Energy Mix 2.0: The Potential for a New Paradigm Presentation at the SANEA Action for Energy Event

Transcription

1 Energy Mix 2.: The Potential for a New Paradigm Presentation at the SANEA Action for Energy Event Dr Tobias Bischof-Niemz, Head of the CSIR Energy Centre Johannesburg, 23 February 217 Dr Tobias Bischof-Niemz tbischofniemz@csir.co.za Dr Tobias Bischof-Niemz Chief Engineer

2 Agenda Background CSIR s Approach and Project Team Comments on IRP Assumptions IRP Results and Least-cost Scenario Summary 2

3 World: In 216, 124 GW of new wind and solar PV capacity installed globally Global annual new capacity in GW/yr Solar PV Wind Total South African power system (approx. 45 GW) Sources: GWEC; EPIA; BNEF; CSIR analysis This is all very new: Roughly 8% of the globally existing solar PV capacity was installed during the last five years

4 World: Significant cost reductions materialised in the last 5-8 years Global annual new capacity in GW/yr Solar PV Wind Solar PV cost Wind cost 1% % % Total South African power system (approx. 45 GW) Subsidies Cost competitive 4 Sources: IEA; GWEC; EPIA; BNEF; CSIR analysis

5 South Africa: From 213 to 216, 3.1 GW of wind, solar PV and CSP commissioned Capacity online in MW (end of year) Supply Sources Solar PV Wind CSP Notes: RSA = Republic of South Africa. Solar PV capacity = capacity at point of common coupling. Wind includes Eskom s Sere wind farm (1 MW) Sources: Eskom; DoE IPP Office

6 South Africa: In 216, almost 7 TWh electricity produced from wind, solar PV & CSP Annual energy produced in TWh Supply Sources Solar PV Wind CSP Notes: Wind includes Eskom s Sere wind farm (1 MW) Sources: Eskom; DoE IPP Office

7 216: Wind, solar PV and CSP supplied 3% of the total RSA system load Actuals captured in wholesale market for Jan-Dec 216 (i.e. without self-consumption of embedded plants) Annual electricity in TWh (1.6%) 2.6 (1.1%).5 (.2%) Residual Load Notes: Wind includes Eskom s Sere wind farm (1 MW) Sources: Eskom; DoE IPP Office Wind Solar PV CSP System Load (domestic and export load)

8 Actual tariffs: new wind/solar PV 4% cheaper than new coal in RSA Results of Department of Energy s RE IPP Procurement Programme (REIPPPP) and Coal IPP Proc. Programme Significant reductions in actual tariffs have made new solar PV & wind power 4% cheaper than new coal in South Africa today 8 Actual average tariffs in R/kWh (Apr-216-R) Nov Mar % -83% Aug Aug 214 Solar PV Wind Nov 215 Actual average tariffs in R/kWh (Apr-216-R) Notes: Exchange rate of 14 USD/ZAR assumed Sources: Deployment-NERSA.pdf; StatsSA on CPI; CSIR analysis.62 Solar PV IPP -4%.62 Wind IPP 1.3 Baseload Coal IPP

9 Agenda Background CSIR s Approach and Project Team Comments on IRP Assumptions IRP Results and Least-cost Scenario Summary 9

10 Total installed net capacity in GW Solar PV CSP Wind Hydro Nuclear Peaking Gas Coal Integrated Resource Plan (IRP) aims for optimal electricity mix for RSA In-principle process of IRP planning and implementation Planning / simulation world Inputs Demand forecast Technology costs assumptions CO 2 limits Etc. IRP Model (PLEXOS) (techno-economical least-cost optimisation) Output Capacity exp. plan After policy adjustment: IRP Installed capacity Actuals / real world Inputs Ministerial Determinations based on IRP capacities Procurement (competitive tender e.g. REIPPPP, coal IPPPP) Outcomes Preferred bidders MW allocation Technology costs actuals (Ø Tariffs) 1 Sources: CSIR analysis

11 IRP process as described in the Department of Energy s Draft IRP 216 document: least-cost Base Case is derived from technical planning facts Scenario 1 Scenario 2 Planning Facts Constraint: RE limits Least Cost Base Case Constraint: Forcing in of nuclear, CSP, biogas, hydro, others Constraint: Advanced CO 2 cap decline Case Base Case Scenario 1 Scenario 2 Scenario 3 Cost Base Base + Rxx bn/yr Base + Ryy bn/yr Base + Rzz bn/yr 1) Public consultation on costed scenarios 2) Policy adjustment of Base Case 3) Final IRP Scenario 3 11 Sources: based on Department of Energy s Draft IRP 216, page 7;

