Least-cost electricity mix for South Africa until 2040 Scenarios to guide the South African power system pathway

Transcription

1 Least-cost electricity mix for South Africa until 4 Scenarios to guide the South African power system pathway CSIR Energy Centre Green Drinks Panel Discussion Sandton, 4 November 16 Dr Tobias Bischof-Niemz Chief Engineer Jarrad Wright JWright@csir.co.za Dr Tobias Bischof-Niemz TBischofNiemz@csir.co.za Joanne Calitz JRCalitz@csir.co.za Crescent Mushwana CMushwana@csir.co.za

2 In 15, 1 GW of wind and solar PV newly installed globally Global annual new capacity in GW/yr 1 Solar PV Wind Total South African power system Sources: GWEC; EPIA; BNEF; CSIR analysis This is all very new: More than 85% of globally existing solar PV capacity was installed during the last five years!

3 Example South Africa: wind/solar PV cheapest new-build options Results of South African Department of Energy s RE/Coal IPP Procurement Programme (REIPPPP/Coal IPPPP) Significant reductions of actual tariffs have made new solar PV & wind power 4% cheaper than new coal in South Africa today 3 Average tariff in R/kWh Nov Mar 1-59% -83% Aug Aug 14 Solar PV Wind.6.6 Nov 15 Actual new-build tariffs Average tariff/cost in R/kWh Notes: All numbers in April-16-Rand Sources: South African Department of Energy IPP Office s publications on results of IPP Bid Windows; IPP Office on Bid Window 4 expedited; StatsSA on CPI; CSIR analysis.6 Solar PV IPP -4%.6 Wind IPP 1.3 Baseload Coal IPP Latest cost estimates 1.17 Nuclear Gas (CCGT) 1.51 Midmerit Coal

4 Agenda Background Approach and assumptions Results Conclusions 4

5 Background The Integrated Resource Plan (IRP) is the expansion plan for the South African power system, and in its most recent version, the IRP 1 plans a doubling of power-generation capacity from 1 to 3 Since the date of its release in early 11, three main assumptions have changed The demand forecast is now significantly lower than in IRP 1 The costs of solar PV and wind are significantly lower than predicted in IRP 1 Most importantly: Annual solar PV and wind new-build limits (as per IRP 1) not justified anymore The CSIR has therefore conducted a study to re-optimise the South African power mix until 4 Two scenarios were defined to quantify two different ways of expanding the South African power system Business-as-Usual generally aligned with IRP 1, updated demand forecast, no new optimisation Re-Optimised least-cost re-optimisation of the demand/supply gap that widens from -4 An hourly expansion and dispatch model (incl. unit commitment) using PLEXOS was run for both scenarios to test for adequacy and for economic feasibility 5 Sources: CSIR analysis

6 Link between planning and real world needs to be established In-principle process of IRP planning and implementation Currently, no feedback loop from procurement results to IRP planning assumptions institutionalised Planning / simulation world Inputs Demand forecast Technology costs assumptions CO limits Etc. IRP model (least-cost optimisation) Output Capacity expansion Installed capacity plan Total installed net capacity in GW Solar PV CSP Wind Hydro Nuclear Peaking Gas Coal Actuals / real world Inputs Ministerial Determinations based on capacity expansion plan Procurement (competitive tender e.g. REIPPPP, coal IPPPP) Outcomes Preferred bidders MW allocation Technology costs actuals (Ø tariffs) 7 Sources: CSIR analysis

7 Agenda Background Approach and assumptions Results Conclusions 1

8 Demand grows, existing fleet phases out gap needs to be filled Forecasted supply and demand balance for the South African electricity system from 16 to 4 Electricity in TWh/yr Decommissioning of Eskom s coal fleet Supply gap Solar PV CSP Wind Other RE Peaking Other (incl. cogen) Gas (CCGT) Hydro (incl. PS) Nuclear Coal All power plants considered as existing fleet that are either: 1) Existing in 16 ) Under construction 3) Procured (preferred bidder) 11 Notes: MTSAO demand forecasts are extrapolated from 5 to 4 using CAGR; IRP 16 under development is using High Growth Low Intensity (CSIR) demand forecast as base case. 1. Peak demand = 53. GW. Peak demand = 68.7 GW Sources: DoE (IRP 1); DoE (IRP 13); Eskom MTSAO 16-1; StatsSA; World Bank; CSIR analysis

