The department of mineral resources & energy announced last week the list of preferred bidders to supply nearly 2,000MW of emergency power to the grid. This is in line with the 2019 Integrated Resource Plan , which identified the need for emergency procurement of 2,000MW-3,000MW to address SA’s immediate short-term electricity supply gap. What raises suspicion is the fact that gas-to-power ships account for two-thirds of the successful bids.
To a country faced with rolling blackouts this sounds like a dream come true, but once the emergency is over it is daft to be locked into 20-year contracts at emergency prices. A far more sensible and cost-effective solution would be to procure emergency power to cover the short term supply gap with dispatchable power for only as long as it takes to close the gap at emergency prices. The emergency power could then be phased out as the lower-cost resources are connected.
By fast-tracking the implementation of the energy mix outlined in the 2019 IRP wind, solar photovoltaic and onshore gas could be integrated into the existing system to close the gap at far lower costs than the preferred bidder prices in the emergency procurement round. For example, wind and photovoltaic renewable energy were bid at R620/MWh in the last window of the renewable energy IPP programme and costs have dropped substantially since then.
As things stand these additional expenses for electricity procurement would be fed directly through to customers in the form of higher tariffs. Households would suffer, more businesses would become uncompetitive and the sort of large-scale industrialisation SA so desperately needs will remain out of reach.
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