Southern African Faith Communities Environment Institute

Liz McDaid – Cape Town

Presentation 23rd May 2012

• Context• Key issues:

– Transmission– Structure – Planning– Link with legislative amendments

Why is the ISMO Important?

• We have had favourable Government policy on private investment in power generation since the 1998 White Paper on Energy – but very little has been achieved.

• By 2012 private investment decisions account for less than 2% of new generation capacity.• Even if the entire REIPPPP (3,725MW) is included, private investment is still under 20%.

23-04-21Parliamentary Hearings on the ISMO

Bill3

2001 2004 2010 20122006

New generation investment decisions since 2001

Government targets 30%

Independent Power

Producers

Government approves Eskom investments:Camden RTS (1,520MW) Grootvlei RTS (1,200MW) Komati RTS (1,000MW)Medupi (4,800MW)Kusile (4,800 MW)Ingula (1,300 MW)

Cabinet decision. DOE to procure 1,000MW of OCGT peaker from IPPs. Eskom to build 1,000 MW

2003

Government approves additional

1,000MW of Eskom OCGT peaker plant

Eskom signs Power Purchase

Agreements (PPAs) with IPPs

under the MTPPP for

273MW

DOE announces Preferred

Bidders for 1,415 MW of

renewable IPPs

Eskom ~16,000 MW

273 MW1,000 MW

14,620 MW

1,000 MW

IPPs 273 MW

DoE Context

• Energy policy

• IEP

• Legislation ERA, NERA

• ISMO

• IRP

• Energy policy

• IRP

• ISMO

• Legislation ERA, NERA

• IEP

1998

2013

Want Have • Build DoE and maintain

transparent, accountable governance structure

• Diversify generation to increase renewables

• Transmission to match generation planning

• Tariffs to ensure ISMO focussed on EE/DSM and not only increasing supply

• Lack of DoE capability• Reliance on private sector

(vested interests)• Eskom failure to

implement renewables• Eskom transmission aligns

centralised generation• Eskom modelling

capability but lack of political will for EE/ DSM led IRP

Transmissioncurrent

ESKOM

ESKOM

Tx ISMO DX HOUSE

ISMO ?

ISMO ?

ESKOM Tx

Tx HOUSE

HOUSE

DX -eskom

DX

ISMO

ISMO

Independent regulation/ central planning

DOE :IEP integrated with IPAP, NDP, MDGs, CC policy etcDSM/EE/ SWH/ IEP/IRP

ISMO:Scheduling, procurementInput into IRP

NERSA:Regulate tariffsSet,Monitor and enforce license conditions

IRP

Eskom generation

IPPs

NERSA exemption

ISMO bill

DOE :IEP integrated with IPAP, NDP, MDGs, CC policy etcDSM/EE/ SWH/ IEP/ IRP

ISMO:Scheduling, procurementInput into IRP

NERSA:Regulate tariffsSet, Monitor and enforce license conditions

IRP

Eskom generation

IPPs

Increase parliamentary oversight

ERA/ NERA amendmentslack of accountability,

transparencyDOE :IEP integrated with IPAP, NDP, MDGs etcDSM/EE/ SWH/ IRP NERSA:

Regulate tariffsMonitor and enforce license conditions

ISMO:Scheduling, procurementInput into IRP

IRP(optional)

Decide who gets licences and determine tariffs and conditions

finalise plan procure generation

public participation in irp but irp can be ignoredPublic participation in tariff hearings but minister can dictate tariffs

ISMO

• Transmission – support transfer of physical assets

• ISMO as a not for profit state institution.

• Accountable, transparent governance – linkages with electricity act amendments

suggestions

• Transitional arrangements – include transmission in ISMO but put timeframe into transitional arrangements

• Ensure strong public participation in all procurement and planning functions

• Legislate to ensure accountable, transparent governance

Archbishop Thabo Makgoba

• “…a mark of true moral leadership, of genuine wisdom: to be able to see with clear eyes what is the right course of action to pursue, and not only to follow it, but to give others the encouragement to do the same.”

Thank you