12 The CSIR has embarked on power-system analyses to determine the least-cost expansion path for the South African electricity system The Integrated Resource Plan (IRP) is the expansion plan for the South African power system until 25 Starting point of the IRP Base Case: pure techno-economic analysis to determine least-cost way to supply electricity Later process steps: least-cost mix can be policy adjusted to cater for aspects not captured in techno-economic model Draft IRP 216 Base Case entails a limitation: Amount of wind and solar PV capacity that the model is allowed to build per year is limited, which is neither technically nor economically justified/explained (no techno-economical reason provided) The CSIR is therefore conducting a study to determine the Least Cost electricity mix in RSA until 25 Majority of assumptions kept exactly as per the Draft IRP 216 Base Case First and most important deviation from IRP 216: no new-build limits on renewables (wind/solar PV) Second (smaller) deviation: costing for solar PV and wind until 23 aligned with latest IPP tariff results Scope of the CSIR study: purely techno-economical optimisation of the costs directly incurred in the power system Two scenarios from the Draft IRP 216 are compared with the Least Cost case Draft IRP 216 Base Case new coal, new nuclear Draft IRP 216 Carbon Budget significant new nuclear Least Cost least-cost without constraints 12 An hourly capacity expansion and dispatch model (incl. unit commitment) using PLEXOS is run for all scenarios to test for technical adequacy same software platform as by Eskom/DoE for the IRP Sources: CSIR analysis

13 CSIR uses an industry standard software package for expansion planning of the power system same package as used by DoE/Eskom Commercial software used by DoE & CSIR covers all key cost drivers of a power system 13 Co-optimisation of long-term investment & operational decisions in hourly time resolution from today to 25 What mix to build? How to operate the mix once built? Objective function: least cost, subject to an adequate (i.e. reliable) power system Key technical limitations of power generators covered Maximum ramp rates (% of installed capacity/h) Minimum operating levels (% of installed capacity) Minimum up & down times (h btw start/stop) Start-up and shut-down profiles Sources: CSIR analysis Costs covered in the model include All capacity-related costs of all power generators CAPEX of new power plants (R/kW) Fixed Operation and Maintenance (FOM) cost (R/kW/yr) All energy-related costs of all power generators Variable Operation and Maintenance (VOM) cost (R/kWh) Fuel cost (R/GJ) Efficiency (heat rate) losses due to more flexible operation Reserves provision (included in capacity costs) Costs not covered in the model currently used are Any grid-related costs (note: transmission-level grid costs typically ~1-15% of generation costs) Costs related to add. system services (e.g. inertia requirements, black-start and reactive power)

14 CSIR team has significant expertise from power system planning, system operation and grid perspective Dr Tobias Bischof-Niemz Head of the CSIR Energy Centre Member of the Ministerial Advisory Council on Energy (MACE) Member of IRP21/213 team at Eskom, energy planning in Europe for large utilities Joanne Calitz Senior Engineer: Energy Planning (CSIR Energy Centre) Previously with Eskom Energy Planning Medium-Term Outlook and IRP for RSA Robbie van Heerden Senior Specialist: Energy Systems (CSIR Energy Centre) Former General Manager and long-time head of System Operations at Eskom Mamahloko Senatla Researcher: Energy Planning (CSIR Energy Centre) Previously with the Energy Research Centre at University of Cape Town 14 Crescent Mushwana Research Group Leader: Energy Systems (CSIR Energy Centre) Former Chief Engineer at Eskom strategic transmission grid planning Jarrad Wright Principal Engineer: Energy Planning (CSIR Energy Centre) Commissioner: National Planning Commission (NPC) Former Africa Manager of PLEXOS

15 Agenda Background CSIR s Approach and Project Team Comments on IRP Assumptions IRP Results and Least-cost Scenario Summary 15

16 Draft IRP 216 limits the annual build-out rates for solar PV and wind The imposed new-build limits for solar PV and wind mean that the IRP model is not allowed in any given year to add more solar PV and wind capacity to the system than these limits No such limits are applied for any other technology. No techno-economical reason/justification is provided for these limits. No explanation given why the limits are constant until 25 while the power system grows Year System Peak Load in MW (as per Draft IRP) New-build limit Solar PV in MW/yr (as per Draft IRP) Relative new-build limit Solar PV (derived from IRP) New-build limit Wind in MW/yr (as per Draft IRP) Relative new-build limit Wind (derived from IRP) % % % % % % % % % % % % % % Note: Relative new-build limit = New-build limit / system peak load Sources: IRP 216 Draft; CSIR analysis

