How much electricity do we really need?

The wasteful electricity grid

Today we present the fifth fact sheet from the Smart Electricity Planning Report. This fact sheetasks how reliable is our electricity forecasting.

According to the Department of Energy, South Africa needs to double its electricity output in the next 25 years if we are to keep pace with growing demand. This is based on the department’s ‘moderate demand’
forecast for how the economy will grow.

But forecasting is only as reliable as the numbers that are put into the system in order to get the modelling results.

Overly optimistic, inflated projection
• Critics of the Integrated Resource Plan, the IRP2010, the government’s strategic plan for electricity generation development in the next decades, argue that it is based on an overly optimistic forecast of the country’s economic
growth.
• It tailors the country’s power generation infrastructure investment on an expected annual demand growth rate of about 2.9% from 2010 onwards, with major demand coming from industrial sectors and municipalities.

Demand may well be less
• Rising electricity prices, ‘price elasticity’, will directly impact electricity demand. This was only factored into the IRP modelling indirectly.
• The past two years saw lower than expected growth, due to the global recession. Economic growth is expected to be low for years to come.
• Energy efficiency and conservation can reduce electricity demand dramatically. Only a fraction of this potential was included in the IRP2010. It did not factor in the existing National Energy Efficiency Targets of 12% (in general) and 15% (for industries), but only proposes a 4% demand reduction by 2030 through EEDSM measures.
• If South Africa reaches its National Energy Efficiency Strategy target of 12%, and continues with a very moderate energy efficiency programme until 2030, it could cut the entire country’s electricity demand by 16% by 2030 without slowing economic growth.
• These important factors were not included adequately in the IRP2010 modelling forecasts for the country’s electricity demand.

Building a smarter electricity sector
The current centralised electricity supply is outmoded, expensive and wasteful. The IRP2010 calls for investment in more of the same: large-scale, costly infrastructure, where most ‘new build’ is in coal and nuclear power plants.

The Smart Electricity Planning report:
• gives a critique of the modelling process used to justify this investment
• models an alternative, and possibly more realistic demand projection
• suggests an alternative investment plan which is pro-poor, modern, decentralised, and would steer the country and economy in the direction of a low carbon future, meaning it will remain globally relevant.

A smarter planning strategy for electricity is one which:
• is based on an integrated energy policy, including even moderate and achievable energy efficiency measures
• includes a wider and more diverse mix of renewable energy technologies, on a decentralised, efficient grid
• mitigates the risk of over-investment in old, dirty technologies which would equate to financially and environmentally risky ‘new build’.
For a full analysis of how South Africa can invest in a smarter electricity future, from a demandside perspective, please review the full Smart Electricity Planning report which can be found at http://www.irp2.wordpress.com/smart-electricity

Look out for next week’s fact sheet: Meeting the need: the supply side of the equation.

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