The Integrated Resource Plan (IRP) is the plan that the Department of Energy is mandated to update and directs the expansion of electricity supply over the given period. In the Department of Energy's own words, the purpose of the plan in practice is to identify investments in the electricity sector that allows the country to meet forecasted demand with the minimum cost to the country.
But what drives this policy development? Or possibly of more relevance here, what should drive this policy development? Techno economic rationality drives policy, which simply put means the best technology at the lowest cost. In terms of the IRP and specifically the base case, which is currently being debated in the public forum, techno economic rationality in the frame of electricity demand should be the only factors driving the outcomes of modelling the base case for South Africa.
What we are seeing in South Africa is that the IRP base case is not free of policy adjustments, and we therefore do not know what the least cost base case is. The current constraint on renewable energy that is included in the IRP, for example, is not based on techno or economic factors and is therefore not rational. No rational reasons for what is effectively a cap on renewable energy have been provided by the Department of Energy to date.
Since 2014 renewable energy has been cost competitive, and today solar PV and wind energy are the cheapest technology options available for generating electricity. What this means for modelling the base case is that the model wants to build renewable energy, as it should, taking only techno and economic factors into account.
Unfortunately the model runs into the renewable energy cap that has been forced in by the Department of Energy which then forces the model to select the next cheapest technology option which is coal. But why stop there, a carbon budget has further been imposed on the model which then forces it to build nuclear which is the most expensive technology option.
Why is any of this relevant to South Africans? Firstly because energy policy provides the backbone for what electricity infrastructure will be built in our country. If technologies that are not the most appropriate in terms of technology learning rates and cost are forced in through our policy processes then we will be left with a second rate energy system based on old technologies that will ultimately cost us all way more than it should.
Secondly, vested interests affect all of us; they have control of the system and prevent new technologies from entering the system. What we are seeing in South Africa is these vested interests using political power to keep themselves in power to the detriment of the country.