17 Today: Both leading and follower countries are installing more new solar PV capacity per year than South Africa s IRP limits for 23/25 4% Annual new solar PV capacity relative to system peak load 4% 5% 9% 4% 9% 17% 1% 7% RSA new-build limits in 23 and 25 6% 4% 4% 6% 7% Germany Spain Italy UK Australia Japan China India South Africa Leader Follower Follower 2 nd wave 3% 3% 3% 3% 3% 3% 3% 3% 2% 2% 2% 2% 2% 2% 2% 2% 2% 1% 1% 2% 1% 1% 1% 1% 1% 1% % % 1% 1% 1% 1% % 1% 1% % % % % % 1% 1% % % % % % % % % % % % % % 23 (1.7%) 25 (1.2%) RSA s IRP relative new-build limit decreases over time Sources: SolarPowerEurope; CIGRE; websites of System Operators; IRP 216 Draft; CSIR analysis

18 Today: Both leading and follower countries are installing more new wind capacity per year than South Africa s IRP limits for 23/25 4% 3% Annual new wind capacity relative to system peak load 5% % 2% % 2% 8% 1% 2% 1% % 2% 3% 5% 2% 1% % 2% 6% 6% 3% 1% % RSA new-build limits in 23 and 25 4% 4% 4% 3% 3% 3% 3% 3% 2% 2% 2% 2% 2% 2% 2% 2% 2% 1% 1% % 7% 3% 1% 2% 7% 6% 5% 4% 4% 1% 1% % 5% 4% 2% % 8% 6% 5% 3% 3% 2% 1% 1% % Germany Spain Ireland China India Brazil South Africa 23 (2.8%) 25 (1.9%) Leader Follower RSA s IRP relative new-build limit decreases over time Sources: GWEC; CIGRE; websites of System Operators; IRP 216 Draft; CSIR analysis

19 Total solar PV capacity relative to system peak load Solar PV penetration in leading countries today is 2.5 times that of South Africa s Draft IRP 216 Base Case for the year 25 7% 6% 5% 4% 3% 2% Germany Spain Italy UK Australia Japan China India South Africa Leader Follower Follower 2 nd wave South Africa IRP 216 Base Case 1% % Year Sources: SolarPowerEurope; CIGRE; websites of System Operators; IRP 216 Draft; CSIR analysis

20 Total wind capacity relative to system peak load Wind penetration in leading countries today is times that of South Africa s Draft IRP 216 Base Case for the year 25 7% 6% 5% 4% 3% Germany Spain Ireland China India Brazil Leader Follower South Africa South Africa IRP 216 Base Case 2% 1% % Year Sources: GWEC; CIGRE; websites of System Operators; IRP 216 Draft; CSIR analysis

21 Agenda Background CSIR s Approach and Project Team Comments on IRP Assumptions IRP Results and Least-cost Scenario Summary 32

22 Agenda Background CSIR s Approach and Project Team Comments on IRP Assumptions IRP Results and Least-cost Scenario Input Assumptions Results Summary 33

23 Input as per IRP 216: Demand is forecasted to double by 25 Forecasted demand for the South African electricity system from 216 to 25 Electricity Demand in TWh/yr IRP 216 IRP 21 Note: by 25 the electricity demand per capita would still be less than that of Australia today Sources: DoE (IRP 216); Eskom MTSAO ; StatsSA; World Bank; CSIR analysis

24 Input as per IRP 216: Decommissioning schedule for existing plants Energy supplied to the South African electricity system from existing plants between 216 and 25 Electricity in TWh/yr Decommissioning of Eskom s coal fleet Demand Existing supply Solar PV CSP Wind Other Peaking Gas (CCGT) 82 Hydro+PS Nuclear Coal 25 All power plants considered for existing fleet that are either: 1) Existing in 216 2) Under construction 3) Procured (preferred bidder) 35 Sources: DoE (IRP 216); Eskom MTSAO ; StatsSA; World Bank; CSIR analysis

25 Demand grows, existing fleet phases out gap needs to be filled Forecasted supply and demand balance for the South African electricity system from 216 to 25 Electricity in TWh/yr Decommissioning of Eskom s coal fleet Demand Supply gap Solar PV CSP Wind Other Peaking Gas (CCGT) Hydro+PS Nuclear Coal The IRP model fills the supply gap in the least-cost manner, subject to any constraints imposed on the model 36 Note: All power plants considered for existing fleet that are either Existing in 216, Under construction, or Procured (preferred bidder) Sources: DoE (IRP 216); Eskom MTSAO ; StatsSA; World Bank; CSIR analysis

