The international studies on energy externalities and the local studies in South Africa suggest that the high impact areas for power generation are impacts of climate change and health impacts of outdoor air pollution. Climate change impacts are by far the greatest. The health costs due to outdoor air pollution are considered quite low based on national studies, though these may be underestimated. Damage cost from acid mine drainage is also thought to be significant, and could be substantially higher than reported here. External costs of electricity generation are a necessary factor in modelling the IRP 2. To be consistent, external costs must be added to the modeller’s reference case and to all policy cases or scenarios. In the multiple criteria decision-making process, the external costs should be reported as a distinct criterion. The weighting of this criterion relative to others (cost, carbon, and access) should be discussed with stakeholders. Although the external cost presented here are appropriate for input into the IRP 2, an extensive national review must be completed for future IRPs. Furthermore, the Integrated Energy Plan (IEP) should take additional factors into account: health impacts of indoor air pollution (important in poor households, as well as industry); noise from transport, and other poverty-related issues such as wealth impacts of paraffin fires and burns, and social costs of fuel wood scarcity