Economic impacts of South Africa s energy mix

Transcription

1 Economic impacts of South Africa s energy mix CSIR Energy Centre Sustainable Energy for All in South Africa National Science and Technology Forum Johannesburg. 6 April 8 Jarrad G. Wright JWright@csir.co.za Dr Tobias Bischof-Niemz Chief Engineer

2 Agenda 4 Global context Local context RSA energy mixes and economic impacts Conclusions

3 Agenda 4 Global context Local context RSA energy mixes and economic impacts Conclusions

4 World: Significant cost reductions materialised in the last 5-8 years Global annual new capacity [GW/yr] 55% Solar PV Wind Solar PV technology cost (global ave.) Wind technology cost (global ave.) % Total South African power system 4 7 % (approx. 45 GW) Subsidies Cost competitive 4 Sources: GWEC; IRENA; IEA PVPS; CSIR analysis

5 Renewables until today mainly driven by US, Europe, China and Japan Globally installed capacities for three major renewables wind, solar PV and CSP end of 7 78 Operational capacities in GW (end 7) USA.9 Canada Americas w/o USA/Canada Europe Middle East and Africa* China India 49 Japan 5 7 Australia 5 7 Rest of Asia Pacific 5 5. Wind Solar CSP PV Total World Total RSA power system (45 GW) * Still to be updated tp 7; Sources: GWEC; IRENA; IEA PVPS; SolarPower Europe; CSIR analysis South Africa has./.5/. GW installed capacity of wind, solar PV and CSP (end 7)

6 Agenda 4 Global context Local context RSA energy mixes and economic impacts Conclusions 6

7 Energy supply is domestic coal-dominated in South Africa but most oil and liquid fuels is imported Simplified energy-flow diagram (Sankey diagram) for South Africa in 5 (PJ) Imports Domestic Primary Energy (PJ) Conversion (PJ) End Use (PJ) Oil 84 Refineries 84 Import 45 Import 47 Non-energy 88 Coal 6 5 Transformation 949 T Transport 76 Nuclear Power Plants 74 E Electricity 88 Renewables* 694 H 7 Natural Gas 78 * Renewables include biomass/waste, wind/solar/hydro. Sources: DoE; CSIR analysis Export 5 Export 6 Export 5 Heat 44 TFEC: PJ

8 Energy is coal-dominated in South Africa end-use is 5% transport, 5% electricity and 5% heating/cooling Simplified energy-flow diagram (Sankey diagram) for South Africa in 5 (PJ) Imports Domestic Primary Energy (PJ) Conversion (PJ) End Use (PJ) Oil 84 Refineries 84 Import 45 Import 47 Non-energy 88 Coal 6 5 Transformation 949 T Transport 76 8 Nuclear Renewables* 694 Natural Gas 78 * Renewables include biomass/waste, wind/solar/hydro. Sources: DoE; CSIR analysis Power Plants 74 Export 5 Export 6 Export 5 E H Electricity 88 Heat 44 TFEC: PJ Focus on this sector

9 From Jan-Dec 7, 6 TWh of net electricity were produced in SA Actuals captured in wholesale market for Jan-Dec 7 (i.e. without self-consumption of embedded plants) Annual electricity in TWh Net Sent Out Imports System Load (domestic and export load) Exports Available for distribution in RSA 9 Notes: Net Sent Out = Total domestic generation (Sent Out) minus pumping load (not shown seperately) Sources: Eskom; Statistics South Africa for imports and exports

10 Actual tariffs: Considerable reductions in tariff for new wind, solar PV and CSP in South Africa Results of Department of Energy s RE IPP Procurement Programme Actual average tariffs in R/kWh (Apr-6-R) 5-59% -8% 4-4% Nov Mar Aug Aug 4 Nov 5 BW BW 4 (Expedited) CSP Solar PV Wind Notes: Assumed USD:ZAR = 4.7; For CSP Bid Window and.5, the weighted average of base and peak tariff is indicated, assuming 5% annual capacity factor and 64%/6% base/peak tariff utilisation ratio; BW = Bid Window; Sources: Department of Energy s publications on results of first four bidding windows StatsSA on CPI; CSIR analysis

11 In 7, wind, solar PV & CSP supplied.8% of total SA system load Actuals captured in wholesale market for Jan-Dec 7 (i.e. without self-consumption of embedded plants) Annual electricity in TWh (.%). (.4%).7 (.%) 4.6 Residual Load Notes: Wind includes Eskom s Sere wind farm ( MW). Sources: Eskom Wind Solar PV CSP System Load (domestic and export load)

