Related Articles
Power Station near Standerton in the Mpumalanga province of South Africa
Forward article link
Share PDF with colleagues

South Africa eyes industrial boost through IRP

Energy minister Gwede Mantashe outlines the benefits expected from the country’s Integrated Resource Plan (IRP) 2019 beyond energy security

The South African government is seeking a range of benefits from its IRP 2019—including industrial development, self-sufficiency and regional co-operation—in addition to its core aims, according to minister of minerals resources and energy Gwede Mantashe on the sidelines of the Africa Oil Week conference in Cape Town. 

South Africa updated its electricity supply blueprint in mid-October with the cabinet-approved IRP, which sets out its preferred generation mix to meet expected electricity demand to 2030. The IRP’s purpose is to reconcile its three aims of ensuring energy security, minimising costs and meeting environmental commitments. 

While the future of gas production in Africa “looks positive”, Mantashe appeals to other governments on the continent to make the most of the recent discoveries. “I encourage fellow African countries to invest massively in this space,” he says. “Most of our gas and petroleum on the continent is not consumed on the continent. It is exported to all other continents except Africa. 

“We must consume sizable amounts of what we produce, and export what is left. It cannot be the case that massive production goes everywhere else—that is called a ‘pit to port’ economy. That must change on the continent—we must agree to make that happen.” 

The government of South Africa “remains unwavering in its mission” of securing security of supply and access to clean and affordable energy to all South Africans by 2030, says Mantashe. Beleaguered South African utility Eskom remains heavily dependent on aging coal-fired plants for power generation. Both more gas from neighbouring Mozambique, as it comes onstream, and the expansion of renewables would reduce its carbon emissions substantially—as well as provide the state enterprise with relatively low-cost sources of fuel. 

“We must consume sizable amounts of what we produce, and export what is left. It cannot be the case that massive production goes everywhere else—that is called a ‘pit to port’ economy.”

Eskon operates 16 coal-fired power stations and “many of them are coming to the end of their lives and will be decommissioned or [receive an] extension of life”. That lifespan extension could involve replacing coal turbines with gas turbines—“that we would welcome, because that extends energy availability in an area where a lot of capacity is being turned off,” says the minister. 

In South Africa’s previous renewable energy independent power producer (REIPP) agreements for solar PV—in windows one, two and three—the government accepted “a lot of the funding risk”. But, as the technology develops, Mantashe expects private sector renewables companies to progressively take over this liability. There is also the possibility of renegotiating the cost of solar PV from window one, “which is quite expensive”, while the government anticipates that cost will decline further for window five. “Renewables is an interesting space, I must say,” Mantashe adds. 

“Government is funding the risk of introducing the technology. I think it is the correct response for any government wanting to introduce a new technology.” But, for the next window of REIPP agreements, as the technology becomes established in the economy, “it is important for the government to say, ‘now, producers, take your own risk’”. 

The IRP is built on top of plans for Eskom to be restructured into its separate functions, including a split of its generation and transmission and distribution arms. But Mantashe scotches rumours that the unbundling of functions may be a precursor to privitisation. “There has never been a decision to sell Eskom’s power stations,” he says, suggesting that speculation has arisen from suggestions in a previous economic paper that were not enacted. 

“Eskom remains a state-owned company, 100pc owned. It is going to be unbundled and re-define the role of transmission… and the buying and selling of energy. The objective is not private ownership—the objective is for Eskom to provide reliability and security of energy supply… Security of supply is what we need in the economy.” 

Core objectives

Mantashe opened Africa Oil Week with a speech on the IRP. “Energy infrastructure is key to economic activity and growth, and must be robust and extensive to meet industrial, commercial and household needs,” he told delegates. “The planning framework must be dynamic and updated regularly to keep abreast of new developments in the energy sector.” 

South Africa’s energy generation landscape is evolving, he says. “Demand is not captive to the national grid, [while] costs are declining as a result of technology advancements.”           

The IRP makes clear South Africa’s coal plants, with over 30GW of installed capacity, and abundant coal resources will “continue to play a significant role”, says Mantashe. “New investments will be directed towards [high-efficiency, low-emission] coal technologies, including underground coal gasification [and] carbon capture and storage to enable us to continue using our coal resources in an environmentally responsible way.” 

The IRP 2019 extends the design life of the country’s Koeberg nuclear power plant, as well as plans to increase nuclear capacity in the form of smaller and lower-cost modular reactors. “In the light of intended decommissioning, urgent planning for additional nuclear capacity will be done at a pace, scale and cost affordable to the country,” he says. 

The IRP includes rollout of renewable energy and storage, particularly to provide off-grid electricity to far-flung areas. South Africa possesses high-grade resources in vanadium, platinum, palladium, nickel, manganese, rare earths, copper and cobalt that are “critical in the global energy storage sector”, he says. “These resources present a huge potential for the creation of new industries and localisation across the value chain.” 

The IRP 2019 makes provision for gas-to-power projects from 2024. “We intend to establish the first LNG hub in the Coega IDZ, in the Eastern Cape Province... Herein is an opportunity not only to invest, but to also help develop the gas industry in this country,” Mantashe adds. 

The Coega Special Economic Zone (SEZ) site will “lay the foundation” for new gas-to-power plants and include the conversion of diesel plants to gas—as well as importing feedstock for the gas-to-liquids refinery in Mossel Bay. “The framework for supporting this major programme will be announced by my department in the near term. Linked to this is an amendment to the Gas Act of 2001, which will be tabled in cabinet soon,” says the minister. An upstream-focused petroleum resources development bill will soon be before cabinet, he continues. 

“Gas-to-power technologies will provide the flexibility required to complement intermittent renewable energy and meet demand during peaking hours. While, in the short term, the opportunity is to pursue gas import options, local and regional gas resources will allow for scaling up within manageable risk levels. Indigenous gas like coal-bed methane and, ultimately, local recoverable shale and [offshore] gas are options we are considering.” 

South Africa saw the substantial Brulpadda gas finds by Total and its partners off the Mossel Bay coast earlier this year. “We are confident that this find will spur further interest in the upstream potential of South Africa,” says Mantashe. “We remain resolute in our conviction about the importance of all energy carriers in our energy mix. We intend to exploit our natural resource endowment to our benefit.” 

Mantashe notes “with great interest and a sense of admiration” recent major gas finds in Mozambique and Tanzania. “We remain ready to contribute to the development of the recent finds [including] through the importation of gas.”

Also in this section
Eastern European coal-to-gas switching enthusiasm builds
7 July 2020
Poland and the Czech Republic, long the continent’s coal champions, are having a rethink
Myanmar LNG projects overcome pandemic and sceptics
3 July 2020
China and Hong Kong-led consortium has started operating first of three planned facilities as Yangon targets nationwide electrification
Letter from China: Pipeline reform heats up
2 July 2020
The signs are positive that Beijing is getting serious about opening up its gas network