Draft IRP2025: Lacking details to critique

Draft IRP2025: Lacking details to critique

The draft IRP2025 is currently undergoing consultation at NEDLAC but herewith are some of FlexED’s views on this important piece of legislation.

Traditionally, an IRP (Integrated Resource Plan) is a deeply technical document which provides a blueprint for new generation projects to be developed over the short to long term for a country. Such projects are often multi-billion-rand investments requiring many millions to be spent on development (i.e. the riskiest phase of the project) years in advance in order to align with the expectations of which technology is to come online as per the infamous IRP table (see main image to this article). Given the high stakes involved, it is prudent that as much detail as reasonably possible is included in the IRP so as to allow key stakeholders, such as IPP’s, sufficient insight into the rationality of the proposed plan thus providing confidence to take those risky development investments forward.

The draft IRP2025 sadly falls short on the necessary crucial detail and instead provides the reader with sweeping statements and broad stroke generalisations coupled with weakly described interventions. This, in our view, is a step back from the previous IRP’s which hosted multiple graphs and tables of information highlighting key information such as “the true cost of not having gas” or “the tariff impact of curtailing renewables” by way of example. The unfortunate part though is that we firmly believe that the detail is there and that in fact, the power system modelling work undertaken by the DEE is of a global standard and accurately portrays what South Africa requires up to 2042. We can, however, only assume though that in an attempt to appease the multitude of “expert” opinions that had to be considered by the DEE, that the authors deemed it safer to simplify and mystify the results thus leaving room for interpretation and obfuscation and side-stepping any meaningful intervention. This lack of robustness in the drafting of the IRP2024 is thus problematic and concerning.

Despite this setback, there is reason to be optimistic as the final recommendation, in FlexED’s view, is a sensible, and directionally sound, one. A recurring theme throughout the report is that the system requires flexibility (as noted by the 50+ occurrences of the words ‘flexibility’ and ‘dispatchability’ and the fact that they have even included a dedicated Annexure called ‘POWER SYSTEM FLEXIBILITY’) to balance the growth in renewables and the technologies of BESS; Gas; and Pump-storage are perfectly aligned to what FlexED’s core focus is. This thought piece attempts, as far as possible, to unpack these results along with highlighting some of the risks/shortfalls we deem to be important in reading this critical report.

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70/20/10: The Golden Ratio?

The mix of new generation proposed in the IRP largely follows FlexED’s view of the ‘new energy equation’ approach, namely, that Energy Security = Renewables + Flexibility (Read Fifty Shades of Flex – Flexed) with a sprinkle of baseload for prudency and risk aversion. By categorizing each technology as either ‘renewable’; ‘flexible’; or ‘baseload’, we can get a sense of where the priorities are in ensuring a stable and cost-effective energy mix into the future. We can categorize the technologies in the following manner:

Renewables Non-dispatchable – Wind, Solar, Embedded Generation

Flexibility – Gas-IPP, BESS (Eskom and IPP), Pump-storage

Baseload – Nuclear, Gas-Eskom*

*Note: We have assumed that for Eskom’s the 3GW gas project (in Richards Bay), whilst it will likely be a mid-merit, due to the anchor gas offtake restrictions (including minimum offtake obligations) from the LNG terminal, there may be limited potential to be a true provider of ‘flexibility’ hence we classify it as ‘baseload’ but in reality, it would contribute some baseload and some flexible characteristics.

Summing the MW’s per category to 2042, we can observe a clear preference to build as much renewable energy (~70%) but supported by flexibility (~20%) to balance the renewable energy and hedged with baseload (~10%) should the renewable+flexible mix deem to be insufficient.

As a side note, we do raise questions about the practical issues of slowing down the renewable builds between 2028 and 2030 as this could have dire effects on the RE industry within South Africa.

