energy it contains. Likewise, as demand decreases the fuel must be left to burn out and excess power bled off the grid leading to enormous waste.

If the grid were smarter it could rely on a greater mix of energy sources and use them more intelligently to provide more precise energy to meet immediate loads. These systems could in effect shuffle power to where greater loads are at any given time which makes for far more dynamic management. While the current draft of the IRP calls for additional solar PV energy the energy supply can be unpredictable since it relies on availability of sunlight. The same unpredictability argument holds true for wind power.

Shortfalls, however, can be met by gas energy production. Gas ramp up or down is immediate. Allow more gas into the plant and the extra energy is immediately produced, just like a gas braai. Close the tap a little and less energy is produced. That control allows energy production to precisely meet demand while including as much renewable energy into the equation as possible. It also allows more consistent supply from existing coal stations that have the lag effect on ramping up or down their supply. There is access to secure supply from sources around South Africa and looking toward the US. Although the infrastructure needed to get the gas to our shores must be put in place it is certainly possible. In addition placement of these gas turbines will be critical. Coastal areas would work best close to ports thus reducing transit.

Coal plants such as Medupi and Kusile, currently under construction, are cumbersome and onerous projects. Their sheer scale renders them prone to construction delays and enormous capital expenditure with reliance on fewer sources of energy. If a single coal plant goes down, for whatever reason, it has a huge and often crippling impact on the economy. Especially given that the existing fleet of coal stations needs to be decommissioned once they have completed their expected life. South Africa is not in a position for the foreseeable future to decommission these plants as the reserve margin is so narrow. That is one of the reasons for the draft’s suggestion for more, smaller coal plants.

However, constructing more, smaller plants means that economies of scale are narrowed. There are modular opportunities for implementation on a small scale but Eskom has limited experience in managing these things. This should be a space for an IPP program looking at conventional power. Let the private sector do the calculations and decide whether it is viable. This would mitigate Eskom’s risk and of course eliminate the upfront costs. It still requires the same number of technicians to operate as larger stations so the cost per kilowatt of power increases. Once a coal plant is constructed it is also limited to that construction for the rest of its days. It cannot be scaled up or down in a relatively short period to allow for less or greater capacity generation. And many smaller plants would have to be built almost on top of coal reserves to make them even remotely economically viable. South Africa has a great deal of low grade coal. This is highly polluting. So the plants would be affected greatly by the carbon taxes to be implemented. To overcome this, more expensive technology will have to be implemented to overcome the problem thus making the economic viability questionable.

Nuclear plants offer the same constrictions but on a massively larger scale. Given that this programme has not even begun the expectation is that costs could be driven up substantially. Added to this is the volatility of the currency which could further drive up the costs. The lack of political leadership is also something to consider. This mix makes for an enormously risky situation.

The IPPs have been able to democratise energy provision in a sense that many suppliers give their product to the market. Nuclear would eliminate this trend and make us subject to the monopolistic tendencies. Not many companies are able to fund such builds, Eskom certainly cannot. It is an enormous risk because it places energy production in the hands of one company, the country does not possess the skills required to run it nor does it currently have the facilities in place to train technicians so it would rely on foreign workers at great cost, again pushing up the cost of electricity. Scaling up or down the capacity of a nuclear plant is not possible. You either demolish it or build a new one depending on which way the demand pendulum swings.

At the end of the day, with uncertain demand, South Africa needs a balance of energy sources that includes wind, coal, solar and gas and with less reliance on liquid energy sources. To achieve that requires a smarter grid as the foundation of any future endeavours, regardless what they may be.