26 PLEXOS actual inputs are individual cost items that together with the utilisation of the plant (a model output) allow to calculate LCOE Overnight R/kW Cost (plant level) Construction %/a Cash Schedule Discount Rate Economic Lifetime % a R/kW/a Fixed O&M (FOM) f CAPEX R/kW (plant level) f R/kW/a Annualised CAPEX + FIXED COST R/kW/a./. + PLEXOS inputs PLEXOS output LCOE R/kWh h/a Utilisation (capacity factor) 37 Variable R/kWh O&M (VOM) Fuel Price R/GJ Heat Rate kj/kwh (1/efficiency) x R/kWh Fuel Cost + R/kWh VARIABLE COST

27 Inputs as per IRP 216: Key resulting LCOE from cost assumptions for new supply technologies Lifetime cost per energy unit 1 (LCOE) in R/kWh (Apr-216-R) Same assumptions used as per IRP Fixed (Capital, O&M) Variable (Fuel) Solar PV CO 2 in kg/mwh Wind Baseload Coal (PF) Nuclear Gas (CCGT) Mid-merit Coal Gas (OCGT) Diesel (OCGT) Assumed capacity factor 2 82% 9% 5% 5% 1% 1% 38 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. 2 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 = 35%; nuclear = 33%; IRP costs from Jan-212 escalated to May-216 with CPI; assumed EPC CAPEX inflated by 1% to convert EPC/LCOE into tariff; Sources: IRP 213 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

28 IRP 216 increases cost assumptions for solar PV compared to IRP 21 Tariff in R/kWh (Apr-216-Rand) = 2.8 GW Assumptions: IRP21 - high Assumptions: IRP21 - low Assumptions: IRP high Assumptions: IRP low Actuals: REIPPPP (BW1-4Exp) BW1 BW 4 (Expedited) Notes: REIPPPP = Renewable Energy Independant Power Producer Programme; BW = Bid Window; bid submissions for the different BWs: BW1 = Nov 211; BW2 = Mar 212; BW 3 = Aug 213; BW 4 = Aug 214; BW 4 (Expedited) = Nov 215 Sources: StatsSA for CPI; IRP 21; South African Department of Energy (DoE); DoE IPP Office; CSIR analysis Year

29 CSIR study cost input assumptions for solar PV: Future cost assumptions for solar PV aligned with IRP 21 Tariff in R/kWh (Apr-216-Rand) = 2.8 GW Assumptions: IRP21 - high Assumptions: IRP21 - low Assumptions: IRP high Assumptions: IRP low Assumptions for this study Actuals: REIPPPP (BW1-4Exp) BW1 BW 4 (Expedited) Notes: REIPPPP = Renewable Energy Independant Power Producer Programme; BW = Bid Window; bid submissions for the different BWs: BW1 = Nov 211; BW2 = Mar 212; BW 3 = Aug 213; BW 4 = Aug 214; BW 4 (Expedited) = Nov 215 Sources: StatsSA for CPI; IRP 21; South African Department of Energy (DoE); DoE IPP Office; CSIR analysis Year

30 IRP 216 increases cost assumptions for wind compared to IRP 21 Tariff in R/kWh (Apr-216-Rand) = 4. GW Assumptions: IRP21 Assumptions: IRP high Assumptions: IRP low Actuals: REIPPPP (BW1-4Exp) BW1 BW 4 (Expedited) Notes: REIPPPP = Renewable Energy Independant Power Producer Programme; BW = Bid Window; bid submissions for the different BWs: BW1 = Nov 211; BW2 = Mar 212; BW 3 = Aug 213; BW 4 = Aug 214; BW 4 (Expedited) = Nov 215 Sources: StatsSA for CPI; IRP 21; South African Department of Energy (DoE); DoE IPP Office; CSIR analysis Year

31 CSIR study cost input assumptions for wind: Future cost assumptions for wind aligned with results of Bid Window 4 Tariff in R/kWh (Apr-216-Rand) = 4. GW Assumptions: IRP21 Assumptions: IRP high Assumptions: IRP low Assumptions for this study Actuals: REIPPPP (BW1-4Exp) BW1 BW 4 (Expedited) Notes: REIPPPP = Renewable Energy Independant Power Producer Programme; BW = Bid Window; bid submissions for the different BWs: BW1 = Nov 211; BW2 = Mar 212; BW 3 = Aug 213; BW 4 = Aug 214; BW 4 (Expedited) = Nov 215 Sources: StatsSA for CPI; IRP 21; South African Department of Energy (DoE); DoE IPP Office; CSIR analysis Year

