|
|
 |
|
Viewing report
|
|
|
|
The IRP 2010: A Frost & Sullivan Impact Analysis
Frost & Sullivan, June 2011, Pages: 132
RESEARCH OVERVIEW
This Frost & Sullivan research service titled The IRP 2010: A Frost & Sullivan Impact Analysis provides a comprehensive overview of document, the challenges contained therein and the implications these will have for the country going forward. The research offers strategic insight into South Africa’s future competitiveness in terms of electricity pricing. It outlines the electricity generation options to 2030, the affect this will have on the electricity price path going forward, the associated economic effects this could have, as well as potential alternatives going forward.
This analysis is available through our Energy & Power Growth Partnership Services programme. With continuous access to intelligence and resources from all seven perspectives of the Complex Business Universe, the Growth Partnership Services programme ensures that you and your Growth Team™ are able to maintain a 360 Degree Perspective of the market.
MARKET OVERVIEW
All Options to Mitigate High Electricity Prices Need to be Investigated
The draft Integrated Resource Plan (IRP) 2010 is a reflection of government’s vision for the South African economy until to 2030. It aims to develop a sustainable electricity investment strategy for generation capacity and supporting infrastructure for South Africa. However, concerns remain about whether it will be able to achieve a ‘justifiable’ electricity price path for South Africa - one which offers viable and affordable tariffs and that balances and supports future supply requirements with developmental objectives. “The robust growth in electricity demand requires a significant expansion in future generation capacity, with the capacity expansion timeline and various technology options set forth in the IRP 2010,” remarks the analyst of this research. “But, the new build programme as outlined in the IRP 2010 has the potential to cause steep rises in the electricity price path, potentially restraining economic development within the country.”
Increasing electricity tariffs will have pronounced consequences for large industry and, therefore, for job creation targets set by the government. “Steep electricity price increases will have far reaching implications for agriculture, mining and beneficiation,” notes the analyst. “All options should be explored to mitigate high prices including lower ROA, limiting renewables, avoiding the revaluation of assets and allowing independent power producers (IPPs) to sell to systems operators and to trade bilaterally.”
Planning for Future Energy Requirements Need to Begin
In terms of security of supply, South Africa is in trouble until 2014 and again from 2022. South Africa, under the IRP 2010, seeks to more than double its current generation capacity to 89 GW by 2030. However, the current electricity growth forecast is based on an assumption of declining electricity intensity. This assumption, if incorrect, will constrain the economy; if commodity prices rise and stay high, then the country will not have the electricity to take advantage of this opportunity. “If South Africa’s economy shifts towards greater energy intensity, there will not be sufficient supply to support the economy,” cautions the analyst. “The impact of price increases will hinder job creation in economic sectors that are sensitive to intensive electricity usage.”
Adjusting the pricing methodology and integrating IPPs will be critical to establishing a justifiable price path range for South Africa. Allowing IPPs and private power plants into the market will facilitate the required energy supply at the most competitive price.
“The link between job creation, economic growth and consequent energy requirements are inextricable,” says the analyst. “From 2023 the economy will start, once more, to grow faster than the supply of energy, making it essential that planning for future energy requirements begin now so that they reach maturity after 2020.”
REASONS TO BUY
This comprehensive, objective information allows your company to mitigate risk, identify new opportunities, and drive effective strategies for growth.
Product samples
A sample for this product is available. Please Login/Register to download this sample.
|
|
|
|