12 Projects already applied for EIAs can supply 9/ GW of while overlap with REDZ can supply 45/7 GW of wind/solar PV capacity RSA domestic demand + exports (7): 5 TWh All EIAs ( 49 km,.% of RSA) (status early 6) Wind: 9 GW ( TWh) Solar PV: 9 GW ( 64 TWh) All REDZ (5 47 km, 4.4% of RSA) (phase ) Wind: 55 GW ( 78 TWh) Solar PV: 78 GW ( 7 TWh) All EIAs in REDZ (6 676 km,.6% of RSA) Wind: 45 GW ( 5 TWh) Solar PV: 7 GW ( 4 TWh) After exclusion zones; EIA = Environmental Impact Assessment; REDZ = Renewable Energy Development Zones Sources:

13 Agenda Global context Local context RSA energy mixes and economic impacts....4 Electrical energy mix and costs CO emissions and water usage Potential job creation opportunities But... what about storage? 4 Conclusions

14 A need to fill the gap in the least-cost manner (subject to reliability constraints) - meeting new demand or replacing existing fleet Energy supplied to the South African electricity system from existing plants (6-5) Whether a high demand forecast is expected in South Africa or a low demand forecast we need electricity infrastructure investment Electricity [TWh/yr] 5 Electricity [TWh/yr] All power plants considered for existing fleet that are either: ) Existing in 6 ) Under construction ) Procured (preferred bidder) All power plants considered for existing fleet that are either: ) Existing in 6 ) Under construction ) Procured (preferred bidder) Solar PV CSP Wind Other Peaking Gas (CCGT) Hydro+PS Nuclear Note: Energy from existing generators is shown representatively; All power plants considered for existing fleet that are either Existing in 6, Under construction, or Procured (preferred bidder) Sources: DoE (IRP 6); Eskom MTSAO 6-; StatsSA; World Bank; CSIR analysis Coal Demand

15 A need to fill the gap in the least-cost manner (subject to reliability constraints) - meeting new demand or replacing existing fleet Energy supplied to the South African electricity system from existing plants (6-5) Whether a high demand forecast is expected in South Africa or a low demand forecast we need electricity infrastructure investment Electricity [TWh/yr] 5 Electricity [TWh/yr] All power plants considered for existing fleet that are either: ) Existing in 6 ) Under construction ) Procured (preferred bidder) All power plants considered for existing fleet that are either: ) Existing in 6 ) Under construction ) Procured (preferred bidder) Supply gap Solar PV CSP Wind Other Peaking Gas (CCGT) Hydro+PS Nuclear Note: Energy from existing generators is shown representatively; All power plants considered for existing fleet that are either Existing in 6, Under construction, or Procured (preferred bidder) Sources: DoE (IRP 6); Eskom MTSAO 6-; StatsSA; World Bank; CSIR analysis Coal Demand

16 Agenda Global context Local context RSA energy mixes and economic impacts....4 Electrical energy mix and costs CO emissions and water usage Potential job creation opportunities But... what about storage? 4 Conclusions 6

17 Technology costs declines changes long-term planning outcomes considerably Today s new-build lifetime cost per energy unit (LCOE) in R/kWh (April-6-Rand) As per South African IRP Fixed (Capital, O&M) Variable (Fuel).6.6 Solar PV CO in kg/mwh Wind Baseload Coal (PF) Nuclear Gas (CCGT) Mid-merit Coal Gas (OCGT) Diesel (OCGT) Assumed capacity factor 8% 9% 5% 5% % % 7 Lifetime cost per energy unit is only presented for brevity. Modelling inherently includes the specific cost structures of each technology i.e. capex, Fixed O&M, variable O&M, fuel costs etc. Changing full-load hours for new-build options drastically changes the fixed cost components per kwh (lower full-load hours higher capital costs and fixed O&M costs per kwh); Assumptions: Average efficiency for CCGT = 55%, OCGT = 5%; nuclear = %; IRP costs from Jan- escalated to May-6 with CPI; assumed EPC CAPEX inflated by % to convert EPC/LCOE into tariff; Sources: IRP Update; Doe IPP Office; StatsSA for CPI; Eskom financial reports for coal/diesel fuel cost; EE Publishers for Medupi/Kusile; Rosatom for nuclear capex; CSIR analysis