9 Two scenarios defined to fill the supply/demand gap until 4 Forecasted supply and demand balance for the South African electricity system from 16 to 4 Electricity in TWh/yr IRP Supply gap Solar PV CSP Wind Other RE Peaking Other (incl. cogen) Gas (CCGT) Hydro (incl. PS) Nuclear Coal Scenario: Business-as-Usual Generally aligned with IRP 1, but demand shifted Nuclear as per briefing to Portfolio Committee on Energy (11 October 16) New coal, nuclear, some RE New capacities fixed as per IRP 1 (no optimisation) Scenario: Re-Optimised Coal, nuclear, gas, RE are all available as supply options Supply candidates chosen by least-cost optimisation to meet energy and capacity requirement 1 Notes: MTSAO demand forecasts are extrapolated from 5 to 4 using CAGR; IRP 16 under development is using High Growth Low Intensity (CSIR) demand forecast as base case. 1. Peak demand = 53. GW. Peak demand = 68.7 GW Sources: DoE (IRP 1); DoE (IRP 13); Eskom MTSAO 16-1; StatsSA; World Bank; CSIR analysis

10 Future cost assumptions for solar PV aligned with IRP 1 Tariff in R/kWh (Apr-16-Rand) =.8 GW Assumptions: IRP1 - high Assumptions: IRP1 - low Assumptions for this study Actuals: REIPPPP (BW1-4) BW1 BW 4 (Expedited) Notes: REIPPPP = Renewable Energy Independant Power Producer Programme; BW = Bid Window; bid submissions for the different BWs: BW1 = Nov 11; BW = Mar 1; BW 3 = Aug 13; BW 4 = Aug 14; BW 4 (Expedited) = Nov 15 Sources: StatsSA for CPI; IRP 1; South African Department of Energy (DoE); DoE IPP Office; CSIR analysis Year

11 Future cost assumptions for wind aligned with results of Bid Window 4 Tariff in R/kWh (Apr-16-Rand). Assumptions: IRP = 4. GW Assumptions for this study Actuals: REIPPPP (BW1-4) BW1 BW 4 (Expedited) Notes: REIPPPP = Renewable Energy Independant Power Producer Programme; BW = Bid Window; bid submissions for the different BWs: BW1 = Nov 11; BW = Mar 1; BW 3 = Aug 13; BW 4 = Aug 14; BW 4 (Expedited) = Nov 15 Sources: StatsSA for CPI; IRP 1; South African Department of Energy (DoE); DoE IPP Office; CSIR analysis Year

12 Key input cost assumptions for new supply technologies Lifetime cost per energy unit 1 R/kWh (Apr-16-R) Bid Window 1 Actual new-build tariffs Assumptions based new-build cost 3.1 High-priced gas at 15 R/GJ.4 Bid Window Solar PV Wind Baseload Coal (IPP) Baseload Coal (Eskom) Nuclear Gas (CCGT) Mid-merit Coal Gas (OCGT) Diesel (OCGT) Typical capacity factor 8% 9% 5% 5% 1% 1% 1 Lifetime cost per energy unit is only presented for brevity. The model 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 conventional 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 = 35%; nuclear = 33%; IRP costs from Jan-1 escalated to May-16 with CPI; assumed EPC CAPEX inflated by 1% to convert EPC/LCOE into tariff; Sources: IRP 13 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

13 CO emissions constrained by RSA s Peak-Plateau-Decline objective PPD that constrains CO emission from electricity sector CO emissions (electricity sector) [Mt/yr] CO cap implemented as a hard constraint into the model (i.e. must not be exceeded) Only in post-processing to calculate cost of CO, cost of 1 R/t assumed PPD = Peak Plateau Decline Sources: DoE (IRP 1-3 Update); StatsSA; CSIR analysis

