Africa: Lights Out Again - Unless South Africa's New Electricity Plan Translates Into Urgent New Power Procurements

analysis

History will judge current ministers harshly should they fail to act with purpose and urgency now to ensure the lights don't go off. It takes time to plan, design and run competitive procurement processes, and for projects to reach financial close and commercial operation.

South Africa is sleepwalking into further periods of power cuts and darkness. A fifth of Eskom's power stations are broken at any one time. No new grid-connected electricity generation capacity has been procured since November 2014, despite Eskom system adequacy reports indicating we are short of power.

South Africa's national integrated resource electricity plan (IRP) should have helped us avoid this situation. Its purpose is to model the optimal mix of energy resources and demand-side interventions that would guarantee a reliable, least-cost supply of electricity. Having failed to update the plan since 2010, Cabinet this week finally approved a new IRP.

Regrettably, the new electricity plan eschews its primary purpose of defining an optimal mix that could guide sensible investment decisions and instead settles on an uncomfortable compromise: it proposes a "balanced energy mix" that purports to offer opportunities and hope to different energy constituencies and interests. However, the political judgments underpinning this approach are misguided...

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