3/26/12 electricity supply interruption mitigation strategy. (2010-2016) 11

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Electricity Supply Interruption Mitigation Strategy.

(2010-2016)

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Agenda Overview of Policy Position in the Medium Term.

Supply Options.

o Renewable Energy IPP Program

o Small-scale Renewable IPP Program

o Co-generation

Demand Options.

o Energy Conservation Scheme

o Solar Water Heaters

Grid Infrastructure Rehabilitation Plan.

o Electricity Distribution Grid.

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GENERATION

TRANSMISSION

RETAIL &COMMERCIAL

RESIDENTIAL INDUSTRIAL

PRIMARY ENERGY

DISTRIBUTION &RETICULATION

Eskom: 97%Coal 89%,

Nuclear 4%

Gas 2%

Hydro 1.5%

Pump storage 3.5%Eskom:100%

EskomCustomers 46%, Sales 58%Municipalities

(182)Customers 54%, Sales 42%

TRANSMISSION (765/400/275 kV)

Electricity Value Chain - ESI

DISTRIBUTION (132/88/66/33/22 kV)

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Introduction: Supply Policy Overview

• IRP2010 recognized and made provision for medium term supply/demand shortfall. (2010 -2016)

• This shortfall was on the back of the following key assumptions;

– High Electricity Demand growth projection (linked to High Economic Growth assumptions) over the 20 year IRP period.

– 85% Energy Availability Factor from existing Eskom fleet.

– Committed build program completed per indicated timelines.

– Demand savings achieved as per “Policy Adjusted IRP2010”.

• In the medium term:

– Emphasis on projects that can reach Commercial Operation by between 2010-2016.

– Assuming a moderate electricity demand projection in the medium term, 1000MW gap shortfall (peaking in year 2012).

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• Supply Option: Immediate Commitments

Supply Policy Planning Tool (IRP2010)

New build optionsCoal

(PF, FBC, imports, own

build)

Nuclear Import hydro Gas – CCGT Peak – OCGT Wind CSP Solar PV

MW MW MW MW MW MW MW MW2010 0 0 0 0 0 0 0 02011 0 0 0 0 0 0 0 02012 0 0 0 0 0 0 0 3002013 0 0 0 0 0 0 0 3002014 5001 0 0 0 0 400 0 3002015 5001 0 0 0 0 400 0 3002016 0 0 0 0 0 400 100 3002017 0 0 0 0 0 400 100 3002018 0 0 0 0 0 4004 1004 3004

2019 250 0 0 2373 0 4004 1004 3004

2020 250 0 0 2373 0 400 100 3002021 250 0 0 2373 0 400 100 3002022 250 0 1 1432 0 805 400 100 3002023 250 1 600 1 1832 0 805 400 100 3002024 250 1 600 2832 0 0 800 100 3002025 250 1 600 0 0 805 1 600 100 1 0002026 1 000 1 600 0 0 0 400 0 5002027 250 0 0 0 0 1 600 0 5002028 1 000 1 600 0 474 690 0 0 5002029 250 1 600 0 237 805 0 0 1 0002030 1 000 0 0 948 0 0 0 1 000Total 6 250 9 600 2 609 2 370 3 910 8 400 1 000 8 400

Firm commitment necessary now

Final commitment in IRP 2012

1. Built, owned & operated by IPPs 2. Commitment necessary due to required high-voltage infrastructure, which has long lead time 3. Commitment necessary due to required gas infrastructure, which has long lead time 4. Possibly required grid upgradehas long lead time and thus makes commitment to power capacity necessary

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Medium Term Risk Mitigation Plan(Supply Policy Overview)

• Phase 1 (Assessment & Planning) is complete and consisted of:

– Assessment of the medium term supply and demand outlook;

– Risk assessing the expected energy shortfalls,

– Develop appropriate mitigation measures;

– Develop a Project Plan for the implementation.