14 Agenda Background Approach and assumptions Results Conclusions 19

15 Least-cost: 7% RE energy in South African electricity sector by 4 Comparison of energy supply for Business-as-Usual and a Re-Optimised scenario 1 Business-as-Usual Re-Optimised Electricity supplied in TWh per year TWh TWh 35 4 Electricity supplied in TWh per year 478 TWh TWh Solar PV CSP Wind Other RE Peaking Other Gas (CCGT) Hydro & PS Nuclear Coal 6% (16 TWh/yr) 17% (6 TWh/yr) 19% (88 TWh/yr) Renewables 6% (16 TWh/yr) 41% (149 TWh/yr) 68% (36 TWh/yr) 17 Mt/yr 5 Mt/yr CO 17 Mt/yr 114 Mt/yr Sources: CSIR analysis

16 Significant solar PV and wind capacities rolled out until 4 Comparison of generation capacity for Business-as-Usual and a Re-Optimised path to 4 1 Business-as-Usual Re-Optimised Total installed net capacity in GW Total installed net capacity in GW GW of new coal 11 GW of new nuclear Peak: 68.7 GW 75 3 Peak: 53. GW No new coal No new nuclear GW 53. GW 1 Solar PV CSP Sources: CSIR analysis Wind Other RE Peaking Other (incl. cogen) Gas (CCGT) Hydro (incl. PS) Nuclear Coal Note: ratio wind/pv can be varied within relatively wide range without significant increase of total cost

17 1 Business-as-Usual: Coal and nuclear dominate the 4 energy mix Demand and Supply in GW Example Week under Business-as-Usual in Monday Tuesday Wednesday Thursday Friday Saturday Sunday Solar PV Wind CSP Hydro Other RE Coal Peaking Gas (CCGT) Other (incl. cogen) Nuclear Demand 4 Sources: CSIR analysis

18 Re-Optimised: Wind and solar PV dominate the 4 energy mix Demand and Supply in GW Example Week (Re-Optimised in 4) 6 4 Monday Tuesday Wednesday Thursday Friday Saturday Sunday Solar PV CSP Hydro Other RE Coal Demand Wind Peaking Gas (CCGT) Other (incl. cogen) Nuclear 5 Sources: CSIR analysis

19 Re-Optimised: Wind and solar PV dominate the 4 energy mix Demand and Supply in GW Example Week (Re-Optimised in 4) 6 4 Monday Tuesday Wednesday Thursday Friday Saturday Sunday Solar PV Wind CSP Peaking Hydro Gas (CCGT) Other RE Other (incl. cogen) Coal Nuclear Demand 6 Sources: CSIR analysis

20 Re-Optimised: Wind and solar PV dominate the 4 energy mix Demand and Supply in GW Example Week (Re-Optimised in 4) 6 4 Monday Tuesday Wednesday Thursday Friday Saturday Sunday Solar PV Wind Hydro Gas (CCGT) Coal Nuclear Demand CSP Other RE 7 Peaking Sources: CSIR analysis Other (incl. cogen)

21 Re-Optimised scenario creates a steady, significant & increasing market Roadmap of investment for wind and solar PV to 4 1 Business-as-Usual Re-Optimised Capacity in GW Capacity in GW 3-4 Wind: 4.5 GW/yr Solar PV:.5 GW/yr Wind:.4 GW/yr Solar PV:.4 GW/yr Wind:.4 GW/yr Solar PV:.4 GW/yr -3 Wind:.8 GW/yr Solar PV: 1.5 GW/yr BW1 BW 4 (Expedited) Sources: CSIR analysis BW1 BW 4 (Expedited)

22 Re-Optimised R87 billion/year cheaper by 4 (without cost of CO) Total cost of power generation in br/yr (constant 16) Business-as-Usual Re-optimised Delta (BAU - Re-optimised) Total Present Value of Delta = R33 billion in 16 Rand Sources: CSIR analysis

