The South African Local Government Association (Salga) has called for a reduced demand forecast for electricity to be included in the Integrated Resource Plan (IRP) 2018, in line with the slowdown in electricity sales and a drop in customer demand.
Salga says the forecasts contained in the draft IRP 2018 are not realistic.
“It forecasts higher demand for electricity, yet electricity sales in metros are decreasing. The high demand forecasts have the potential to create stranded assets which will drastically increase the price of electricity. This will further exacerbate the financial difficulty of municipalities and Eskom. This will be passed down to consumers and the tariffs will be very high,” energy expert Nhlanhla Ngidi said on behalf of Salga.
During public hearings into the draft IRP, last month, Ngidi told Parliament’s Portfolio Committee on Energy that the cost of electricity supplied by Eskom to municipalities had not been increasing, and “is flat at best”.
He said the IRP should reduce the cost of electricity supplied to end-users and include demand forecasts that more accurately reflected what was experienced by municipalities.
Ngidi said Salga was concerned that, with the changing energy landscape, municipalities would be left with “poor, nonpaying customers as well as customers that steal electricity”. He also said some customers had installed their own generation. This had been done without regulation.
Salga has also called for accurate pricing of battery storage technologies and details of the expected additional savings by using such technologies in distribution networks.
“The constant technology price of battery storage was used in the IRP. This does not reflect recent trends and future predictions where costs are expected to decrease by more than 70% by 2030.”
Ngidi said the inclusion of battery storage potentially had great benefits for municipalities and could reduce infrastructure maintenance backlogs.
Meanwhile, the local government association welcomed the inclusion of embedded generation in the draft IRP. However, it called for a higher allocation for embedded generation, saying it was not sure how the draft IRP had arrived at an allocation of 200 MW a year.
“The allocation of 200 MW per year for both private and public installations is insufficient. Individual municipalities say they can account for 200 MW to 300 MW alone and there is already 1 500 MW awaiting generation licences.”
Future studies should also investigate whether the limit on embedded generation was necessary, Salga suggested.
“Why should there be limits on embedded generation if municipalities can source the electricity at a cheaper cost?’ questioned Ngidi.
Salga further suggested that the Department of Energy develop an IRP scenario with more ambitious greenhouse-gas emissions reduction targets, in line with the global 1.5 ºC target.
The association requested that it be included in negotiations for the next IRP, as it was a vital player in the energy sphere. Chairperson of Parliament’s Portfolio Committee on Energy Fikile Majola asked Salga representatives to be present at a meeting of the committee and the department the following week, so that it could state its case.
There was no mention in the presentation of the debt owed by municipalities to Eskom.