Gas, Nuclear and South Africa’s Draft Integrated Energy Planning Report

South Africa faces the task of trying to reduce its dependence on fossil fuels for energy production. This is challenging as coal is a significant source of energy, fueling approximately 92% of our electricity generation. However, the adverse effects of our reliance on coal are certainly evident and a concerted effort by Government is required to lead the way in transitioning into a low-carbon economy. In doing so, Government should have a long-term vision for the energy sector that takes into consideration the fact that our energy system functions in the context of social, economic and environmental factors.

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On 24 July 2013, the Department of Energy released a Draft Integrated Energy Planning Report (“IEP”) for public consultation. IEP is envisaged as an energy road map for South Africa, and aims to achieve the most efficient way of satisfying current and future energy demand and supply needs. In this way, IEP contemplates the demand for energy services, the costs of various technologies and their life span, efficiencies and emission factors, energy commodities and other materials which are inhibited by availability of local natural resources and environmental constraints.

Taking this into consideration, IEP sets out to ensure that the most appropriate supply-side options are carefully chosen and does this through investigating various scenarios set out in the “Base Case” and “Test Cases”. The Base Case emphasises a business-as-usual scenario where current energy market trends continue into the future. Test Cases on the other hand represent alternative energy policy options, which depart from the business-a-usual scenario. Each Test Case is informed by various policies within the energy sector which include but are not limited to the Integrated Resource Plan, the National Development Plan, New Growth Plan, Industrial Policy Action Plan, the White Paper on Energy Policy of 1998, the White Paper on Renewable Energy Policy of 2003, and the National Climate Change Response White Paper of 2011.

Using the Base Case and Test Cases, IEP outlines various model outputs for the energy sector. These model outputs provide strategic guidance on the potential implications that may arise when implementing alternative energy policy options and aims to find the most cost effective development path for our energy system to the year 2050.

What is interesting to note, is that the Test Case “Emission Limit – No Nuclear Build Programme Case” expressly excludes the 9,600 MW Nuclear Build Programme from contributing to the emission limit target set out in the “Peak Plateau Decline Test Case” which seeks to reduce emission levels of 34% by 2020 and of 42% by 2025.  One of the reasons that may be holding government back with the build programme, is the high costs associated with constructing new nuclear plants. 

Moreover, the “Emission Limit – Natural Gas Test Case” selects natural gas (which comprises of conventional gas, coal bed methane and shale gas) as a policy supply option over the Nuclear Build Programme. There has been considerable growth and interest in natural gas exploration and production in South Africa, as the costs are much less than nuclear. In addition natural gas can play a role in reducing GHG emissions. Nevertheless, there are significant barriers that must be overcome, namely the lack of infrastructure and a clear industry development plan for natural gas.

Nuclear along with renewable energy technologies still however feature prominently as sustainable policy options in the Base Case for electricity generation.

The implications of all the alternative options will be assessed against the key objectives of IEP and a final recommendation will be made in the form of the final IEP report.  Some of the key objectives are to ensure the security of supply, minimise the cost of energy, diversify supply sources and primary sources of energy and minimise emissions from the energy sector.

Once the various public stakeholder consultations have been held, the input obtained from stakeholder engagement will be taken into account. The stakeholder input is crucial for amendments of key planning assumptions in IEP, which will revise the demand projections, the Base Case optimisation model as well as the optimisation models of the different Test Cases. The final report will be tabled in Cabinet for approval before being published in the Government Gazette.

Overall the high costs for the Nuclear Build Programme appear to be a deterring factor for government. This makes natural gas an appealing alternative policy option. However, government must not dismiss the significant barriers that exist with developing a natural gas industry as well as the long-term advantages of nuclear in terms of reducing emissions.

Article written by Jacqueline Campbell (Junior Sustainability Legal Consultant), IMBEWU Sustainability Legal Specialists (Pty) Ltd 

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