18 Draft IRP 6 Base Case is a mix of / coal, / nuclear, / RE Draft IRP 6 Base Case Total electricity produced in TWh/yr As per Draft IRP (5%) 9 (8%) 5 49 (9%) (6%) 5 48 (8%) (9%) 7 (4%) More strict carbon limits 8 Solar PV Wind CSP Other storage Sources: DoE Draft IRP 6; CSIR analysis Biomass/-gas Peaking Gas Hydro+PS Nuclear (new) Nuclear Coal (new) Coal

19 Draft IRP 6 Carbon Budget case: 4% nuclear energy share by 5 As per Draft IRP 6 Draft IRP 6 Base Case Draft IRP 6 Carbon Budget Total electricity produced in TWh/yr (5%) 9 (8%) 49 (9%) (6%) 48 (8%) (9%) 7 (4%) Total electricity produced in TWh/yr More strict carbon limits (%) 8 (6%) (6%) 5 44 (8%) 85 (5%) 69 (%) No RE limits, reduced wind/solar PV costing, warm water demand flexibility 9 Solar PV Wind CSP Other storage Sources: DoE Draft IRP 6; CSIR analysis Biomass/-gas Peaking Gas Hydro+PS Nuclear (new) Nuclear Coal (new) Coal

20 Least-cost is largely based on wind and solar PV complemented by flexibility (including existing coal, new gas, hydro and CSP) As per Draft IRP 6 Draft IRP 6 Base Case Draft IRP 6 Carbon Budget Least Cost Total electricity produced in TWh/yr (5%) 9 (8%) 49 (9%) (6%) 48 (8%) (9%) 7 (4%) Total electricity produced in TWh/yr More strict carbon limits (6%) (6%) 5 44 (8%) (%) 85 (5%) 69 (%) Total electricity produced in TWh/yr No RE limits, reduced wind/solar PV costing, warm water demand flexibility (%) 57 (49%) (%) 55 (%) (6%) 6 (%) Solar PV Wind Biomass/-gas Gas Nuclear (new) CSP Other storage Peaking Hydro+PS Nuclear Sources: DoE Draft IRP 6; CSIR analysis Coal (new) Coal

21 Least-cost deploys considerable solar PV and wind and flexibility with no new investments in coal or nuclear capacity As per Draft IRP 6 Draft IRP 6 Base Case Draft IRP 6 Carbon Budget Least Cost Total installed net capacity in GW Total installed net capacity in GW Total installed net capacity in GW More strict carbon limits No RE limits, reduced wind/solar PV costing, warm water demand flexibility Solar PV Wind CSP Other storage Sources: DoE Draft IRP 6; CSIR analysis Biomass/-gas Peaking Gas Hydro+PS Nuclear (new) Nuclear Coal (new) Coal Plus GW demand response from residential warm water provision

22 Draft IRP 6 Base Case: Nuclear and coal dominate the supply mix in 5 Demand and Supply in GW Exemplary Week under Draft IRP 6 Base Case (5) Monday Tuesday Wednesday Thursday Friday Saturday Sunday Solar PV Peaking Gas Nuclear Customer demand Wind Hydro + PS Coal Sources: CSIR analysis, based on DoE s Draft IRP 6

23 Scenario: Least Cost Solar PV/wind dominate in 5, curtailment and variability managed by flexible gas, DR, PS and hydro capacity Demand and Supply in GW Exemplary Week under Least Cost (5) Monday Tuesday Wednesday Thursday Friday Saturday Sunday Curtailed solar PV and wind Solar PV CSP Hydro + PS Biomass/-gas Nuclear Customer demand DR Wind Peaking Gas Coal Sources: CSIR analysis

24 Conservatively, Least Cost is R-5 billion/yr cheaper than the statusquo (Base Case) and Carbon Budget by As per Draft IRP 6 IRP 6 Base Case IRP 6 Carbon Budget Least Cost Energy Mix in Demand: 4 TWh % % 4% 5% % 7% % 4% % 58% 8% 6% % % % 8% % 4% 47% % 8% % % % 5% 4% 54% Cost in Total system cost (R-billion/yr) Average tariff (R/kWh) R -5 bln/yr cheaper ( 6-9%) Environment in CO emissions (Mt/yr) Water usage (billion-litres/yr) Jobs in Direct & supplier ( ) 4 Coal Coal (new) Nuclear Nuclear (new) Hydro+PS Only power generation (Gx) is optimised while cost of transmission (Tx), distribution (Dx) and customer services is assumed as. R/kWh (today s average cost for these items) Lower value based on McKinsey study (appendix of IEP), higher value based on CSIR assumption with more jobs in the coal industry; Sources: Eskom on Tx, Dx cost; CSIR analysis; flaticon.com Gas Peaking Biomass/-gas Other storage Wind CSP Solar PV

