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Critique of South Africa’s Flawed Roadmap to End Power Shortages

South Africa's New Energy Plan Critiqued: Inadequate and Economically Flawed

by Oluwatosin Alabi

In 2023, South Africa faced unprecedented electricity shortages due to the unreliability of aging coal plants, sparking an urgent need for new electricity generation facilities and a reduction in reliance on coal power. Early 2024 saw the introduction of a proposed energy roadmap by the South African Energy Minister, Gwede Mantashe. However, this draft Integrated Resource Plan has been widely criticized for its substantial flaws, particularly in its cost estimations and energy scenarios.

The plan’s credibility is first called into question by its costing estimates. Contrary to what might be expected, it overlooks the most cost-effective combination of new electricity generation—mainly wind and photovoltaic solar power supplemented by some battery storage. Instead, it erroneously asserts that gas-intensive scenarios would be less expensive.

One of the central proposals of the plan is the construction of 6,000MW of new gas-fired power stations by 2030. This idea faces significant opposition from environmental and civil society groups, who argue that increased fossil fuel usage would exacerbate global warming. Additionally, the reliance on imported gas subjects South Africa to the volatile international gas market, and the required investment in new gas infrastructure is likely to lead to major delays and cost overruns.

The draft plan outlines various scenarios for South Africa’s energy future. The first, termed the “Reference Case,” proposes a mix of gas and renewable energy (wind and solar), mistakenly claimed as the most cost-effective option. The second scenario, “Renewable Energy,” excludes new coal, nuclear, and gas plants, but disproportionately invests in concentrated solar power—a technology now considered expensive compared to photovoltaic solar power. The third, “Renewable Plus Nuclear,” suggests a significant investment in nuclear power as a substitute for concentrated solar power. The fourth, “Delayed Shutdown,” extends the lifespan of existing coal plants beyond their projected closure dates. Finally, the “Renewable Plus Coal” scenario envisions new gas and coal plants replacing the capacities allocated to concentrated solar power or nuclear energy in the other scenarios.

Surprisingly, the plan does not consider what may be the most cost-effective option: an exclusive focus on renewable energy, particularly photovoltaic technology, with expanded storage capabilities. The government’s methodology for costing these scenarios remains unclear, as the draft plan does not detail costs per technology. It claims to use the Lazard Levelized Costs of Energy report from April 2023, which is recognized as authoritative, but the costs for various technologies (renewable, coal, gas, and nuclear power) as calculated by Lazard differ significantly from those used in the plan.

Lazard’s cost estimations per megawatt-hour (MWh) include: utility-scale solar photovoltaic at $24-96, solar with storage at $46-102, onshore wind at $24-75, coal from new plants at $68-166 and existing plants at $29-74, and nuclear power from new builds at $141-221 and existing plants at $29-34. Notably, Lazard last assessed costs for concentrated solar power in 2019 at $141 per MWh, placing it at the lower end of nuclear power costs. Given these figures, it is inexplicable that the plan’s authors concluded the “Renewable Energy” scenario to be the most expensive, considering South Africa’s high levels of sunshine and strong winds, which should reduce the costs of solar and wind power to the lower end of Lazard’s ranges.

The draft plan’s failure to adopt a more cost-effective, renewable-focused approach raises questions about the government’s commitment to both fiscal responsibility and environmental sustainability. A robust and transparent electricity plan is vital for ensuring a country’s energy security. It is crucial for the government to clarify its assumptions and calculations in the energy modeling process.

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