Professor Anton Eberhard of the University of Cape Town’s Graduate School of Business says it is time to call out the confusion and gloom of those opposed to renewable energy independent power projects (IPPs) and the move away from coal and nuclear. South Africa’s new electricity roadmap, the Integrated Resource Plan (IRP). Some are clearly frustrated and angry at not being able to secure special deals with Eskom or the coal and nuclear industries. Others may feel alienated and alienated from President Ramaphosa’s new political era – but the false narratives surrounding the IPP and IPPs. IRP should not cloud our policy and investment choices,” he added.
If South Africa is to support real economic change, Eberhard says, it must embrace unprecedented global innovation in new, cheap energy technologies and competitive markets. Failure to do so risks succumbing to parochial and reactionary minorities seeking rent-seeking opportunities in old and expensive technologies that hinder social and economic progress.
“South Africa’s highly competitive IPP program has attracted over R200 billion of private investment in projects built on time and on budget and without subsidies in the most recent tender round,” says Eberhard.
According to Eberhard, it is the coalition of the recently marginalized and the angry that is currently dominating many public forums, fueling resentment and protest. It includes accused parties from the Zuma-wing of the ANC, the EFF, the South African Nuclear Industry Association, the Coal Transporters Forum, some unions, a minority of energy professionals, several former SOE board members and managers. anti-corruption, Black First Land First and advocacy groups such as Transform RSA and the South African Energy Forum. Ironically, this coalition is joined by deniers of anthropogenic climate change and some members of the Free Market Foundation.
“Anti-IRP and anti-IP advocacy is based on four fallacies,” explains Eberhard. “They argue that solar and wind power are unreliable and expensive; that the IRP does not adequately consider the impact and costs of renewable IPPs on the rest of the electricity system; that these IPPs do not encourage domestic industrialization or create enough jobs; and that the procurement of IPPs is corrupt and that the president’s family and new It benefited the politically connected elite.
Eberhard argues that while solar and wind power used to be expensive, innovation and the expansion of global markets have driven costs down over the past five years and are now the cheapest new grid-connected energy sources in South Africa. “If South Africa were to conduct new competitive procurement now, solar and wind power tenders would be ZAR 50c/kWh below Eskom’s expensive coal-fired generation costs,” he added.
The idea that the IRP ignores the cost to the rest of the system for backup and auxiliary power services runs counter to the goal of the IRP, which is a mix of low-cost power sources that provide an acceptable level of reliability, Eberhard explains. “The PLEXOS computer model, based on IRP, is the industry’s gold standard and is used by many utilities and countries around the world. Gas (or equivalent variable resources) meet the variability of solar and wind power and together, their average cost is higher than coal or nuclear. Power stations show less — although IRP cost estimates for solar and wind are conservative. And for nuclear hopefuls.”
The arguments of the Eberhard anti-IPP coalition against the IRP simply do not stack up, and so many in this group now abandon any pretense that nuclear or coal are cheap. They argue that industrialization and employment should be the determining factors in our investment choices, ignoring the impact of electricity prices on affordability or economic growth.
“Renewable energy contributes to local manufacturing and jobs and has the potential to do more,” says Eberhard. He cites data from the Department of Energy which shows that localization in the renewable energy IPP program is over 45%. In addition, local equity ownership accounted for more than 50% of many projects and more than 80% of debt financing came from local banks.
“Comparing small solar or wind powered sites to those in an Eskom power station is misleading and ignores their vastly different energy output,” says Eberhard. “There is overwhelming evidence that renewable energy generates more direct jobs than coal or nuclear power on a comparable kilowatt-hour basis.
Eberhard said there was no basis for conspiracy theories that the IPP program was corrupt and used members of President Ramaphosa’s family and administration. “More than 400 bids were submitted in five rounds of procurement and nearly 92 projects were awarded through intense competition. Bid evaluation and awards were conducted with strict safeguards, independent and transparent audits.”
IPPs currently contribute less than 5 percent of South Africa’s electricity. Their costs are passed on directly to consumers at the prescribed tariff. Although Eskom’s finances or operations have yet to be directly impacted by IPPs, and neither are jobs in coal mines, Eberhard says this is coming. “President Ramaphosa and his ministers must now take the lead and embrace global innovation in energy markets.