25 Conservatively, Least Cost is R5-4 billion/yr cheaper than the statusquo (Base Case) and Carbon Budget by 4 As per Draft IRP 6 4 IRP 6 Base Case IRP 6 Carbon Budget Least Cost Energy Mix in 4 Demand: 48 TWh 5% 5% % % % 8% 5% 7% 4% 9% % 4% % % % % 8% 4% 7% % 4% % % 6% 4% % % Cost in 4 Total system cost (R-billion/yr) Average tariff (R/kWh) R 5-4 bln/yr cheaper ( 6-7%) Environment in 4 CO emissions (Mt/yr) Water usage (billion-litres/yr) Jobs in 4 Direct & supplier ( ) 5 Coal Coal (new) Nuclear Nuclear (new) Hydro+PS Biomass/-gas Only power generation (Gx) is optimised while cost of transmission (Tx), distribution (Dx) and customer services is assumed as. R/kWh (today s average cost for these items) Lower value based on McKinsey study (appendix of IEP), higher value based on CSIR assumption with more jobs in the coal industry; Sources: Eskom on Tx, Dx cost; CSIR analysis; flaticon.com Gas Peaking Other storage Wind CSP Solar PV

26 Conservatively, Least Cost is R6-75 billion/yr cheaper than the statusquo (Base Case) and Carbon Budget by 5 As per Draft IRP 6 5 IRP 6 Base Case IRP 6 Carbon Budget Least Cost Energy Mix in 5 Demand: 5 TWh 5% 4% 8% % % % 9% 9% 6% 8% 8% % % % % 6% 6% % 5% % 49% % 6% % % % Cost in 5 Total system cost (R-billion/yr) Average tariff (R/kWh) R 6-75 bln/yr cheaper ( %) Environment in 5 CO emissions (Mt/yr) Water usage (billion-litres/yr) Jobs in 5 Direct & supplier ( ) 6 Coal Coal (new) Nuclear Nuclear (new) Hydro + PS Biomass/-gas Other storage Only power generation (Gx) is optimised while cost of transmission (Tx), distribution (Dx) and customer services is assumed as. R/kWh (today s average cost for these items) Lower value based on McKinsey study (appendix of IEP), higher value based on CSIR assumption with more jobs in the coal industry; Sources: Eskom on Tx, Dx cost; CSIR analysis; flaticon.com Gas Peaking Wind CSP Solar PV

27 Agenda Global context Local context RSA energy mixes and economic impacts....4 Electrical energy mix and costs CO emissions and water usage Potential job creation opportunities But... what about storage? 4 Conclusions 7

28 CO emissions trajectory is never binding and water use declines as coal fleet decommissions CO emissions Water usage Electricity sector CO emissions [Mt/yr] 5 5 Electricity sector Water usage [bl/yr] PPD (Moderate) Draft IRP 6 (Base Case) Draft IRP 6 (Carbon Budget) Least-cost Draft IRP 6 (Base Case) Draft IRP 6 (Carbon Budget) Least-cost Peak-Plateau-Decline (PPD) is not very ambitious anymore least-cost is easily below PPD

29 Least-cost emits % more CO than Carbon Budget but emits % less than the Base Case by As per Draft IRP 6 IRP 6 Base Case IRP 6 Carbon Budget Least Cost Energy Mix in Demand: 4 TWh % % 4% 5% % 7% % 4% % 58% 8% 6% % % % 8% % 4% 47% % 8% % % % 5% 4% 54% Cost in Total system cost (R-billion/yr) Average tariff (R/kWh) R -5 bln/yr cheaper ( 6-9%) Environment in CO emissions (Mt/yr) Water usage (billion-litres/yr) Cleaner +% vs CB -% vs BC Jobs in Direct & supplier ( ) 9 Coal Coal (new) Nuclear Nuclear (new) Hydro+PS Only power generation (Gx) is optimised while cost of transmission (Tx), distribution (Dx) and customer services is assumed as. R/kWh (today s average cost for these items) Lower value based on McKinsey study (appendix of IEP), higher value based on CSIR assumption with more jobs in the coal industry; Sources: Eskom on Tx, Dx cost; CSIR analysis; flaticon.com Gas Peaking Biomass/-gas Other storage Wind CSP Solar PV

