Electricity Scenarios for South Africa · 2017. 3. 24. · Wind Solar PV CSP Supply Sources Notes: RSA = Republic of South Africa. Solar PV capacity = capacity at point of common

Dr Tobias Bischof-NiemzChief Engineer

Electricity Scenarios for South AfricaPresentation to the Portfolio Committee on Energy

CSIR

Cape Town, 21 February 2017

Pre-submission to the PC on Energy on 14 February 2017

2

CSIR delegation

Dr Rachel Chikwamba Group Executive: Strategic Alliances and Communication

Dr Tobias Bischof-Niemz Manager: Energy Centre

Crescent Mushwana Research Group Leader: Energy Systems

Jarrad Wright Principal Engineer: Energy Planning

Joanne Calitz Senior Engineer: Energy Planning

Mamahloko Senatla Researcher: Energy Planning

Tendani Tsedu Group Manager: Communications

Azeza Fredericks Parliamentary Liaison

3

Agenda

Background

CSIR’s Approach and Project Team

Comments on IRP Assumptions

IRP Results and Least-cost Scenario

Summary

4

World:In 2016, 124 GW of new wind and solar PV capacity installed globally

44 0

46

39

7

2008

33

2000

70

2001

77

51

40

2013

73

35

2011

71

41

30

2010

9

81

2002

8

120

63

57

2014

91

38

2012

76

45

31Total South Africanpower system(approx. 45 GW)

2016

9

81

2003 2005

13

121

2004

0

7

2007

22

20

124

54

70

2015

273

2006

17

15

2

56

39

17

2009

Wind

Solar PV

Sources: GWEC; EPIA; BNEF; CSIR analysis

Global annual new capacity in GW/yr

This is all very new: Roughly 80% of the globally existing solar PV capacity was installed during the last five years

5

World:Significant cost reductions materialised in the last 5-8 years

100%

27

7

2003

33

2007

22

20

3

12

17

152

9

8

2006

1

2005

1

2004

13

65%

0

120

46

70

7Total South Africanpower system(approx. 45 GW)

315630

2016

63

2015

5135

91

45

76

2013

40

39 41

71

2012

38

73

57

20142009

22%

124

54

2010

39

17

20112008

40

2002

7

2000

70

7

2001

189

48

Wind

Solar PV costSolar PV

Wind cost

Sources: IEA; GWEC; EPIA; BNEF; CSIR analysis

Subsidies Cost competitive

Global annual new capacity in GW/yr

6

5601 075

1 460

210

960

965

1 474

257

1 520

2013

3 134

+520

+1 094

467

200

2015

2 040

2014

+1 053

20202019201820172016

Wind

Solar PV

CSP

Supply Sources

Notes: RSA = Republic of South Africa. Solar PV capacity = capacity at point of common coupling. Wind includes Eskom’s Sere wind farm (100 MW)Sources: Eskom; DoE IPP Office

South Africa:From 2013 to 2016, 3.1 GW of wind, solar PV and CSP commissioned

Capacityonline in MW(end of year)

7

2.2

1.1

1.1

2013

0.1

3.7

4.7

2.5

2.2

2014

2.6

0.5

6.9

202020192018201720162015

0.01 0.05

Wind

Solar PV

CSP

Notes: Wind includes Eskom’s Sere wind farm (100 MW)Sources: Eskom; DoE IPP Office

Annual energy produced in TWh

South Africa:In 2016, almost 7 TWh electricity produced from wind, solar PV & CSP

Supply Sources

8

2016: Wind, solar PV and CSP supplied 3% of the total RSA system loadActuals captured in wholesale market for Jan-Dec 2016 (i.e. without self-consumption of embedded plants)

CSP

Annualelectricity

in TWh0.5 (0.2%) 238.2

Residual Load

231.3

System Load (domestic and export load)

Solar PV

2.6 (1.1%)

Wind

3.7 (1.6%)

Notes: Wind includes Eskom’s Sere wind farm (100 MW)Sources: Eskom; DoE IPP Office

9

Significant reductions in actual tariffs …

Actual tariffs: new wind/solar PV 40% cheaper than new coal in RSAResults of Department of Energy’s RE IPP Procurement Programme (REIPPPP) and Coal IPP Proc. Programme

