An Assessment of New Coal Plants in South Africa’s Electricity Future: The cost, emissions and supply security implications of the coal IPP programme

South Africa’s coal base load independent power producer (IPP) procurement programme was launched in 2014, in line with the new coal capacity envisaged in the 2010 Integrated Resource Plan for Electricity (IRP2010) (DoE, 2011). Since the release of the IRP 2010, however, there have been fundamental changes to the South African electricity sector. In particular, rapid changes in the costs of competing supply technologies and fuels globally and in South Africa, coupled with an unprecedented decline in demand for electricity, have rendered the assumptions of the 2010 IRP increasingly out of date. This study aims to quantify the effects of the inclusion of the coal IPPs in South Africa’s electricity system over the period from 2015 to 2052. The modelling framework indirectly allows for an assessment of supply security because the model is required to meet a 15% firm reserve margin of fully dispatchable plant. The relative costs of a system with or without the coal IPPs thus reflects the costs of ensuring an equivalent level of operating supply security and system adequacy. The modelling highlights several key changes in the electricity sector that have not been considered by the Minister of Environmental Affairs in her decision to uphold the environmental authorisation. This includes the substantially lower demand that has materialised since the IRP 2010 (and that is forecast into the future) and which renders the coal IPPs unnecessary for meeting short, medium, or long-term demand growth at lowest cost. We also investigate the cost implications that the inclusion of the coal IPPs imposes on the system relative to cheaper alternatives (comparing total system costs), the GHG emission ‘lock-in’ from the plants, and the effects this has on South Africa meeting its long-term climate change commitments.