Introductory remarks by Ms Nelisiwe Magubane, Director-General of the Department of Energy, at the plenary session of the Electricity Integrated Resource Plan (IRP) 2010 second version, CSIR, Tshwane
7 Jun 2010
Chairperson and Facilitator, Collin Matjila
Members of the panel
Members of the Integrated Resource Plan (IRP) working group
Members of the IRP technical task team
Ladies and gentlemen
We are a mere three days away from hosting the biggest sporting event on earth, the FIFA World Cup 2010. It has not escaped our minds that this event is of huge symbolic significance to us, the peoples of Africa, for it is happening, for the first time, on our continent.
The world cup is crucial to us not only because of what is going to happen in the field of play, but also for that which will take place off the field.
Accordingly, your presence here today, despite the hysteria and the frenzy's similar to the one that prevailed in William Shakespeare's Julius Caesar following the fateful events of the Ides of March, is indicative of the fact that you understand the magnitude of the enormous electricity challenges that are facing our country.
When you are asked about the 2010 FIFA World Cup, you will no doubt confidently answer with the refrain: I was there! And conversely when they ask you about who contributed to the drafting of the country's most profound electricity plan. You will inevitably respond with the same answer: I was there!
To further develop the metaphor of football, all countries that are here to play in the world cup are reaping the benefits of many years of systematic and deliberate planning. Similarly, we too also need to plan ahead for our future electricity requirements. This exercise will ensure that our future generations have access to electricity.
Our Minister has clearly defined the parameters of this exercise. She has indicated that the department will also engage in a similar exercise of developing a much broader integrated energy plan whose subset is what this gathering is about: the Electricity Integrated Resource Plan.
We have reached a moment in history where we have to take bold and decisive decisions about the quantity and type of the current and future electricity infrastructure for our country.
We need to decide on the timing, quantity and the type of investments we need as well as identify the type of technologies that will accompany the eventual investment decisions. All of this is supposed to be done whilst we are mindful of the concomitant impact on the environment.
We need to answer difficult questions whilst simultaneously responding to the injunction of our President, Jacob Zuma, who has urged us to do everything in our power to extricate ourselves from the status of a developing country.
We have to aspire for continuous economic growth particularly during this period when we are just emerging from the worst global economic downturn in more than a century. So this exercise is but one contribution to the overall drive ultimately to catapult our country to the status desired by our president.
We are aware that a lot of stories are being peddled about the process of drafting the IRP 2010. We will not respond to these distortions other than to indicate that the department is firmly in the driving seat busy working with all the affected stakeholders, including the Inter-Ministerial Committee on Energy, to produce the IRP 2010.
To the critics of this exercise, I want to remind you of the words of Samuel Johnson that are quoted in James Boswell's The life of Samuel Johnson where he said: "You may abuse a tragedy, though you cannot write one. You may scold a carpenter who has made you a bad table, though you cannot make a table. It is not your trade to make tables".
In the same vein, I want to clarify the issue of the involvement of Eskom in this process. Eskom is a utility that is owned 100 percent by the government of the Republic of South Africa.
It is not an alien institution that should and must not be involved in determining our future electricity requirements. It controls more than 90 percent of our electricity generation, owns the entire transmission network as well as a large part of our distribution network.
We also need to remember that historically Eskom has carried the mantle of being the "supplier of last resort" in terms of which they had to ensure the security of electricity supply. Eskom was therefore responsible, in terms of this arrangement, for determining the extent and nature of the new generation capacity that was required for our country at the time.
However, this has changed. It is now the responsibility and the legislative mandate of the Minister of Energy. She has to drive and give impetus to a process that historically has been the exclusive preserve of Eskom.
It has been about 15 years since South Africa last commissioned new generation plants in our country. In the 1980s and early 1990s we experienced reserve margins higher than 30 percent and over a long period it was not necessary to build new power stations.
Eskom announced only last week that our reserve margin has now gone down to 16 percent. This is better than what it was during the dreaded load shedding of 1998.
It is common knowledge that we are now entering an intensive capital investment programme, in terms of which approximately 40 000 megawatts of new capacity could be required over the next 20 years. The exercise that we are conducting today and tomorrow has the potential to create another "proverbial" Eskom.
This is still a modest target considering the fact that countries such as China bring on stream about 40 000 megawatts worth of electricity each year. Surely we cannot fail to meet our modest target of bringing on stream, over a period of two decades, what China is able to introduce each year.
This gathering marks the beginning of a series of consultations with regard to the future of electricity infrastructure. We are implementing the requirements encapsulated in the appropriate legislation including the Energy Act, the Electricity Regulation Act (as amended) and the regulations on new generation capacity.
We are pleased that we have received more than 400 responses to the input parameters and the fact sheets that we have sent to various stakeholders.
In view of the huge interest from our stakeholders, we have therefore decided to extend this session to two days, today and tomorrow. We want to hear every shade of technical input that there is available in this plenary hall so that we can factor these when we embark on the cyclical modelling process.
This exercise will be repeated every two to three years, depending on the need to determine the best options, to balance the electricity demand with supply.
This process is a continuous one as it depends on the input assumptions that are made. The outcomes are a direct product of these assumptions. It becomes critical therefore continuously to check if the assumptions hold true, particularly macro-economic parameters like economic growth projections, environmental policy changes, cost of generation, etc.
Consequently the IRP modelling process will be adjusted as soon as there are changes to the original assumptions.
One of the questions that we have to answer as we develop the IRP is the critically important issue of climate change and the need to reduce South Africa's carbon footprint. We will do this guided by our very own long-term mitigation scenarios.
We will have to navigate our way through various permutations such as coal, renewable energy (wind, solar, small hydro and biomass), gas and nuclear.
We will do this as we clearly have to meet our country's future demand requirements through the trapeze like delicate act of balancing a number of parameters such as cost, energy security adequacy, social and environmental considerations.
We also have to take into account any implications flowing from the Copenhagen accord. Reducing carbon emissions is perhaps the single biggest factor that will influence the IRP that will ultimately emerge from the process that is commencing today.
We are attending to this matter. The Inter-Ministerial Committee on Energy is finalising the issue of the funding model for Eskom as well as the location of the independent systems and market operator. Over the next five years, demand side responses such as energy conservation, energy efficiency and demand side initiatives will be very critical and need to be given the impetus they truly deserve.
Finally, we invite you to engage with us as openly and as candidly as possible. On our side, we will listen attentively and we will offer clarity or respond to any issue that will be raised by this audience.
The kind of IRP 2010 that we will introduce in the context of the new socio-political landscape obtaining in our country is something, I would aver, that these plenary sessions must be able to outline, mindful, throughout, that this is not about numbers.
As Margaret Mead so correctly says, "Never doubt that a small group of thoughtful committed people can change the world. Indeed it is the only thing that ever has".
Let us get down to work!
I thank you all.
Issued by: Department of Energy
7 Jun 2010
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