Intervene now, or load shedding could increase ten-fold

Burden spills can be stopped by 2024, but strong leadership from the presidency will be needed to ensure that extraordinary interventions in many areas are implemented without delay, says the Meridian Economics think tank.

This includes raising the licensing exemption for generating plants from 100MW to 1000MW.

He says that load bearing is likely to quadruple in 2023, compared to 2021, up to five times in 2024 and up to tenfold in 2026, with no intervention.

The solution proposed by Meridian Economics includes a soaring of wind and solar energy, changes in the tariff regime to incentivize distributed generation owners to push too much energy into the grid, and the removal of obstacles to current government supply from independent power producers (IPPs). .

Meridian, led by respected energy expert Dr Grove Steyn, is releasing two reports (‘Resolving The Power Crisis’) outlining its research and recommendations on Monday, June 13th.

Slowly consequences

In the first report, the think tank investigated what the burden loss picture would look like if the government’s renewable energy supply from IPPs continued uninterrupted following Eskom’s refusal to sign power purchase agreements in 2016. .

They were finally signed off in 2018, but the procurement program has only recently been revamped at a slow pace.

Meridian found that if the system operator had access to 5 000 MW (equivalent to about two bidding rounds) of additional wind and solar energy in 2021, it would not only prevent the year worsening of burden – bearing would eliminate 96.5% of the load loss that year.

Figure 11: Summary of results: 5GW Additional renewable sources would reduce load sealing by 96.5% in 2021.

Source: Meridian Economics

Combined with a “modest expansion” of Eskom’s program to repurchase power from industrial customers, demand management as well as 2 000 MW of disposable batteries, the loss of load could be completely eliminated.

That would have come at no cost to Eskom. In fact, the utility would have saved R2.5 billion due to more economical use of its coal-fired power station, open-cycle gas turbines and pumped storage plants, Meridian found.

Power proposals

In the second paper Meridian identifies problems in the current stages aimed at mitigating the electricity crisis. It develops and adjusts a solution to mitigate some execution risks and develops an ambitious game plan to eliminate burden loss by 2024.

The paper also sets out the assumptions for demand growth and other key variables.

According to Meridian, the reduction in the availability of Eskom power stations is unlikely to be limited to less than 2% per year and the pressure on the system leaves the utility with little space for proper maintenance. Demand is also expected to increase to pre-Covid levels.

The think tank suggests that aggressive pricing calculated in the wake of the Covid-19 Pandemic was the result of a supply chain disruption and massive price increases as a result of the 1 850 MW emergency power purchase program (RMIPPPP) and the fifth round of in-energy bidding. renewed (BW5).

As a result, combined with unrealistic and impractical local material requirements primarily related to solar panels and poor supply design, many of these projects will fail, according to Meridian.

It proposes the following urgent measures as a game plan to end burdens by 2024 and to ensure energy security by 2025:

  • Eliminate or significantly reduce local material requirements for PV modules.
  • Repair the RMIPPPP design defects so that all projects with PV, wind and storage can proceed and provide the full energy and capacity of the project to the system.
  • Implement full price increases for BW5 projects to offset major cost increases to ensure viability.
  • Accelerating the distributed generation market was adopted through the application of additional license exemptions of up to 1 000 MW and net feed-in tariffs and additional tax incentives..
  • Accelerating the distributed generation market was adopted through the application of additional license exemptions of up to 1 000 MW and net feed-in tariffs and additional tax incentives..
  • REIPPPP (Renewable Energy IPP Supply Program) expanded BW6 to double its current size and launch on time with stronger incentives for early energy.
  • Accelerate the provision of additional peak capacity, demand response capacity and storage;
  • Eskom’s Just Energy Transition (JET) public-private renewable energy (PPP) partnership projects..
  • Clarify and unlock the opportunity for a municipality to quickly acquire a new resource.
  • Strengthen the connection process with the Eskom grid.
  • Set up and establish key institutions, including resolving issues in the IPP Office and the Nersa energy regulator.
  • Accelerate further amendments to Schedule 2 of the Energy Regulation Act and issue new Ministerial notices / decisions.
  • Establish a well-resourced dedicated power crisis implementation unit within the presidency to drive and monitor the implementation of these measures.
Source: Meridian Economics

READ NOW: Eskom is dying for business, the adviser says in a handwritten note to De Ruyter

  • This article was originally published on Moneyweb and republished with permission. The original can be read here.

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