32 The CSIR conducted a Wind and Solar PV Resource Aggregation Study CSIR, SANEDI, Eskom and Fraunhofer IWES conducted a joint study to holistically quantify the wind-power potential in South Africa and the portfolio effects of widespread spatial wind and solar power aggregation in South Africa Wind Atlas South Africa (WASA) data was used to simulate wind power across South Africa Solar Radiation Data (SoDa) was used to simulate solar PV power across South Africa Output: Simulated time-synchronous solar PV and wind power production time-series 5 km x 5 km spatial resolution Almost 5, pixels covering entire South Africa 15-minute temporal resolution 5 years temporal coverage (29-213) 45 Sources:

33 South Africa has wide areas with > 6 m/s average wind 1 m Average wind speed at 1 meter above ground for the years from for South Africa Polokwane Latitude -26 Johannesburg Upington Bloemfontein Durban Port Elizabeth Cape Town Mean wind speed (29 to 213) at 1 m above ground [m/s] 12 Longitude 46 Sources:

34 Five different generic wind turbine types defined for simulation of wind power output per 5x5 km pixel in South Africa (~5 pixels) High-wind-speed turbine Low-wind-speed turbine Turbine type no Nominal power [MW] Selection criterion Blade diameter [m] Hub height [m] Space requirement.1km²/mw max. 25 MW per pixel Sources:

35 One outcome of the study: More than 3% capacity factor achievable almost everywhere in RSA Achievable average wind capacity factors for for turbine types Polokwane -24 Latitude Latitude Johannesburg Upington Bloemfontein Durban Cape Town 2 gitude Longitude Port Elizabeth Load factor factor Average capacity.45 Actuals Spain Actuals Germany.1 3 Longitude Sources:

36 Areas already applied for Environmental Impact Assessments can cater for 9 / 33 wind / solar PV capacity Polokwane Johannesburg All EIAs (status early 216) Wind: 9 GW Solar PV: 33 GW Latitude Upington Bloemfontein Durban All REDZ (phase 1) Cape Town Port Elizabeth EIA: Onshore Wind EIA: Solar PV REDZ Longitude Sources: Wind: 535 GW Solar PV: GW

37 CO 2 emissions constrained by RSA s Peak-Plateau-Decline objective PPD that constrains CO 2 emission from electricity sector CO 2 Emissions Cap (electricity sector) [Mt/yr] PPD = Peak Plateau Decline Sources: DoE IRP 216; StatsSA; CSIR analysis

38 Agenda Background CSIR s Approach and Project Team Comments on IRP Assumptions IRP Results and Least-cost Scenario Input Assumptions Results Summary 51

39 Draft IRP 216 Base Case is a mix of roughly 1/3 coal, nuclear, RE each Draft IRP 216 Base Case Total electricity produced in TWh/yr As per Draft IRP (5%) 93 (18%) 39 (7%) 33 (6%) 165 (32%) (3%) More stringent carbon limits 54 Sources: DoE Draft IRP 216; CSIR analysis Solar PV CSP Wind Peaking Gas (CCGT) Hydro+PS Nuclear Coal

40 Draft IRP 216 Carbon Budget case: 4% nuclear energy share by 25 As per Draft IRP 216 Draft IRP 216 Base Case Total electricity produced in TWh/yr Draft IRP 216 Carbon Budget Total electricity produced in TWh/yr (5%) 93 (18%) 39 (7%) 33 (6%) 165 (32%) 159 (3%) More stringent carbon limits (8%) 19 (21%) 63 (12%) 35 (7%) 26 (39%) 63 (12%) No RE limits, reduced wind/solar PV costing, warm water demand flexibility 55 Sources: DoE Draft IRP 216; CSIR analysis Solar PV CSP Wind Peaking Gas (CCGT) Hydro+PS Nuclear Coal

41 Least Cost case is largely based on wind and solar PV As per Draft IRP 216 Draft IRP 216 Base Case Total electricity produced in TWh/yr Draft IRP 216 Carbon Budget Total electricity produced in TWh/yr Total electricity produced in TWh/yr Least Cost (5%) 93 (18%) 39 (7%) 33 (6%) 165 (32%) 159 (3%) More stringent carbon limits (8%) 19 (21%) 63 (12%) 35 (7%) 26 (39%) 63 (12%) No RE limits, reduced wind/solar PV costing, warm water demand flexibility (25%) 282 (54%) 44 (8%) 2 (4%) 36 (7%) 56 Sources: DoE Draft IRP 216; CSIR analysis Solar PV CSP Wind Peaking Gas (CCGT) Hydro+PS Nuclear Coal