30 Least-cost emits 5% less CO than Carbon Budget and 55% less than the Base Case by 4 As per Draft IRP 6 4 IRP 6 Base Case IRP 6 Carbon Budget Least Cost Energy Mix in 4 Demand: 48 TWh 5% 5% % % % 8% 5% 7% 4% 9% % 4% % % % % 8% 4% 7% % % 4% % 6% 4% % % Cost in 4 Total system cost (R-billion/yr) Average tariff (R/kWh) R 5-4 bln/yr cheaper ( 6-7%) Environment in 4 CO emissions (Mt/yr) Water usage (billion-litres/yr) Cleaner Same as CB -55% vs BC Jobs in 4 Direct & supplier ( ) Coal Nuclear Coal (new) Nuclear (new) Gas Hydro+PS Peaking Other storage Biomass/-gas Only power generation (Gx) is optimised while cost of transmission (Tx), distribution (Dx) and customer services is assumed as. R/kWh (today s average cost for these items) Lower value based on McKinsey study (appendix of IEP), higher value based on CSIR assumption with more jobs in the coal industry; Sources: Eskom on Tx, Dx cost; CSIR analysis; flaticon.com Wind CSP Solar PV

31 Least-cost emits 5% less CO than Carbon Budget and 65% less than the Base Case by 5 As per Draft IRP 6 5 IRP 6 Base Case IRP 6 Carbon Budget Least Cost Energy Mix in 5 Demand: 5 TWh 5% 4% 8% % % % 9% 9% 6% 8% 8% % % % % 6% 6% % 5% % 49% % 6% % % % Cost in 5 Total system cost (R-billion/yr) Average tariff (R/kWh) R 6-75 bln/yr cheaper ( %) Environment in 5 CO emissions (Mt/yr) Water usage (billion-litres/yr) Cleaner -5% vs CB -65% vs BC Jobs in 5 Direct & supplier ( ) Coal Coal (new) Nuclear Nuclear (new) Hydro + PS Biomass/-gas Other storage Only power generation (Gx) is optimised while cost of transmission (Tx), distribution (Dx) and customer services is assumed as. R/kWh (today s average cost for these items) Lower value based on McKinsey study (appendix of IEP), higher value based on CSIR assumption with more jobs in the coal industry; Sources: Eskom on Tx, Dx cost; CSIR analysis; flaticon.com Gas Peaking Wind CSP Solar PV

32 Agenda Global context Local context RSA energy mixes and economic impacts....4 Electrical energy mix and costs CO emissions and water usage Potential job creation opportunities But... what about storage? 4 Conclusions

33 Localised job creation per technology is a function of capital (build-out) as well as operations (utilisation) for each technology Direct Suppliers Capex Job-years per GW installed Opex Annual jobs per TWh Coal (incl. coal mining) Nuclear (incl. Uranium mining) Gas (excl. shale gas extraction) Solar PV Note: It seems like the McKinsey study (appendix of IEP) under-estimates direct/supply job numbers in the coal industry. Thus, CSIR have assumed more jobs in the coal industry than in the Mickinsey study. Sources: DoE IEP 6 Annexure B: Macroeconomic parameters CSP Wind

34 Increasing job opportunities as more and more RE is deployed as South Africa transitions away from coal in the long-term As per Draft IRP 6 Draft IRP 6 Base Case Draft IRP 6 Carbon Budget Least Cost Job-years [ ] Job-years [ ] Job-years [ ] More strict carbon limits No RE limits, reduced wind/solar PV costing, warm water demand flexibility Solar PV Wind Peaking Hydro+PS Coal CSP Biomass/-gas Gas Nuclear Note: Direct and supplier jobs only (jobs resulting from construction, operations and first level suppliers); Because of lack of data, zero jobs for biomass/-gas assumed; Sources: DoE; CSIR analysis