• Phase 2 (Implementation) consists of the following work plan:

– Development and promulgation of legal framework to promote non-Eskom generation:

• Finalise regulatory framework for the procurement of non-Eskom generated power;

• Address licensing regulations;

• Develop and implement rules to promote non-Eskom generation;

• Development of appropriate and equitable wheeling charges for all generators;

• Streamline the process for approving access to the grid for non-Eskom generators;

• Develop rules of costs and access to municipal distribution systems;

– Development of fast track process for projects that will alleviate pressure on grid until 2016

• Roll out of solar water heater plans;

• Streamline the approval processes for all non-Eskom generation options during the constrained period;

• Implement procurement processes to purchase power identified both in the IRP and the MTRMP;

• Finalisation of procurement process for generation technology not included in MYPD2.

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• Phase 2 (Implementation)...continued consists of the following agreed work plan:

– Finalise National Energy Efficiency Strategy review and develop implementation plan

• Develop and implement action plan to introduce energy efficiency instruments;

• Establish reporting mechanism to report on progress on energy efficiency interventions.

– Develop the national contingency plan (Safety Net)

• Develop policy statement on the legal platform for the Conservation Scheme, its scope of application and the mechanisms for triggering.

• Identification of most appropriate systems and technology for aggregated demand response management

– Development of a comprehensive approach to funding EE interventions including:

• Fast track the finalisation of tax rebate scheme 12L;

• Finalise the approach to the Standard Offer.

– Develop a sustainable funding model to support the following interventions:

• Aggregation of demand response at municipal and Eskom level

• Emergency use of OCGT to prevent load shedding

– Execution and monitoring of actions

• Establish a technical team to undertake technical work as directed by this action plan;

• Establish a reporting and feedback mechanism for monthly reporting of progress to stakeholders through Nedlac.

– Develop comprehensive energy efficiency awareness campaign

• Nedlac energy task team to develop a proposal for consideration by NSACE.

Medium Term Risk Mitigation Plan(Supply Policy Overview)

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• Supply-Demand Gap Analysis:

Medium Term Policy Analysis

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SA electricity supply-demand balance will remain tight until 2015 with 2011/2012 the crucial period

Assumptions:Eskom estimate of the IRP 2010 moderate load forecast (~ 260 TWh in 2010)New Build (e.g. Medupi, Kusile Ingula) & RTS at current datesREFIT as IRP1DoE Peaking IPP includedDSM as per base plan (3.9 GW by FY 2018).Planned maintenance allocation increased to 10%

Annual energy gap for 2010 to 2017 under base case outlook, TWh shortfall

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1

2

3

9

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1514 16 20171311 122010

9 TWh is equivalent to ~1000 MW baseload capacity

Annual energy gap for 2010 to 2017 under base case outlook, TWh shortfall

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1

2

3

9

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1514 16 20171311 122010

9 TWh is equivalent to ~1000 MW baseload capacity

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• Supply Options (Decisions made)

RE IPP Program

3625 MW: Across various technologies100 MW: Small Projects (<5 MW)

Open Cycle Gas Turbine

1020 MW: Initially diesel fired.Convert to gas within 7yrs of operation.

Cogeneration

Discussions Sugar Industry around project specific items (taking into account food before power principle)Discussions with Paper Industry on Commercial issues.

Construction start June 2012 (for phase 1 {1400 MW})

Construction to start by June 2012 (Expected CoD 2013)Wheeling power arrangements for large customers.

Policy Decisions

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• Demand Options (Decisions taken)

Energy Conservation Scheme

Rules ready for consultation with Stakeholders.

Solar Water Heating

Program on-going at, albeit at a slower pace.

Accompanied with EE Tax incentives scheme.

Standard Offer Policy: designed to increase program size.

Policy Decisions

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• RE IPP Program: (first Commercial Operation Date {COD} in 2013)

– 1400 MW IPP’s Confirmed Preferred Bidder Status (Construction to Start June 2012)

– 2325 MW Still to be allocated under this Program.