42 Least Cost means no new coal and no new nuclear until 25, instead 9 GW of wind and 7 GW of solar PV plus flexible capacities As per Draft IRP 216 Draft IRP 216 Base Case Draft IRP 216 Carbon Budget Least Cost Total installed net capacity in GW 25 Total installed net capacity in GW 25 Total installed net capacity in GW Technical potential in REDZ only GW More stringent carbon limits No RE limits, reduced wind/solar PV costing, warm water demand flexibility GW Note: REDZ = Renewable Energy Development Zones Current REDZ cover 7% of South Africa s land mass Sources: DoE Draft IRP 216; CSIR analysis Solar PV CSP Wind Peaking Gas (CCGT) Hydro+PS Nuclear Coal Plus 25 GW demand response from residential warm water provision

43 Draft IRP 216 Base Case: Weekly electricity demand profile in 25 Demand in GW Exemplary Week under Draft IRP 216 Base Case (25) Monday Tuesday Wednesday Thursday Friday Saturday Sunday Demand 6 Sources: CSIR analysis, based on DoE s Draft IRP 216

44 Draft IRP 216 Base Case: Nuclear and coal dominate the supply mix in 25 Exemplary Week under Draft IRP 216 Base Case (25) Demand and Supply in GW Monday Tuesday Wednesday Thursday Friday Saturday Sunday Nuclear Demand 61 Sources: CSIR analysis, based on DoE s Draft IRP 216

45 Draft IRP 216 Base Case: Nuclear and coal dominate the supply mix in 25 Exemplary Week under Draft IRP 216 Base Case (25) Demand and Supply in GW Monday Tuesday Wednesday Thursday Friday Saturday Sunday Coal Nuclear Demand 62 Sources: CSIR analysis, based on DoE s Draft IRP 216

46 Draft IRP 216 Base Case: Nuclear and coal dominate the supply mix in 25 Demand and Supply in GW Exemplary Week under Draft IRP 216 Base Case (25) Monday Tuesday Wednesday Thursday Friday Saturday Sunday Solar PV Wind Coal Nuclear Demand 63 Sources: CSIR analysis, based on DoE s Draft IRP 216

47 Draft IRP 216 Base Case: Nuclear and coal dominate the supply mix in 25 Exemplary Week under Draft IRP 216 Base Case (25) Demand and Supply in GW Monday Tuesday Wednesday Thursday Friday Saturday Sunday Solar PV Wind Peaking Hydro Gas (CCGT) Coal Nuclear Demand 64 Sources: CSIR analysis, based on DoE s Draft IRP 216

48 Draft IRP 216 Carbon Budget: Nuclear dominates the supply mix in 25, gas required for balancing Exemplary Week under Draft IRP 216 Carbon Budget (25) Demand and Supply in GW Monday Tuesday Wednesday Thursday Friday Saturday Sunday Solar PV Wind Peaking Hydro Gas (CCGT) Coal Nuclear Demand 65 Sources: CSIR analysis, based on DoE s Draft IRP 216

49 Least Cost: Medupi, Kusile and Coal IPPs will still produce constant power by 25 Exemplary Week under Least Cost (25) Demand and Supply in GW Monday Tuesday Wednesday Thursday Friday Saturday Sunday Coal Nuclear Demand 66 Sources: CSIR analysis

50 Least Cost: Solar PV and wind dominate supply mix in 25, with excess at times Exemplary Week under Least Cost (25) Demand and Supply in GW Monday Tuesday Wednesday Thursday Friday Saturday Sunday Curtailed solar PV and wind Solar PV Wind Coal Nuclear Demand 67 Sources: CSIR analysis

51 Least Cost: Solar PV and wind dominate supply mix in 25, with excess at times Exemplary Week under Least Cost (25) Demand and Supply in GW Monday Tuesday Wednesday Thursday Friday Saturday Sunday Curtailed solar PV and wind Solar PV Wind Peaking Hydro Gas (CCGT) Coal Nuclear Demand 68 Sources: CSIR analysis

52 Total cost of power generation: Draft IRP 216 Base Case R86 bn/year more expensive by 25 than Least Cost (without cost of CO 2 ) Total cost of power generation in br/yr (constant 216 Rand) Draft IRP 216 Base Case Draft IRP 216 Carbon Budget Least Cost (+2%) Sources: CSIR analysis Note: Medium-term from 216 to 23 not in the main focus of a long-term IRP study and therefore only indicative. Will be investigated in more detail in a separate sub-study