23 Business-as-Usual incurs large cost from building new coal and nuclear Comparison of total electricity system costs average electricity tariff of BAU and Re-Optimised mix 1 Business-as-Usual Re-Optimised Total cost of power generation in br/yr (constant Apr-16 Rand) 518 (w/ CO) Total cost of power generation in br/yr (constant Apr-16 Rand) (w/o CO) (w/ CO) (w/o CO) (w/o CO) (w/o CO) Sources: CSIR Cost of CO Solar PV CSP Wind Other RE Peaking Other (incl. cogen) Gas (CCGT) Hydro (incl. PS) Nuclear (new) Nuclear (existing) Coal (new) Coal (existing)

24 Sensitivity on cost difference: Even if RE were 5% more expensive than assumed, Re-Optimised is still cheaper than Business-as-Usual 1..9 Annual cost delta of BAU Re-Optimised by 4 in br/yr Relative RE/nuclear cost (Today: RE =.6 R/kWh, Nuclear = 1.17 R/kWh.53) Sources: CSIR analysis Today (16) Study assumptions (-4) Relative RE/coal cost (Today: RE =.6 R/kWh, Coal = 1.3 R/kWh.6)

25 Unit cost of power generation: Re-Optimised case is almost cents/kwh cheaper than BAU by 4 Average cost of power generation in R/kWh (constant 16) 1 Business-as-Usual 1.1 Re-Optimised % 3. Sources: CSIR analysis

26 Factoring in cost of CO emissions: Re-Optimised case is 3 cents/kwh cheaper than BAU by 4 Average cost of power generation in R/kWh (constant 16) 1 Business-as-Usual 1.1 Re-Optimised % Sources: CSIR analysis

27 Re-Optimised: CO emissions and water use significantly lower Comparison of CO emissions and water use for BAU and a Re-Optimised scenario to 4 Electricity sector CO emissions in MtCO/yr Electricity sector water use in billion litres/yr % % Sources: CSIR analysis BAU Re-optimised CO Cap

28 Agenda Background Approach and assumptions Results Conclusions 35

29 Summary: South Africa is beyond the tipping point of least-cost RE Comparison of electricity supply in South Africa for Business-as-Usual and Re-Optimised from 16 to 4 Today (16) Business-as-Usual (4) Re-Optimised (4) 6% 19% 68% R1 billion/yr R49 billion/yr R4 billion/yr Mt/yr 5 bn l/yr 5 Mt/yr 11 Mt/yr 61 bn l/yr 5 bn l/yr 36 Electricity supplied in TWh per year Sources: 3Nov16_FINAL3.pdf; CSIR analysis 4 Solar PV CSP Wind Gas Hydro Nuclear Coal

30 South Africa can get 7% renewable energy share by 4 at least cost Solar PV, wind and natural gas is the cheapest new-build mix for the South African power system It is the cost-optimal expansion to aim for a 7% renewable energy share by 4 This Re-Optimised mix is almost R9 billion per year cheaper by 4 than the Business-as-Usual scenario (without factoring in cost of CO emissions difference is > R1 billion per year with CO) The Re-Optimised mix will furthermore reduce South Africa s CO emissions by 55% compared to BAU Avoiding CO emissions and least-cost is not a trade-off anymore South Africa can de-carbonise its electricity sector at negative carbon-avoidance cost Building out the required capacities until 4 will provide a steady anchor offtake for a South African solar PV and wind manufacturing industry, which can then export into the African continent 37 If CSP costs can be pushed below 1. R/kWh (today in RSA: > 3. R/kWh) and CSP is designed to be fully dispatchable (intra-day), 75% RE by 4 is least cost (9% from CSP) Sources: CSIR analysis

31 Ha Khensa Re a leboha Siyathokoza Enkosi Thank you Re a leboga Ro livhuha Siyabonga Dankie 38