0.620.87

3.65

0.620.690.87

1.191.51

0

1

2

3

4

5

-83%

-59%

Nov 2015

Aug 2014

Aug 2013

1.17

Mar 2012

2.18

Nov 2011

Wind

Solar PV

Notes: Exchange rate of 14 USD/ZAR assumed Sources: http://www.energy.gov.za/files/renewable-energy-status-report/Market-Overview-and-Current-Levels-of-Renewable-Energy-Deployment-NERSA.pdf; http://www.saippa.org.za/Portals/24/Documents/2016/Coal%20IPP%20factsheet.pdf; http://www.ee.co.za/wp-content/uploads/2016/10/New_Power_Generators_RSA-CSIR-14Oct2016.pdf; StatsSA on CPI; CSIR analysis

1.03

0.620.62

-40%

Baseload Coal IPP

Wind IPPSolar PV IPP

… have made new solar PV & wind power 40% cheaper than new coal in South Africa today

Actual average tariffsin R/kWh (Apr-2016-R)

Actual average tariffsin R/kWh (Apr-2016-R)

http://www.energy.gov.za/files/renewable-energy-status-report/Market-Overview-and-Current-Levels-of-Renewable-Energy-Deployment-NERSA.pdf

http://www.saippa.org.za/Portals/24/Documents/2016/Coal IPP factsheet.pdf

http://www.ee.co.za/wp-content/uploads/2016/10/New_Power_Generators_RSA-CSIR-14Oct2016.pdf

12

Agenda

Background




Summary

13

Integrated Resource Plan (IRP) aims for optimal electricity mix for RSAIn-principle process of IRP planning and implementation

IRP Model (PLEXOS)

(techno-economical least-cost optimisation)

Output• Capacity exp. plan• After policy

adjustment: “IRP”

Planning / simulation

world

Actuals / real world

Procurement(competitive tender

e.g. REIPPPP, coal IPPPP)

Inputs• Ministerial

Determinations based on IRP capacities

Inputs• Demand forecast• Technology costs

assumptions• CO2 limits• Etc.

Outcomes• Preferred bidders• MW allocation• Technology costs

actuals (Ø Tariffs)

Sources: CSIR analysis

Installed capacity

80

100

60

40

20

0

4.8

9.2

1.2

8.4

2025202020152010

42.2

35.9

2.41.8

2.1

Total installed net capacity in GW

Solar PV

2030

85.7

41.1

2.4

7.3

9.6+1.8

Coal

Gas

Peaking

Nuclear

Hydro

Wind

CSP

14

IRP process as described in the Department of Energy’s Draft IRP 2016 document: least-cost Base Case is derived from technical planning facts

Least CostBase Case

Scenario 2Scenario 1

Scenario 3

Case Cost

Base Case Base

Scenario 1 Base + Rxx bn/yr

Scenario 2 Base + Ryy bn/yr

Scenario 3 Base + Rzz bn/yr

… …

Constraint: RE limits

Constraint: Forcing in of nuclear, CSP, biogas, hydro, others

Constraint: Advanced CO2

cap decline

1) Public consultationon costed scenarios

2) Policy adjustment of Base Case

3) Final IRP

PlanningFacts

Sources: based on Department of Energy’s Draft IRP 2016, page 7; http://www.energy.gov.za/IRP/2016/Draft-IRP-2016-Assumptions-Base-Case-and-Observations-Revision1.pdf

http://www.energy.gov.za/IRP/2016/Draft-IRP-2016-Assumptions-Base-Case-and-Observations-Revision1.pdf

15

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 2050

• 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 2016 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 2050

• Majority of assumptions kept exactly as per the Draft IRP 2016 Base Case

• First and most important deviation from IRP 2016: no new-build limits on renewables (wind/solar PV)

• Second (smaller) deviation: costing for solar PV and wind until 2030 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 2016 are compared with the Least Cost case

• “Draft IRP 2016 Base Case” – new coal, new nuclear

• “Draft IRP 2016 Carbon Budget” – significant new nuclear

• “Least Cost” – least-cost without constraints

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 IRPSources: CSIR analysis

16

Co-optimisation of long-term investment & operational decisions in hourly time resolution from today to 2050

• 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

CSIR uses an industry standard software package for expansion planning of the power system – same package as used by DoE/Eskom

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 ~10-15% of generation costs)

• Costs related to add. system services (e.g. inertia requirements, black-start and reactive power)

Commercial software used by DoE & CSIR … … covers all key cost drivers of a power system


17

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 IRP2010/2013 team at Eskom, energy planning in Europe for large utilities

Jarrad Wright

• Principal Engineer: Energy Planning (CSIR Energy Centre)

• Commissioner: National Planning Commission (NPC)

• Former Africa Manager of PLEXOS

Robbie van Heerden

• Senior Specialist: Energy Systems (CSIR Energy Centre)