53 Average tariff (without cost of CO 2 ): Draft IRP Base Case tariff 17 cents/kwh higher than Least Cost by 25 Average tariff in R/kWh (constant 216 Rand) Draft IRP 216 Base Case Draft IRP 216 Carbon Budget Least Cost Note: Medium-term from 216 to 23 not in the main focus of a long-term IRP study and therefore only indicative. Will be investigated in more detail in a separate sub-study. Note: Average tariff projections include.3 R/kWh for transmission, distribution and customer service (today s average cost for these items) (+15%) Sources: Eskom on Tx, Dx cost; CSIR analysis

54 Average tariff (with cost of CO 2 ): Draft IRP Base Case tariff 2 cents/kwh higher than Least Cost by 25 Average tariff in R/kWh (constant 216 Rand) Draft IRP 216 Base Case Draft IRP 216 Carbon Budget Least Cost Note: Medium-term from 216 to 23 not in the main focus of a long-term IRP study and therefore only indicative. Will be investigated in more detail in a separate sub-study Note: Average tariff projections include.3 R/kWh for transmission, distribution and customer service (today s average cost for these items) (+17%) Sources: Eskom on Tx, Dx cost; CSIR analysis

55 Least Cost without renewables limits is R82-86 billion/yr cheaper by 25 than IRP 216 Base Case and IRP 216 Carbon Budget case As per Draft IRP 216 Draft IRP 216 Base Case Draft IRP 216 Carbon Budget Least Cost ~525 TWh/yr ~525 TWh/yr ~525 TWh/yr 1% 7% 18% 6% 5% 32% 3% 21% 1% 12% 8% 7% 12% 4% 7% 25% 8% 39% 54% 2% 1% R522 billion/yr Ø tariff = 1.29 R/kWh R518 billion/yr Ø tariff = 1.29 R/kWh R436 billion/yr Ø tariff = 1.13 R/kWh 2 Mt/yr 1 Mt/yr 7 Mt/yr 38 bn l/yr 16 bn l/yr 9 bn l/yr 72 Coal Nuclear Hydro + Pumped Storage Gas (CCGT) Peaking Other Wind CSP Solar PV Note: Average tariff projections include.3 R/kWh for transmission, distribution and customer service (today s average cost for these items) Sources: Eskom on Tx, Dx cost; CSIR analysis

56 Sensitivity on cost difference: Even if RE were 5% more expensive than assumed, Least Cost is still cheaper than Draft IRP 216 Base Case Annual cost delta of Draft IRP Least Cost by 25 in br/yr Relative RE/nuclear cost (Today: RE =.62 R/kWh, Nuclear = 1.9 R/kWh.57) Today (216) Study assumptions (22-25) Sources: CSIR analysis Relative RE/coal cost (Today: RE =.62 R/kWh, Coal = 1. R/kWh.62)

57 Agenda Background CSIR s Approach and Project Team Comments on IRP Assumptions IRP Results and Least-cost Scenario Summary 74

58 Summary: A mix of solar PV, wind and flexible power generators is least cost It is cost-optimal to aim for >7% renewable energy share by 25 Solar PV, wind and flexible power generators (e.g. gas, CSP, hydro, biogas, demand response) are the cheapest new-build mix for the South African power system There is no technical limitation to solar PV and wind penetration over the planning horizon until 25 Clean and least-cost is not a trade-off anymore: South Africa can de-carbonise its electricity sector at negative carbon-avoidance cost The Least Cost mix is >R8 billion per year cheaper by 25 than the current Draft IRP 216 Base Case Additionally, Least Cost mix reduces CO 2 emissions by 65% (-13 Mt/yr) over Draft IRP 216 Base Case The IRP and this analysis factor in all first-order cost drivers within the boundaries of the electricity system, but not external costs and benefits of certain electricity mixes that occur outside of the electricity system Deviations from the Least Cost electricity mix can be quantified to inform policy adjustments (e.g. forcing in of certain technologies not selected by the least-cost mix like coal, nuclear, pumped storage, CSP, biogas, biomass, etc.) 75 Note: Wind and solar PV would have to be 5% more expensive than assumed before the IRP Base Case and the Least Cost case break even Sources: CSIR analysis

59 South Africa s energy system relies on domestic coal and imported oil Simplified energy-flow diagram (Sankey diagram) for South Africa in 214 in PJ Primary Energy Conversion End Use Oil 897 Non-energy 179 Coal 6 2 Liquefaction 79 T Transport 749 Nuclear 151 Power Plants E Electricity 7 Renewables 661 H Heat Natural Gas 161 Sources: IEA; CSIR analysis Export 1 935