35 Conservatively, Least Cost is R6-75 billion/yr cheaper than the statusquo (Base Case) and Carbon Budget by 5 As per Draft IRP 6 IRP 6 Base Case IRP 6 Carbon Budget Least Cost Energy Mix in Demand: 4 TWh % % 4% 5% % 7% % 4% % 58% 6% 8% % % 47% % 8% % 4% % 8% % % % 5% 4% 54% Cost in Total system cost (R-billion/yr) Average tariff (R/kWh) R -5 bln/yr cheaper ( 6-9%) Environment in CO emissions (Mt/yr) Water usage (billion-litres/yr) Cleaner +% vs CB -% vs BC Jobs in Direct & supplier ( ) % more jobs 5 Because of lack of Coal Nuclear Hydro+PS Peaking Other storage CSP data, zero jobs for biomass/-gas assumed Coal (new) Nuclear (new) Gas Biomass/-gas Wind Solar PV (affects Decarbonised) Only power generation (Gx) is optimised while cost of transmission (Tx), distribution (Dx) and customer services is assumed as. R/kWh (today s average cost for these items) Lower value based on McKinsey study (appendix of IEP), higher value based on CSIR assumption with more jobs in the coal industry; Sources: Eskom on Tx, Dx cost; CSIR analysis; flaticon.com

36 Conservatively, Least Cost is R6-75 billion/yr cheaper than the statusquo (Base Case) and Carbon Budget by 5 As per Draft IRP 6 4 IRP 6 Base Case IRP 6 Carbon Budget Least Cost Energy Mix in 4 Demand: 48 TWh 5% 5% % % % 8% 5% 7% 4% 9% % 4% % % % % 8% 4% 7% % 4% % % 6% 4% % % Cost in 4 Total system cost (R-billion/yr) Average tariff (R/kWh) R 5-4 bln/yr cheaper ( 6-7%) Environment in 4 CO emissions (Mt/yr) Water usage (billion-litres/yr) Cleaner Same as CB -55% vs BC Jobs in 4 Direct & supplier ( ) % more jobs 6 Because of lack of Coal Nuclear Hydro+PS Peaking Other storage CSP data, zero jobs for biomass/-gas assumed Coal (new) Nuclear (new) Gas Biomass/-gas Wind Solar PV (affects Decarbonised) Only power generation (Gx) is optimised while cost of transmission (Tx), distribution (Dx) and customer services is assumed as. R/kWh (today s average cost for these items) Lower value based on McKinsey study (appendix of IEP), higher value based on CSIR assumption with more jobs in the coal industry; Sources: Eskom on Tx, Dx cost; CSIR analysis; flaticon.com

37 Conservatively, Least Cost is R6-75 billion/yr cheaper than the statusquo (Base Case) and Carbon Budget by 5 As per Draft IRP 6 5 IRP 6 Base Case IRP 6 Carbon Budget Least Cost Energy Mix in 5 Demand: 5 TWh 5% 4% 8% % % % 9% 9% 6% 8% 8% % % % % 6% 6% % 5% % 49% % 6% % % % Cost in 5 Total system cost (R-billion/yr) Average tariff (R/kWh) R 6-75 bln/yr cheaper ( %) Environment in 5 CO emissions (Mt/yr) Water usage (billion-litres/yr) Cleaner -5% vs CB -65% vs BC Jobs in 5 Direct & supplier ( ) % more jobs 7 Because of lack of Coal Nuclear Hydro + PS Peaking Other storage CSP data, zero jobs for biomass/-gas assumed Coal (new) Nuclear (new) Gas Biomass/-gas Wind Solar PV (affects Decarbonised) Only power generation (Gx) is optimised while cost of transmission (Tx), distribution (Dx) and customer services is assumed as. R/kWh (today s average cost for these items) Lower value based on McKinsey study (appendix of IEP), higher value based on CSIR assumption with more jobs in the coal industry; Sources: Eskom on Tx, Dx cost; CSIR analysis; flaticon.com

38 Agenda Global context Local context RSA energy mixes and economic impacts....4 Electrical energy mix and costs CO emissions and water usage Potential job creation opportunities But... what about storage? 4 Conclusions 8

39 What if more realistic solar PV, wind and storage costs are realised Conservative cost assumptions for renewables and batteries were used initially - predominantly solar PV and wind complemented by flexibility Solar PV % reduction by, % reduction by 5 (from.6 R/kWh today to.5 R/kWh) Wind CSP Unchanged from today (.6 R/kWh) 4% reduction to (from. R/kWh to. R/kWh) Batteries Equivalent of USD/kWh by, 5 USD/kWh by 4, USD/kWh by 5 If expected cost trajectories for new technologies are applied, what happens to the structure of the electrical energy supply mix? Solar PV 7% reduction to 4 (from.6 R/kWh to. R/kWh) Wind CSP 4% reduction to 4 (from.6 R/kWh to.5 R/kWh) 4% reduction to (from. R/kWh to. R/kWh) Batteries Equivalent of USD/kWh by, 5 USD/kWh by 4, USD/kWh by 5 9

