Additional power generation need in southern Africa and possible positive

impact of Mozambican power generation developments.

Presented by Willem Theron

Mozambique Coal 6th Annual Meeting Mozambique 27 - 28 July 2015

Presentation Outline

2

Introduction

Illustrative Primary Energy Resource Map

SAPP Demand – Supply Gap

Mozambique Coal Opportunities

Contribution to SA’s Energy Mix

Eskom’s Role in Coal Fired Generation in Mozambique

Introduction

2015/08/03 3

Introduction

4

SADC, as a region, is endowed with significant untapped primary energy

resources which could increase access to energy and electricity while improving

the reliability of supply across the region.

The beneficiation of these resources in the region can also accelerate

industrialization and electrification for the benefit of the African continent.

As a region, we are committed to developing this natural resource to benefit our

community and Africa as a whole.

Hence it is our responsibility to contribute towards building an energy economy

that fuels the desired economic growth and development, and to create a legacy

on the continent with the brightest potential.

Illustrative Primary Energy Resource Map

2015/08/03 5

6 6

Primary Energy Source

Illustrative Primary Energy Resource Map

Mozambique’s coal reserve is estimated at ~20bn

tonnes and has the potential to be the second

largest coal exporter in Africa (TMSA, Growth Poles – Oil,

Gas and Coal, September 2013)

It is estimated that Mozambique will produce up to

25% of the world’s coking coal by 2025. (SAIIA Policy

Briefing 56, “Raising Mozambique: Development through coal”,

September 2012)

Coal still plays a vital role in electricity generation

worldwide. Coal-fired power plants currently fuel

41% of global electricity. (TMSA, Growth Poles – Oil, Gas

and Coal, September 2013)

In the International Energy Association’s (IEA) much

more conservative New Policies Scenario (assuming

all new policies announced are fully enacted), coal

still accounts for over 9500 TWh of electricity

globally in 2035. Replacing coal in this growth

context would be impossible. (Cornerstone Winter 2014,

Vol 2 Issue 4)

Wind

Solar Hydro

Nuclear Gas

Geo thermal

Coal

As a region, we have coal in abundance, estimated to be 5.4% of the world’s recoverable reserves which should not be wasted

SAPP Demand – Supply Gap

2015/08/03 7

SAPP Demand - Supply Gap

8

The above graph confirms what we are currently experiencing in the region,

i.e. demand has outstripped supply resulting in load shedding, load

management and load curtailment.

Coal can play a determining factor to close the gap between supply and

demand in the region taking advantage of the existing and new transmission

Infrastructure (i.e Songo – Bindura, MOTRACO, ZIZABONA, MOZISA, CTC,

STE and others)

Mozambique’s Coal Opportunities

2015/08/03 9

Mozambique’s Coal Opportunities (1)

10

It is understood that the drive of large scale mining operations in Mozambique is

to export the good quality coal.

The opportunity exists for the discard / lower grade coal to be beneficiated

domestically.

Coal-fired generation in Mozambique is one alternative of beneficiation.

• To secure the electricity supply to the operations of the mines and will assist

Mozambique to close its supply gap.

• Medium and large scale Coal power plants can be implemented close to the

mining operations and transmission electrical infrastructures

With the progressive development of newer, cleaner coal-fired generation

technologies, the justifiable utilisation of this natural resource is one way in which

a contribution can be made to Powering and Industrializing the region and the

continent.

The utilization of lower grade coal for the power plants is one of the cost effective

options to minimize the environmental impact and risks associated with storage of

this coal

11 11

Under discussion

Po

ss

ible

Po

we

r S

tati

on

s

Mozambique’s Coal Opportunities (2)

1 Ncodezi

2 Moatize

3 Benga

4 Chirodzi

1

2

4

3

Considering the supply deficit in Mozambique, it is foreseeable that each mining operations might have its

own power station to help supply the demand of their mines, and potentially sell surplus to other regional

customers/host utilities.

Apollo Songo

Existing Tx. Infrastructure

Zimbabwe-RSA

STE – HVAC and

HVDC

Mozambique -

Zimbabwe

5 Others

5

Contribution to SA’s Electricity Mix

2015/08/03 12

Mozambique’s coal contribution in respect of South Africa’s future electricity demand

13

The IRP 2010-2030 already provides for 9600 MW from coal-fired power

stations - Medupi and Kusile.

There is an additional provision of 6250 MW for coal new build. Though not

explicit, it is assumed that some of the power can be through imports.

SA’s power procurement programme is run by the DoE, with Eskom designated

as the buyer of all energy in SA.

The DoE IPP unit issued an RfP to the market in December 2014 for the supply

of capacity and energy from new baseload coal power generation facilities.

Bidders had to respond in relation to: projects where the Buyer shall be the sole purchaser of the capacity and energy generated by a

Bidder's proposed project (Single Buyer);

projects where the Buyer is one of two buyers of capacity and/or energy generated by a Bidder's

proposed project (Multiple Buyers); and

projects in respect of which the facility is situated in a country other than the Republic of South

Africa (Cross Border).

Capacity and energy to be available no later than December 2021.

It is understood that proposals were received from within the region.

Eskom’s Role in Coal-Fired Generation in Mozambique

2015/08/03 14

Eskom’s Role in Coal-Fired Generation in Mozambique

15

Eskom can assist in contributing to the development and bankability of the

projects as an off-taker.

Eskom will be interested in taking 100 – 200MW per project for our regional

trade portfolio requirements.

Eskom has forged good relationships with EDM over the years of working

together on projects. As such, the utilities are undertaking to work together

for bilateral and regional benefit through a draft framework agreement on

capacity and skills development in Mozambique.

Eskom has significant experience in coal-fired generation in design and

engineering, project management as well as extensive O&M capabilities

and is willing to partner with potential developers/owners in this regard.

Eskom is learning from its current coal build programme and is willing to

impart knowledge and skills transfer with potential developers.

Thank you