Now that the Western Cape High Court has overturned the Ministerial Determination to procure a new nuclear industry and averted a back-door deal with the Russians, through a detailed ruling delivered on 26 March, the merits of nuclear power will have to be decided through the formal energy planning process. The court found not only that the secretive agreement with Russia should have been tabled for debate in parliament, but also stipulated that the national regulator will have to hold public hearings to consider whether to consent to any new Ministerial Determination on nuclear procurement.
The Determination that is ruled unlawful had been mandated in terms of the IRP2010: the Integrated Resource Plan formally promulgated in early 2011, following the most transparent energy planning process that has yet been achieved in South Africa. The mandated plan for new generation, as a result of being ‘Policy-Adjusted’, provides for a lot of nuclear power and remains the basis for electricity supply determinations until a new IRP is adopted. The Department of Energy has already indicated to Parliament that a new IRP will be tabled in August or September. This follows publication of IRP documents last November and a first round of stakeholder consultations.
The requirements for a legitimate process to restart nuclear procurement are such, that the outcome of the Integrated Resource Planning process currently in progress, will have to be the basis for a new Ministerial Determination (the court’s ruling noted that the IRP2010 is overdue for review). This should serve to raise the profile of the IRP and associated decision-making to its rightful prominence in public debate, and as a meaningful target of mobilisation for a more people-oriented energy plan.
However, it will also encourage the coal industry to intensify its efforts to build as many new plants as possible before the case for phasing out coal-fired generation is accepted more broadly by the investment community and society at large.
The standing determination for procurement of 2 400 MW of new coal-fired generation capacity has not been challenged (though the independent power projects proposed to contribute to such capacity are being opposed on the basis of social and environmental impacts). It is highly unlikely that any new Ministerial Determination will be accepted on the basis of the IRP 2010, particularly since a national decline in electricity use over recent years means there is currently surplus generation capacity. Rather, it is early decommissioning some of Eskom’s worst old plants that becomes a more pressing decision and potentially controversial issue for a national electricity plan that is responsive to current realities, as it has to include a retirement schedule for existing capacity.
With a nuclear mega-project and massive financial commitment no longer imminent, a deterrent to other energy investment opportunities is lifted, providing conditions for more detailed consideration of near- and long-term options and their socio-economic potential. The competition between coal and renewable energy supply options comes to the fore and the dynamics behind recent manoeuvrings by Eskom, as well as prospects for democratic governance of this ‘public enterprise’ and the electricity supply system as a whole, can be subject to rational deliberation. Space has been created for the practice of integrated planning, allowing democratic process and public interest to take precedence over opportunistic deal-making.
The assumptions that the DoE has proposed to use for the new IRP, such as technology costs and transmission constraints, have been strongly contested, even within government. Continued insistence that meeting baseload electricity demand requires massive, fuel-based generation plants has become hollow rhetoric in the light of extensive research by the Council for Scientific and Industrial Research (CSIR). The rapid decline in the costs of renewable energy and storage technologies has radically altered both value propositions for energy services and the risk profile of investment options, particularly for long-term investors such as the Public Investment Corporation (PIC), which is also directed by the IRP.
With Eskom continuing to defy government policy and commitments to renewable energy projects, the need for democratic process to determine our energy development pathway and related public spending has never been clearer. Affirmation by the judiciary of requirements for public consultation should invigorate social dialogue amongst all stakeholders, looking beyond short-term defensiveness to a national energy system that optimises employment opportunities, resource-efficiency and transformation of the electricity system to serve all South Africans equitably and sustainably.
The IRP should be more than a new generation build plan, encompassing grid expansion planning (currently controlled by a monopoly utility directed by corporate self-interest, despite being nominally owned by the state) and programmes to deliver universal access to electricity. The success of the legal challenge improves the prospects for interrogation of vested interests and for due consideration of household energy services needs and opportunities alongside those of established industries.
While electricity supply is not the only big-spending area of national concern, the IRP process could become the most important opportunity available this year to advance good governance in development planning, including full-cost accounting and risk analysis for public investment decisions. That is if Parliament holds the new Minister to completing the process in an objective, transparent and timely manner.