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Integrated Resource Plan 2/2010Cape Town 20 October 2010
Durban 22 October 2010Polokwane 1 November 2010
Pretoria 2 November 2010
Building on the Findings of the Electricity Governance Initiative South Africa
Understanding the Integrated Resource Plan
(IRP 2010 Rev 2)
Purpose
• Review what is meant by IRP• Examine some aspects of IRP 2010 Rev 2• Present key aspects in plain language• Raise issues of interest or potential concernIdentify issues with biggest relevant impact
and focus on theseThere are looooooots of technical details… we will try not to
chase red-herrings
Some basics: electricity demand and energy supply mix
• Electricity demand and energy mix• Choosing an energy mix
– Least financial-cost model– Constraints such as GHG emissions– Policy adjustment
• Integrated Resource Plan– The Negawatt: efficiency and DSM as a resource– Economy, environment, society
World 1 World 2
World 3?
Electricity demand and energy mix
Source: Draft IRP 2010 pg 5
Electricity demand and electricity mix
Source: Draft IRP 2010 pg 8
Electricity demand and electricity mix
Source: Draft IRP 2010 pg 9
What is an IRP ?…compared with traditional planning
There is a LARGE BODY of work and experience published on IRP
Steps in the IRP process
• establish objectives [All stakeholders]• survey energy use patterns and develop demand forecasts• investigate electricity supply options• investigate demand-side management measures• prepare and evaluate supply plans• prepare and evaluate demand-side management plans• integrate supply- and demand-side plans into candidate
integrated resource plans• select the preferred plan [A broad range of stakeholders]• during implementation of the plan, monitor, evaluate, and
iterate
Integrated resource plan
• In a nutshell– Technical
• Incorporating environment • Incorporating society• Incorporating economy• Treating all energy resources equally• Includes all significant electricity system components• Treating energy efficiency and DSM equally to supply
– Process• Attaining a balance on technical issues can only be
covered in consistently transparent public process
Environment
Society
Economy
Making choices• How much electricity do we need? The DEMAND• What do we want this electricity for? GROWTH
sectors• How can we use electricity more efficiently and
wisely? EE and DSM• What other national public development
priorities should inform our decision? HEALTH, POLLUTION, JOBS, CLIMATE CHANGE, UNIVERSAL ACCESS TO ELECTRICITY
Key Issues
“Revised Balanced Scenario” IRP 2010 Rev 2
Making choices• How much electricity do we need? The DEMAND• What do we want this electricity for? GROWTH
sectors• How can we use electricity more efficiently and
wisely? EE and DSM• What other national public development
priorities should inform our decision? HEALTH, POLLUTION, JOBS, CLIMATE CHANGE, UNIVERSAL ACCESS TO ELECTRICITY
Demand forecast
Source: Draft IRP 2010 pg 31
SO estimate
CSIR estimate
Making choices• How much electricity do we need? The DEMAND• What do we want this electricity for? GROWTH
sectors• How can we use electricity more efficiently and
wisely? EE and DSM• What other national public development
priorities should inform our decision? HEALTH, POLLUTION, JOBS, CLIMATE CHANGE, UNIVERSAL ACCESS TO ELECTRICITY
Electricity demand forecast
Big metros
Mining
Industry
Industrial demand forecast
Allocation of risk for investments
• Risk in a BIG smelter project• Lead time• Public sector role
Smelter project
Private sector
Public sector
Allocating risk, balancing interests
Xstrata Given 100 Megawatts by S. African Utility for Smelter
By Carli Lourens - Oct 21, 2010 2:25 PM GMT
“In its court papers, Eskom acknowledges that in 2008 the country would probably not have been subjected to power cuts and load-shedding had electricity not been delivered to the smelters.”
Jun 10 2010 07:37 Jan de Lange
Sake24.com
“Regulatory Capture”
Regulatory capture
• occurs when a state regulatory agency created to act in the --public interest instead acts in favor of the commercial or special interests that dominate in the industry or sector it is charged with regulating
Metros’s energy demand
• How is Eskom-SO re-distributor demand forecast done?
Example of Metro electricity planning:Energy Consumption for Different Scenarios
Cape Town
Optimum Energy Future energy efficiency measures result in lower energy demand than Business as Usual without compromising energy service delivery.