60 E Future energy system will be built around variability of solar PV & wind Actual scaled RSA demand & simulated 15-minute solar PV/wind power supply for week from Aug 11 GW 1 Demand shaping 3 Biogas, hydro, CSP Monday 1 Tuesday 2 Wednesday Thursday 2 Power-to-Power 3 Friday 4 Sector coupling 4 77 Excess Solar PV/Wind Residual Load (flexible power) Useful Wind Useful Solar PV Sources: CSIR analysis Day of the week Electricity Demand

61 High Renewables: energy in RSA mostly from domestic renewables Hypothetical energy-flow diagram (Sankey diagram) for South Africa in the year 2?? T Transport H2 PtL fuels E Electricity H2 Liquid biofuels H Heat CO2 78

62 Re a leboha Ha Khensa Siyathokoza Enkosi Thank you Re a leboga Ro livhuha Siyabonga Dankie 79 Note: Thank you in all official languages of the Republic of South Africa

63 8 BACKUP

64 Transmission supply area generation connection capacity for simultaneous generation sources in an area Grid capacity is available all over the country, therefore wind and PV projects should be incentivised to go where there is grid capacity in order to expedite time to connect to the grid. Focusing only on the Northern Cape for Wind and PV will result in unnecessary delay to connect new plants since wind and PV resource is good all over the country 81 Source: - GCCA 222:

65 Least Cost scenario creates a steady, significant and increasing market Roadmap of investment for wind and solar PV to Wind:.7 GW/yr Solar PV:.5 GW/yr Draft IRP 216 Base Case Wind: 1. GW/yr Solar PV:.5 GW/yr Wind: 1.6 GW/yr Solar PV:.7 GW/yr Wind: 1.2 GW/yr Solar PV: 1.6 GW/yr Least Cost Wind: 4.4 GW/yr Solar PV: 3.3 GW/yr Wind: 4.9 GW/yr Solar PV: 3.1 GW/yr BW1 BW 4 (Expedited) BW1 BW 4 (Expedited) Note: Annual new-build capacity between 24 and 25 includes replacement of decommissioned wind and solar PV plants Sources: CSIR analysis

66 Wind: Lifetime annual cash flow and annual energy production Cash flow (cost) in br/gw/a Energy production in TWh/GW/a Assumed capacity factor 36% Time in years CAPEX Fixed O&M Time in years 5 6

67 Solar PV: Lifetime annual cash flow and annual energy production Cash flow (cost) in br/gw/a CAPEX 16 Fixed O&M Assumed capacity factor 25% Energy production in TWh/GW/a Time in years Time in years 4 5 6

68 Nuclear: Lifetime annual cash flow and annual energy production Cash flow (cost) in br/gw/a CAPEX Assumed capacity factor 9% Fixed O&M Variable O&M Fuel Energy production in TWh/GW/a Time in years Time in years 5 6

69 Coal: Lifetime annual cash flow and annual energy production Cash flow (cost) in br/gw/a Assumed capacity factor 82% CAPEX Fixed O&M Variable O&M Fuel Energy production in TWh/GW/a Time in years Time in years 6

70 Gas (CCGT): Lifetime annual cash flow and annual energy production Cash flow (cost) in br/gw/a CAPEX 16 Fixed O&M Assumed capacity factor 36% Variable O&M Fuel Energy production in TWh/GW/a Time in years Time in years

71 New solar PV projects are >8% cheaper than BW1 and reduce the average solar PV tariff as they come online Average tariff in R/kWh PPAs signed, "sunk cost" -83% Procured, PPAs to be signed Area: total annual payments in billion R R5.1 bn/a 1 R2. bn/a R1.1 bn/a 3.87 R.8 bn/a 4.95 R.8 bn/a 5.62 R.7 bn/a BW1 BW2 BW3 BW4 BW4-add BW4-exp Operational in 216 Energy produced in TWh/a 88

72 New wind projects are 6% cheaper than BW1 and reduce the average wind tariff as they come online Average tariff in R/kWh PPAs signed, "sunk cost" Procured, PPAs to be signed Area: total annual payments in billion R R2.9 bn/a -59% BW R2. bn/a BW2.87 R2.1 bn/a BW3.69 R1.4 bn/a BW4.8 R1.7 bn/a BW4-add.62 R1.2 bn/a BW4-exp Operational in 216 Energy produced in TWh/a 89

73 CSP costs come down new CSP is still quite expensive Average tariff in R/kWh PPAs signed, "sunk cost" Procured, PPAs to be signed R2.1 R.7 bn/a bn/a R2.7 bn/a R1.3 R1.3 bn/a bn/a R3.7 bn/a BW1 BW3 BW3.5 BW2 BW3.5 BW4-exp 9 Operational in 216 Energy produced in TWh/a