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RESOURCES: Draft 2016 Integrated Resource Plan Could Damage the Economy


Recent Western Cape Business News

THE CAPE Chamber of Commerce and Industry has described the draft 2016 Integrated Resource Plan as unrealistic, defective and warned that using it to plan ahead would be ill advised and could lead to significant damage to the economy.

In its formal letter of objection to the Department of Energy, the Chamber’s President, Ms Janine Myburgh says “There are many points of concern, but the two aspects that we are most worried about are the over-estimate of future demand for electricity and some of the assumptions on the costs of generating electricity.”

Growth in the Economy

The Chamber pointed out that the 2010 IRP had over-estimated future electricity demand by 32%. One of the main reasons for this was the lack of growth in the economy which was caused, in part, by Eskom’s high tariffs.

The high tariffs also forced companies and domestic consumers to find ways to use less electricity. This was a logical and predictable response to the huge increases in Eskom tariffs.

The third factor, said the Chamber, was the increase in embedded generation of roof-top solar. It pointed out that the Green Cape market intelligence report said that there were now more than 100 000 roof-top solar installations in South Africa and that the number of these installations could be expected to increase as roof-top solar was now cheaper than the retail price of electricity.

The Chamber said it was clear that costs would continue to come down as the technology improved and solar panel production volumes increased, while Eskom tariffs would rise along with the price of coal as well as transport and labour costs.

Companies were increasingly turning to the green economy with roof-top solar to save money and to protect them from future Eskom tariff increases. This trend would accelerate as batteries improved and fuel cells became available.

Future demand predictions were also unrealistic. The study, for instance, predicted a steep increase in demand from the agricultural sector, but this was the sector of the economy where solar power was making the greatest inroads.

Solar Powered Economy

“Agriculture, essentially a daylight industry, is in a position to use solar power without expensive back-up. In the Western Cape fruit industry, cooling sheds are already being powered by roof-top solar and the system works well because the cooling is needed most in sunny weather when PV solar performs best.” Other tasks like pumping water and irrigation could be done when solar power was available.

“In fact,” said Ms Myburgh, “it would be realistic to expect demand from the agricultural sector to decline rather than increase.”

The estimates of renewable energy costs on the economy in the 2006 IRP were outdated and dangerously wrong. They were much higher than actual prices of wind and solar power submitted to the Department of Energy in last round of bidding (Fourth round, expedited.)

Hard Evidence

The cost of nuclear power was understated by at least 50%. The hard evidence was new Hinckley Point nuclear power station in the UK which was being built and financed by the French and Chinese Governments while the UK had agreed to buy the electricity for the equivalent of R1.60 per kWh.

“France, Britain and China have done their homework and they agree that R1.60 cents a kWh is a fair price for electrify from a new nuclear power station, so how is it possible to justify Eskom’s assumed price of 97 cents a kWh?” Ms Myburgh asked.

“Our conclusion is that there is no justification for a large investment in nuclear power at this stage. We have 10 years before a decision is necessary and by 2027 we will have better information on the cost and performance of renewable energy and other technologies which may then be available.”

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