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South Africa policy blueprint says energy sector needs “large investments” up to 2050

Out-Law News | 06 Dec 2016 | 3:41 pm | 3 min. read

South Africa has released an energy policy master plan to guide “future energy infrastructure investments and policy development” up to 2050.

The Integrated Energy Plan (IEP) outlines recommendations to address projected shortages in the country’s electricity generating capacity, which the plan said “starts to decline notably from 2025” as a result of power plant retirements, leaving only 20% of current capacity available by 2050.

Energy minister Tina Joemat-Pettersson said the IEP will be open for public comment, along with an updated Integrated Resource Plan, until February 2017.

According to the IEP (191-page / 3.67 MB PDF), “large investments are required in the electricity sector in order to maintain an adequate supply in support of economic growth”.

The country’s transport sector “will continue to make the highest demand on energy”, the IEP said. Freight haulage, predominantly by road, “is the greatest contributor to increases in transport demand and related fuel consumption”. “Petrol and diesel vehicles will continue to be used in the foreseeable future, with electric vehicles only starting to make a significant contribution to passenger transportation after 2030.”

The IEP called for the promotion of “non-motorised transport and mass transport” such as buses and trains along with “variable pricing schemes such as electronic tolling systems should be used to penalise/incentivise inefficient/efficient vehicles”.

On freight, the IEP urged the imposition of “high penalties” on heavy vehicles to encourage a shift from road to rail. “Greater investment should be made in rail infrastructure to improve the rail network and encourage the use of rail for long distance haulage.”

Outside of the transport sector, “the most significant energy demand increase is expected to be in the industrial sector (manufacturing), followed by the commercial sector,” the IEP said.

The IEP said South Africa should continue to pursue a diversified energy mix to reduce dependence on a single or few primary energy sources. “Coal should continue to play a role in electricity generation, however, investments need to be made in new and more efficient technologies such as new supercritical pulverised fuel power plants with flue-gas desulphurisation,” the IEP said. “Investments should also continue on the testing of underground coal gasification.”

Long-term investment in research and test injections for carbon capture and storage (CCS) should also continue, the IEP said. “Given the significant investments required for this technology, South Africa should establish strategic partnerships with countries that have made advancements in the development of CCS technologies (such as Norway) as well as those that have abundant coal resources and therefore similar objectives in terms of exploiting their coal resources responsibly (such as Australia).”

According to the IEP, “natural gas presents the most significant potential in the energy mix” and South Africa should cooperate with neighbouring countries and develop partnership for “joint exploitation and beneficiation of natural gas within the region”.

“One of the challenges of introducing gas into new markets is that large, capital-intensive investment in infrastructure along the supply chain is required,” the IEP said. “Compared to oil, transporting gas by pipeline is relatively expensive because of the additional capital-intensive equipment needed to overcome the lower energy density of gas. However, these challenges can be overcome if there is a sizeable off-taker.”

Power generation from nuclear “needs to play a more significant role in the provision of new baseload generation” depending on the cost of building new reactors and their financing, the IEP said.

“Opportunities related to hydrogen technologies can help to establish South Africa’s place in the fuel cell sector both locally and globally,” the IEP said.

In terms of renewables, the IEP said solar, solar photovoltaic and concentrated solar power with storage “present excellent opportunities to diversify the electricity mix, to produce distributed generation and to provide off-grid electricity”.

However, the IEP said investments should be made in South Africa’s power distribution infrastructure “to upgrade the grid in order to accommodate increasing solar and other renewable energy contributions”.

“The deployment of technologies that utilise primary energy carriers with high carbon content and other pollutants should be reduced over time,” the IEP recommended. “Regulatory measures such as the carbon tax should be implemented to discourage future investments in these technologies, while carbon offsets and other innovative incentives such as renewable energy certificates and energy efficiency certificates should be explored and implemented.”

South Africa’s state-owned freight logistics company Transnet said in a 2014 forecast (28-page / 1.23 MB PDF) that demand for freight transportation was expected to grow from 762 to 1,954 million tonnes per annum over the next 20 years. The company said it was working on “road-to-rail migration” initiatives.

Last year, South Africa’s Department of Energy ordered officials to “expand and accelerate” the country’s independent power producer procurement programme to help boost the country’s struggling electricity generating infrastructure.