Happy Khambule, head of energy and environment for Business Unity South Africa (Busa), says the recently released draft Integrated Resource Plan (IRP) 2023 points to a worrying lack of agreement within the government about how to end the crippling energy crisis.
“It’s not a reflection of the collaboration we have with government in the national energy crisis committee [Neco], it’s a reflection of internal government co-ordination that is lacking.”
The most fundamental disagreement laid bare by the long overdue draft IRP is about load-shedding, and when and how the government intends ending it.
“Everyone in Necom including the head, in this case the president, and the director-general in the Presidency, has been very frank that load-shedding would be addressed by the end of 2024.”
The IRP 2023 says the high levels of load-shedding South Africa experienced last year will persist up to at least 2027.
“Government is not speaking with the same understanding about how to end this crisis, and that’s a worry. We’re seeing different views from government about load-shedding. Two weeks ago the electricity minister [Kgosientsho Ramokgopa] was saying something totally different about the severity of load-shedding to what is reflected in the IRP, which has just created even more confusion about this than before.”
The allocation for renewable energy is way smaller than what it needs to be.
Not the least of the concerns Busa, the country’s apex business organisation, has about the IRP is its contradictory stance on the role of the private sector.
It places an “over-reliance” on private sector participation without giving any indication of what public sector investment to facilitate that participation looks like, Khambule says.
“You’ve got all these private sector allocations based on the technology options that are there, including nuclear, all of them on the back of the private sector. But the allocations for the technologies the private sector has been really looking forward to deploy and use are very small compared to the traditional ones. The allocation for renewable energy is way smaller than what it needs to be.”
IRP 2023 plans for a paltry yearly allocation for distributed generation of 900MW and a “curtailment” of solar and wind.
It shows no understanding of the fundamental shift away from central planning, he says.
“You can’t dictate what kinds of technologies, how much and where something’s got to be built. Rather, ensure investments flow and give the parameters.
“This IRP doesn’t align with lived experience, it’s not describing the current situation accurately so that the point of departure is understood by all so that when we move ahead we at least have a better understanding of which direction we’re going.”
It seemingly ignores changes outlined in the Electricity Regulation Amendment Bill currently before parliament, Khambule says.
This IRP doesn’t align with lived experience, it’s not describing the current situation accurately so that the point of departure is understood by all.
“It’s still assuming that the old, vertically integrated monopoly decision-making and mandating process for investments and energy decisions will continue, whereas we’re going into an open market where we will have a system market operator determining what the market needs.”
The draft IRP 2023 doesn’t allow for that.
“We’re going to put pressure on them to reconsider their approach to integrated resource planning so it aligns with the new market design of the electricity system. We’re going to be very clear about it, because as it stands the IRP 2023 curtails market participation on the public procurement side of things. That needs to change.”
Busa will be thrashing out these issues with the government at the National Economic Development and Labour Council, he says, including the role of the IRP in South Africa’s energy future.
“We need to be much more astute as to what kind of role it needs to play. It’s not going to be the same.”
Khambule says business is concerned there will be a rush to finalise the draft IRP 2023 to satisfy an election agenda.
“If the draft IRP is basically the one that is hammered through by cabinet and gazetted, there will be ramifications not only relationship-wise but in terms of the kinds of decisions companies will be making and how these will impact the material conditions of the electricity supply system.
“If the current version is pushed through then more big users will go their own way than has already started to happen. And if we lose the large intensive users, a big chunk of Eskom’s revenue is going to be wiped out, and the ability to keep the system going will be at risk.”
The year load-shedding can be expected to end, according to IRP 2023.
— IN NUMBERS: 2027
On top of that, the issue of affordability for smaller businesses and regular households, whose use of the system is subsidised by these big users, will come to the fore. “That could turn into a political and social crisis even worse than the crisis we already have.”
Meanwhile, he says the recent call on business by the Presidency to hold off on retrenchments, citing quick implementation of the government’s economic turnaround plan, smacks of electioneering.
“We understand there is a feeling that because of the key interventions that need to be made there may be an economic recovery that comes into play. But that’s not only premised on renewables or electricity.
“We’ve still got the logistics issue and Transnet not being able to get things in and out, and we’ve still got the perennial problem of the lack of confidence due to crime and corruption. If all of that can be dealt with in the next couple of weeks then we’re at least getting back on track and such a call might be justified.”
Otherwise, he says, business can only speculate that the retrenchment plea is more about electioneering than an honest appreciation of current reality. “And I’d be worried if the Presidency as a state body is indulging in party political messaging. As an organ of the state it shouldn’t be doing that.”
Khambule says business will be bringing this up with President Cyril Ramaphosa at their next meeting, scheduled for January 30.
Busa will also raise questions about the implementation of key reforms, “because momentum seems to have died down”, and statements by minister in the Presidency Khumbudzo Ntshavheni that business is trying to subvert the government and the state .
“We really need to understand where that comes from because it raises serious questions about the collaboration and partnership we’re trying to build in order to expedite the quick implementation of key reforms.”
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.