40 With expected cost trajectories for solar PV, wind and batteries - renewables share grows to >85% by 5 with gas displaced Total electricity produced in TWh/yr IRP 6 Least Cost Total electricity produced in TWh/yr Least Cost (cheaper RE and storage) (%) 46 (%) (%) (49%) (5%) 5 8 (%) (%) (%) Expected Wind, PV and CSP cost Battery costs More DR (4%) 4 46 (%) 8 (%) 9 5 (4%) (45%) 9 (%) 9 (%) 8 (%) 58 (%) 4 DR Storage (batteries) Pumped storage Biomass/-gas Solar PV CSP Wind Hydro Peaking Gas Nuclear Coal

41 Installed capacity of GW solar PV, GW wind & storage deployment (pumped storage and batteries) IRP 6 Least Cost Least Cost (cheaper RE and storage) Total installed net capacity in GW 5 Total installed capacity in GW Expected Wind, PV and CSP cost Battery costs More DR DR Storage (batteries) Pumped storage Biomass/-gas Solar PV CSP Wind Hydro Peaking Gas Nuclear Coal

42 Expected RE and storage cost reductions means a slightly faster reduction of CO emissions/water use and lower emissions by 5 Scenario: Least-cost (new outcomes) CO emissions Water usage Electricity sector CO emissions [Mt/yr] Electricity sector Water usage [bl/yr] PPD (Moderate) Draft IRP 6 (Base Case) Draft IRP 6 (Carbon Budget) Least-cost Least-cost (cheaper RE+storage) Draft IRP 6 (Base Case) Draft IRP 6 (Carbon Budget) Least-cost Least-cost (cheaper RE+storage) Cheaper RE and storage means quicker RE deployment and lower CO emissions by

43 Scenario: Least Cost with expected RE and storage cost trajectories Demand and Supply in GW Exemplary Week under Least Cost (5) Monday Tuesday Wednesday Thursday Friday Saturday Sunday Curtailed solar PV and wind Battery Wind Peaking Gas Coal Customer demand DR Solar PV CSP Hydro + PS Biomass/-gas Nuclear 4 Sources: CSIR analysis

44 Future energy system will be built around variability of solar PV & wind Actual scaled RSA demand & simulated 5-minute solar PV/wind power supply for week from 5- Aug GW Sources: CSIR analysis Monday Tuesday Wednesday Thursday Friday Saturday Sunday Excess Solar PV/Wind Residual Load (flexible power) Useful Wind Demand shaping Power-to-Power Useful Solar PV 4 Electricity Demand X-to-Power (natural gas, biogas, hydro, CSP) Power-to-X (sector coupling into heat/transport/chemicals) 4

45 Agenda 4 Global context Local context RSA energy mixes and economic impacts Conclusions 45

46 Conclusions Favourable technology costs, a world-class solar/wind resource and large geographical land area means new-build capacity in South Africa should predominantly be solar PV/wind complemented by flexibility In just REDZ (Phase ) constituting 4.4% of RSA land area, 55 GW wind (78 TWh) and 78 GW solar PV (7 TWh) - RSA demand in 7 was 5 TWh Flexibility sourced from existing coal, imported hydro, natural gas, CSP and demand side response Energy mix transitioning to considerable RE share by 5 can be achieved in South Africa at least-cost, with less CO emissions, lower water usage and an opportunity for increased job creation potential Electricity costs at least R6-75-bln/yr cheaper than business-as-usual and carbon budget (% cheaper) CO emissions are 65% lower than business-as-usual and 5% lower than carbon budget Water usage is 65% lower than business-as-usual and % lower than carbon budget Direct and supplier job creation potential % more than business-as-usual and % more than carbon budget Direct and supplier coal sector jobs by 5 reduce by % whilst absolute job numbers grow (as the power system grows) from 75-8 to The dark horse in the race (battery storage) doesn t change outcomes in the electricity sector as much as most think but notable differences occur If costs reduce as expected, increased storage deployment shifts deployment of wind/solar PV more towards solar PV whilst displacing imported natural gas peaking capacity Sector coupling using excess solar PV/wind being researched with considerable opportunities expected