South Africa Seeks Energy Security through Integrated Resource Plan

The South Africa Investment Conference united industry leaders and experts on Tuesday, in part to discuss how South Africa can accelerate economic growth and achieve energy security through its long-term Integrated Resource Plan (IRP).

During the virtual session, “Building and Implementing South Africa’s Energy Plan,” panelists shed insight on the country’s IRP 2030 as a means of maximizing available energy resources, mitigiating the domestic power crisis and initiating an effective post-COVID-19 recovery.

The panel included H.E. Samson Gwede Mantashe, South African Minster of Mineral Resources and Energy; Andre de Ruyter, Group Chief Executive of Eskom Holdings SOC Ltd.; Khaya Gobodo, Managing Director, Old Mutual Investment Group Holdings; Bernard Magoro, Head of the Independent Power Producers Office of South Africa; and Ntombifuthi Ntuli, Chief Executive Officer, South African Wind Energy Association.

H.E. Minister Mantashe identified South Africa’s top priority within the sector as securing sustainable energy supply; through the implementation of the IRP, the Ministry aims to create adequate generation capacity to meet the rising power demands of a high-growth economy. The Minister noted that the IRP is not a single event, but rather an ongoing journey, in which the utilization of technology and mutliple energy resources will not only fulfill power capacity objectives, but also drive the energy transition.

That said, the Minister stated that moving directly from coal-fired sources, on which the country is currently dependent, to a 100% renewables-based system will not lead to power stability. Accordingly, the implementation of the IRP seeks to utilize a mix of fossil fuel- and renewable-based resources.

In terms of the contribution of wind energy, Ntuli noted the strong potential of the resource in South Africa’s power mix, despite the sector being relatively new compared to other emerging markets. According to Ntuli, harnessing wind energy will allow South Africa to boost economic development while providing additional employment opportunities for local populations.

Meanwhile, the Independent Power Producers Office (IPPO) is currently working to facilitate cooperation among South African energy stakeholders, with Magoro identifying a number of key policies that the IPPO is implementing in response to ongoing and COVID-19-related challenges. Specifically, the IPPO is looking to procure 2000MW of capacity from a mix of sourcesby June 2022, supported by the participation of multiple stakeholders and technologies.

Additionally, the IPPO is aiming to kickstart domestic manufacturing and build upon existing infrastructure and skills in 2021, with the aim of creating an industrial megahub in the country. Within the power procurement process, Magoro noted that 6800MW will come from renewables, 3000MW from gas – through gas-to-power projects – and 1500MW from coal. Moreover, the IPPO has established programs that not only address the energy crisis, but also aim to resolve socioeconomic challenges by targeting local ownership and content, as well as skill development and increased participation of women and youth, within the sector.

When it comes to the financial implementation of the IRP, Gobodo emphasized that placing control of transmission and revenues under state-owned Eskom can ensure that balance sheet resolutions and sufficient revenues are achieved. The capital structure of the IRP establsihes guarantees as a mechanism for ensuring that revenues are effectively allocated, and ultimately make their way to the IPPs.

De Ruyter indicated that Eskom’s role within the IRP cannot address South Africa’s energy crisis alone, but rather foster effective collaboration among stakeholders as a means of achieving energy stability. Eskom is currently seeking to develop additional generation capacity on the grid, however, de Ruyter explained that its success ultimately comes down to the multilateral participation of key players to ensure that electricity is generated in the fastest and most affordable way possible.

With a view to the energy transition and the establishment of sustainable power strategies in South Africa and on the continent, Africa Oil & Power (AOP) is holding its fifth annual AOP Conference & Exhibition (October 5-7, 2021), where industry leaders and experts will be united in both a virtual and in-person formats. In line with South Africa’s Department of Mineral Resources and Energy, government and private sector partners, AOP will host the Africa Renewables Forum, Africa LNG Forum, and Energy Finance Forum as part of the event. Under the theme, “Invest Without Boundaries,” the conference will provide a premier platform for investment, networking and deal-making for African energy industry stakeholders.

Join us on 5-7 October 2021 in Cape Town, South Africa for Africa Oil & Power 2021 

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