• Cogeneration Program: (COD 2013)

– MW offered by Sugar Industry.

– MW offered by Paper Industry.

– 1000 MW Coal IPP’s Wheeling through the grid. ( COD 2014)

• Open Cycle Gas Turbine Project: (COD 2013)

– 1020 MW Construction to start by June 2012.

– Plants to be converted to gas within 7 years after COD.

• Energy Conservation Scheme Program: (immediate implementation)

– Rules to consulted with Stakeholders (idea, minimum 5% reduction without impacting production)

– Accompanied by Energy Efficiency Tax incentive scheme.

• Solar Water Heating Program: (currently running)

– Rapid increase on number of installation through Standard Offer Policy.

Programs to Mitigate Supply/Demand Shortfall.

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Closing Remarks:• Supply Policy Overview:

• Renewable Energy IPP Program1. Window 2 closed on 5th March 20122. 76 Bids received.3. Tariffs are declining (compared to Window 1)

• Request for Information (RFI) (closes 26 March 2012)1. Gas, Coal, Imported Hydro and Cogeneration.2. Procurement program to be launched shortly after.

• Cogeneration Programme1. Designed for Industrial Processing Plants2. In discussion with industries such as Paper and Sugar.

Current interventions will ensure adequate supply of electricity to meet the medium term supply-demand anticipated shortfall.

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Grid Infrastructure Rehabilitation Plan. Electricity Distribution Infrastructure.

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Overview:

• Status of Distribution Infrastructure:• Based on 2007 NERSA report on the state of distribution

infrastructure.• Study conducted by EDI-H in 2008 revealed that

distribution’s maintenance, rehabilitation and strengthening backlog was at R27.4 bn.

• Assets needed an urgent and immediate rehabilitation and investment to reverse the downward spiral.

• A Business Plan developed by EDI-H introducing a holistic Approach to Distribution Asset Management (ADAM)

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Total Backlog Maintenance Refurbishment Short term Strengthening

Total R 27,369,146,995 R 2,736,914,699 R 8,210,744,098 R 16,421,488,197

Investment Requirements per Region

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Funding Options:

• Inter-departmental Task Team:• National Treasury, NERSA, COGTA, DPE & DoE, DoJ and

EDD• Funding options considered;

1. Fiscal allocation.2. Municipal Infrastructure Grant.3. Increased Tariff allocation per entity. 4. Increased Multi Year Price Determination allocation.5. Loans to Municipalities (i.e. fromDevelopment

Finance Institutes).6. Grant/Donor funding.7. A mix of above options.

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Proposed DX Infrastructure Rehabilitation Plan:

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Pilot Development Finance InstitutionsProject Finance Agreement

Implementation of additional projects based on DFI model

NERSA Concurrence (Initial MYPD)29 Feb 2012

Implementation of Initial MYPD project (1st April 2013)Corporation of Public Deposits or DBSA agreement. 31 March 2012

Develop Detailed Funding Model Implementation of the remainder of the projects

Phase 1

Pilot at certain Municipalities to test delivery model.

Phase 2

Phase 3

Output 1

Output 2

Output 3

Pilot Funding model based on DFI Project Finance.

Consolidation of delivery model, including Funding. Full Implementation

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Closing Remarks:• Distribution Infrastructure Rehabilitation:

• Cabinet decision of Dec 20101. Approved focus directed towards addressing regulatory challenges

affecting municipalities (including network rehabilitation).

• Distribution Network Rehabilitation• Cabinet’s Required Approvals;

1. Proposed Distribution Asset Management Programme.2. Initial pilot phase using the MYPD allocation remaining from

restructuring process.3. Mandate further detailed investigations on status of the network

(NT, DPE, EDD, DoE, NERSA, Eskom and Munics)

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Thank You.

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Documents

electricity distribution

supply options

supply policy overviewirp2010

demand savings

master text stylesclick

energy availability

mw gap shortfall peaking

year irp period