Going a step further into the pie chart, within the Flexibility wedge, we notice that Gas is the dominant provider (60%) followed by BESS (36%) and then Pump-Storage (4%). And as per the ‘Optimistic BESS scenario’, should BESS prices fall further than expected, then the ratio of gas to BESS looks the other way around. Interestingly though, pumped storage, a new-comer into the IRP table, is not a technology that appears in the reference case (i.e. the least cost scenario) but has been included as part of the proposed balanced plan in recognition of the high likelihood of needing more flexibility in the system.

“A flexible power system is one that can adapt quickly and reliably to changes in electricity demand or supply. This means being able to ramp power output up or down or switch between different energy sources to make sure the grid is always balanced. A measure of flexibility is assessing how quickly a dispatchable power plant can change its output from zero to maximum when required. South Africa’s power system is dominated by older generations of coal-fired plants that are generally not designed for rapid changes in output or ideally operated below their minimum stable level, thus making them less flexible. As the energy share of variable renewable energy resources increases in the grid, a more flexible type of generation is necessary to ensure a reliable power system.” (Draft IRP2025)

Finally, Nuclear makes an appearance when one restricts the new gas beyond 2030 (excluding the already committed 6GW). We do however challenge the ability to undertake over 6GW of Nuclear in 10-15 years time but this is a separate debate for another day…

So is this exactly the right mix of technology types for South Africa? Based on FlexED’s experience with power system modelling, the 70/20/10 renewables/flexibility/baseload signifies a cost conscious; risk aware; and carbon prudent approach to achieving our energy security objectives.

Under-analysing the biggest risk: Coal EAF

The first observation made under Section 7 ‘OVERALL OBSERVATIONS’ is that the “power system will remain adequate till 2030 if the Eskom Plant Performance remains within forecasted range…”. In addition, there is a 4-line summary in section 5.6 called ‘ANALYSIS OF THE SHORT-TO MEDIUM-TERM PERIOD (2025-2030) which essentially says “don’t worry, we don’t expect load shedding and we not going to be burning excess diesel to keep the lights on”.

Well…. Three months after the publication of the IRP, which was premised on the positive EAF trend still seen in December 2024 which South Africa enjoyed with 300 load shedding free days, load shedding struck with MUT’s (Multiple Unit Trips) experienced in Q1 2025. During this time, South Africa experienced record breaking levels of diesel been burned with up to R300M being spent in a single day as was experienced on the 4^th April when the OCGT’s were running over 60% (keep in mind that the design level is meant to be ~3%!). At the time of writing this, load shedding is still a regular occurrence.

So clearly the system was unable to “absorb shocks from MUT’s” and that the “if” in the observation has failed us dismally. And without any details to interrogate, we will never fully understand what the extent of damage will be resulting from this assumption. How much diesel will we be burning if we have a low coal EAF and how will this impact the final tariff you and I pay? And what exactly are the measures being taken by Eskom in improving the EAF? We do note that a comment is made about studying this sensitivity after the IRP is approved but given that the coal EAF is the biggest driver in whether or not we have energy security or not, should this report not at least seek to unpack this very likely scenario in a little more detail?  

What Case for CCGT?

A new inclusion in the report is a section dubbed ‘6.1 CASE FOR GAS CCGT’ which essentially says that the requirement for Gas CCGT by 2030 is critical in lieu of the impending loss of 8GW of coal plant and that above the 6GW needed before 2030, a further 1GW is required per annum between 2030 and 2040. Now whilst one cannot argue with this logic (in the absence of more details being made available), we do question whether the need to introduce a ‘marginally flexible’ technology was based on quantifiable evidence or is simply wordsmithing to appease certain stakeholders? This is why we challenge the ‘case’….

The promotion of adding of 1GW of mid-merit CCGTs every year is in direct contrast to what the reference case results indicate (i.e. the “least cost” scenario) which calls for no more ‘mid-merit’ gas between 2031 and 2035 (section 5.7). More curious though is that the report remains silent on the need for gas plant for lower dispatch levels (such as OCGT and ICE) as was clearly required in the IRP2019  which called for gas plants of approximately 12% load factor – a number clearly not achievable from a CCGT (Read The Need for Flexible Gas in South Africa).