Making choices• How much electricity do we need? The DEMAND• What do we want this electricity for? GROWTH
sectors• How can we use electricity more efficiently and
wisely? EE and DSM• Using realistic credible costs• What other national public development priorities
should inform our decision? HEALTH, POLLUTION, JOBS, CLIMATE CHANGE, UNIVERSAL ACCESS TO ELECTRICITY
Energy efficiency in the IRP2010 Rev 2
• Potential vs proposed plan– 3,420MW vs at least 12,933MW**** “Research conducted by Eskom indicates that this programme may
only scratch the surface of the potential market for EEDSM (which has been estimated at 12933 MW of total market potential. ”
(IRP 2010 Rev 2, page 33)
• Impacts– Costs and electricity price– Environment– The ‘needs’ and timing of the build programme
Making choices• How much electricity do we need? The DEMAND• What do we want this electricity for? GROWTH
sectors• How can we use electricity more efficiently and
wisely? EE and DSM• Using realistic credible costs• What other national public development priorities
should inform our decision? HEALTH, POLLUTION, JOBS, CLIMATE CHANGE, UNIVERSAL ACCESS TO ELECTRICITY
Cost curves without learning Cost Curves with learning
Transmission and distribution not modeled
• Important investments• Effects on EE, DSM and distributed renewable
energy generation• Assessment of INEP• Assessment of locational aspects of
generation and demand
The international context not explicitly addressed
• Globally RE electricity generation investments overtook investments in conventional (coal, gas nuclear) in 2008
• Most of South Africa’s major trading partners have significant energy efficiency and renewable energy programmes
• Ditto for large renewable energy targets• EE programmes have been implemented for
decades
Global installed wind power
Source: World Resources Institute / IEASource: World Resources Institute / IEA
The nuclear ‘renaissance’ ?
The combined effect of
• Increased energy efficiency and DSM • Lower demand• Learning curves on predicted technology costs • The higher nuclear capital costs than
predicted by EPRI• More ambitious GHG emissions reduction
targets and lower pollution• Higher renewable energy levels• Consideration of industrial development / jobs
Other issues
• The basis for assigning values in the multi criteria decision framework** is not clear or defended or the stakeholders listed– The IRP 2010 Rev document states:
“These preferences are by nature subjective, but by including numerous stakeholders in the workshops determining these preferences a broad and inclusive approach to the values can be determined.”
“This process should include a broad range of stakeholders to capture all the preferences.”
**see next slide
A Multi-Criteria Decision-Making Framework
Other issues
• Regional hydro options have potential complex challenges that are not addressed– Big Dams… Big environmental and social issues for
our partners in the region– Transmission and distribution investment is a
challenge • This is noted in the draft but not addressed
The next few years supply vs demand
IRP 2010 p5 MTRMP p7
Other issues
• There is a need for clarity on next steps in the IRP
Other issues
• Lack of consistency with what major players are saying– Eskom statements about CSP– DoE statements about solar park– DoE statements in parliament
• (esp around resources for process = “process issue”)– Budget expenditure– Technical capabilities
Alternative scenarios in SNAPP
Elec. system costs irp2 plus 5% ee
Elec system costs irp2 plus 19% ee
Reserve margin in 2030 = 40%Reserve margin 2030 = 20 %
Electricity system costs irp2 plus 5% EEDSM
Electricity system costs irp2 plus 5% EEDSM plus glimpse of real world
Reserve margin in 2030 = 20% Reserve margin in 2030 = 20%
Electricity system costs alternative irp2 business un-usual in real world
Electricity system costs irp2 business as usual in real world
Reserve margin in 2030 = 20%Reserve margin in 2030 = 20%
Overall impressions 1
• Many key issues relate to the modeling and the assumptions – not the “PLAN”– The IRP 2010 as it stands is essentially a Capacity
Expansion Plan• This is (sometimes, but inconsistently) stated• This is not adequately justified• “Lack of data” used as explanation for MOST
IMPORTANT omissions – not credible / acceptable
Overall impressions 2
• The “Revised Balanced Scenario” = the “PLAN”– The scenarios presented do not convince that all
options have been explored– Shortcomings in modeling and assumptions lead
to some problematic results• Important options therefore cannot be properly
considered
Issues of interest and potential concern
(of the PLAN, not the methodology, which is what essentially leads to the deficiencies)
• Alignment with Economic and industrial policies– The plan appears to pre-empt (some) economic policy– Does not include information on economic and environmental
impacts
• Does not include INEP– Does not address social policy– Does not include employment effects
• Does not meet UNFCCC commitments• Explanation of implementation
– Reasoning behind statements that decisions needed in early 2011
Jobs in South Africa
20/06/07Parliamentary Hearing on Nuclear Energy
Employment potential in RE sector in SASource: EPRESA report by Agama Energy for Earthlife Africa, 2003
Comparison of all generation technologies: gross direct jobs/TWh-equivalent
80 130 700 952 1341
65458733
32636
0
5000
10000
15000
20000
25000
30000
35000
nuclear gas coal RETs Biogas Bioethanol SWH Biodiesel
technology
dir
ect
job
s