SONA 2015 – The Energy Perspective

Despite the early disruption of the South African State of the Nation Address 2015 (SONA 2015) that saw EFF party members forcibly removed from the chamber, followed by a mass walk-out of opposition parties lead by the Democratic Alliance, SONA 2015 had to go on.

When it was time to get back to business, President Zuma rightly placed high priority and emphasis on energy matters, acknowledging that South Africa's lack of electricity is a primary constraint to economic growth. He stood to reaffirm to the nation and the world that overcoming this challenge is uppermost in government's programme.

President Zuma set out the government's immediate, short, medium and long-term goals in addressing the energy "challenge". First on the priority list is a stabilisation of Eskom's finances, with government committing ZAR23 billion to this cause in the next financial year. The short/medium-term imperatives are to address maintenance backlogs (presumably at both power plants and on the transmission network), enhance grid and generation capacity and manage demand. The long-term goal is to finalise and consequently implement the long-term energy security master plan.

Eskom's massive over-spend of approximately ZAR8 billion on diesel this year (used in running its diesel generators generally designed for peak power use periods) did not escape the President. He advised that Eskom had been directed to shift from diesel to gas as a source of energy for its generators. While on the subject of gas, the President also stated that the programme for 2 200 MW of gas-fired power generation was anticipated to be launched in the first quarter of the financial year 2015/2016.

There was acknowledgement that South Africa is surrounded by gas-rich neighbours and, for our own part, the discovery of shale gas deposits in the Karoo, and the promise of oil and gas deposits through the Phakisa Ocean Economy initiative launched in 2014, indicate that oil and gas resources will be "a game changer for us and the region", said the President.
The iconic Renewable Energy Independent Power Producer Procurement Programme, which was launched in 2011, also featured in the speech. The programme has seen the procurement of 3 900 MW of renewable energy through 32 projects (with foreign direct investment of more than ZAR140 billion), with just over 1 500 MW already connected to the grid. With this, the President reminded the nation that Eskom has completed its own 100 MW Sere Wind Farm, ahead of its scheduled completion of March 2015 nonetheless.

Continuity of government's programmatic approach to electricity procurement was illustrated by the 2 400 MW coal-fired independent power producer programme launched in December 2014. We do note, however, that only 1 600 MW has been released for procurement in the first round of bidding, which closes in June 2015. 2 600 MW of hydro-electric power will also be procured from SADC countries. The President also made mention of the mammoth 48 000 MW Grand Inga hydro-electric power project in the Democratic Republic of Congo, of which 15 000 MW+ will be made available to South Africa.

On the nuclear front, President Zuma stated that South Africa would continue to explore the 9 600 MW nuclear power programme approved in terms of the Integrated Resource Plan 2010 - 2030. Having signed inter-governmental agreements, the USA, South Korea, Russia, France and China presented on their nuclear power expertise and capabilities at vendor parade workshops held in the Drakensburg in December 2014. The President said that all five countries will be engaged in a fair, transparent and competitive procurement process to select a strategic partner or partners to undertake the nuclear build programme. The target is to have the first new nuclear generation unit online in 2023, "just in time for Eskom to retire part of its aging power plants" the President said.

The President also reminded the nation that an additional 10 000 MW of energy would be available through Eskom's new build coal-fired power stations of Medupi, Kusile and Ingula. No mention of the delays and cost over-runs on these projects was made.

The SONA 2015 energy discussion ended with a confirmation that in accordance with the long-term energy master plan, the country would continue to pursue gas, petroleum, hydropower, nuclear and others sources as part of its energy mix.

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