So what really is the case for CCGT? How was this jump made from the last IRP at 12% to this one presumably at much higher dispatch levels? What were the costs and tariff impacts of this change? And what are the assumptions driving this ‘case’? Given the topical debate around load factors for gas power plants and what constitutes ‘mid-merit’ solutions, we believe that the answer will lie in a divulgence of more dispatch details but preferably even better, in a dedicated analysis especially considering the impact it will have on future gas IPP procurement strategies.

A Leap of faith into the Proposed Balanced Plan

We have already noted that the IRP makes many general observations which lack quantifiable evidence and unfortunately, this trend continues in the definition of the ‘Proposed Balanced Plan’ which seemingly gets divined into existence from the Overall Observations.

Now we appreciate that the proposed mix is based on certain system views and forecasts, and that the proposed mix is deemed sufficient to ensure energy security is maintained, but what happened inside the black box that spat this result out? Was there any probabilistic analysis around the risk of rooftop solar not being rolled out as quickly as envisaged? Or whether there is a reasonable chance that the coal plants life could be extended?

Again, without details, we are left to trust that the proposed balanced plan is indeed the right plan for us…. Whether we like it or not.

Not-so-SMART Interventions

There are five proposed interventions which essentially say the following:

1. Improve coal EAF;
2. Accelerate Gas to power;
3. Delay shutting down coal plants;
4. Develop the transmission grid and;
5. Don’t forget the Koeberg extension risk and MES risk (Read The Final Countdown for Coal? – Flexed).

Once again, while we cannot argue much on the logic employed behind the above proposed interventions, we need however to be more practical here. While objectives need to be SMART, meaning in other words, they needed to be Simple; Measurable; Achievable; Relevant; and Time-bound, in this instance the above proposed interventions talk only to being Relevant.

Perhaps the above proposed interventions could have been accompanied by clearly stated objectives that are achievable until the next IRP iteration is developed, such as for example:

1. Successfully launch the SAWEM by [a certain date];
2. Improve coal EAF to [percentage] by [such a date] by doing [clearly stated and properly sequenced activities];
3. Announce Preferred Bidders on Gas IPP Programme by [a certain date];
4. Launch independent grid operator tender by [a certain date];
5. Confirm Coal Plant MES strategy by [a certain date];
6. Etc ….

These, in FlexED’s respectful view, would be more meaningful milestones which would then have a material impact on whether the ‘Proposed Balanced Plan’ is in fact achievable or not until the next IRP draft is issued.

Conclusion

Renewables are the winners but flexibility steals the limelight in second place and baseload straddles behind in third place. No doubt there will be those in support and those opposed to this result but we believe nonetheless that this is a positive outcome and signifies a clear shift in what the power system of tomorrow will look like.

Having said this, we submit that the current draft IRP2025 has left us, reluctantly so, only marginally satisfied since whilst directionally it is good in as far as an attempt to map out a vision for the medium to long term on the one hand, on the other, we felt cheated out of an opportunity to unpack and analyse the details driving this result. In a way, this approach forces the reader to trust the DEE process and hope that the ultimate objective is achieved from this document which is to ensure energy security is maintained (as per the amended ERA, the IRP plays a role in guiding what needs to be procured (through a determination) in the event of a “failure of a market”, “an emergency”, or “for purposes of ensuring the security of energy supply in the national interest”). Only time will tell if this approach works and if we should trust the DEE to ‘keep the lights on’ up to 2042 but as FlexED, we hope that the next IRP will divulge more graphs and tables to meet the exigencies of a specific instance, in this case a provision of sufficient detail to outline reasons for decisions, stances and assumptions adopted culminating in this final draft IRP 2024 before us.  And lastly, as the saying goes, “the devil is in the detail”, we submit that the DEE’s potentially conscious withholding of this crucial detail has meant that a certain wide ranging stakeholder group, FlexED included in that group, would have a more restrained chance to scrutinise the real science and logic underpinning the DEE’s recommended way forward in the IRP 2024 draft, the nett result of which it may be argued in conclusion by some, as leading to a vague and somewhat ambiguous document.