• Former General Manager and long-time head of System Operations at Eskom

Crescent Mushwana

• Research Group Leader: Energy Systems (CSIR Energy Centre)

• Former Chief Engineer at Eskom strategic transmission grid planning

Mamahloko Senatla

• Researcher: Energy Planning (CSIR Energy Centre)

• Previously with the Energy Research Centre at University of Cape Town

Joanne Calitz

• Senior Engineer: Energy Planning (CSIR Energy Centre)

• Previously with Eskom Energy Planning

• Medium-Term Outlook and IRP for RSA

18

Agenda

Background




Summary

19

Agenda

Background



• Cost inputs for solar PV and wind

• Limitations on build-out rates for solar PV and wind


Summary

22

IRP 2010 forecasted steep cost decline for solar PV from 2010 to 2030

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2010 2015 2020 2025 2030 2035 2040 2045 2050

Tariff in R/kWh(Apr-2016-Rand)

Year

Assumptions: IRP 2010 - low

Assumptions: IRP 2010 - high

Notes: REIPPPP = Renewable Energy Independant Power Producer Programme; BW = Bid Window; bid submissions for the different BWs: BW1 = Nov 2011; BW2 = Mar 2012; BW 3 = Aug 2013; BW 4 = Aug 2014; BW 4 (Expedited) = Nov 2015 Sources: StatsSA for CPI; IRP 2010; South African Department of Energy (DoE); DoE IPP Office; CSIR analysis

23

Actual solar PV tariffs quickly moved below IRP 2010 cost assumptions

0.62

3.65

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2010 2015 2020 2025 2030 2035 2040 2045 2050


Year

0.911.17

2.18

Actuals: REIPPPP (BW1-4Exp)




∑ = 2.8 GW

BW1 BW 4 (Expedited)

24

IRP 2016 increases cost assumptions for solar PV compared to IRP 2010

0.62

3.65

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2010 2015 2020 2025 2030 2035 2040 2045 2050


Year

0.911.17

2.18Actuals: REIPPPP (BW1-4Exp)






∑ = 2.8 GW


25

IRP 2010 forecasted small cost decline for wind from 2010 to 2030

0.00

0.25

0.50

0.75

1.00

1.25

1.50

1.75

2010 2015 2020 2025 2030 2035 2040 2045 2050


Year

Assumptions: IRP 2010


26

Actual wind tariffs quickly moved below IRP 2010 assumptions

0.62

0.69

1.19

1.52

0.00

0.25

0.50

0.75

1.00

1.25

1.50

1.75

2010 2015 2020 2025 2030 2035 2040 2045 2050


Year

0.87



∑ = 4.0 GW



27

IRP 2016 increases cost assumptions for wind compared to IRP 2010

0.62

0.69

1.19

1.52

0.00

0.25

0.50

0.75

1.00

1.25

1.50

1.75

2010 2015 2020 2025 2030 2035 2040 2045 2050


Year

0.87





∑ = 4.0 GW



29

Agenda

Background



• Cost inputs for solar PV and wind

• Limitations on build-out rates for solar PV and wind


Summary

30

Draft IRP 2016 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 2050 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)

2020 44 916 1 000 2.2% 1 600 3.6%

2025 51 015 1 000 2.0% 1 600 3.1%

2030 57 274 1 000 1.7% 1 600 2.8%

2035 64 169 1 000 1.6% 1 600 2.5%

2040 70 777 1 000 1.4% 1 600 2.3%

2045 78 263 1 000 1.3% 1 600 2.0%

2050 85 804 1 000 1.2% 1 600 1.9%

Note: Relative new-build limit = New-build limit / system peak loadSources: IRP 2016 Draft; CSIR analysis

31

Today: Both leading and follower countries are installing more new solar PV capacity per year than South Africa’s IRP limits for 2030/2050

2%

3%

4%

10%9%9%

5%

2%

4%

2%

4%

1% 1%1%

3%

7%

4%

1%

0%

6%

3%3%

3%

2%

1%

0%0%

7%

6%

4%

1%1%

1%0%0%

2%

2%2%

1%0%

0%0%0%

1%

1%1%

0%0%0%0% 0%

2%

2007

3%

0%

2014

0%

3%

0%

2008

0%

1%

0%

2013

2%

0%

2012

2%

1%

2011

1%

17%

3%

2010

0%

1%

2009

2050 (1.2%)2030 (1.7%)

2015

India

South Africa

China

Japan

Australia

UK

Italy

Spain

GermanyAnnual new solar PV capacity relative to system peak load

RSA’s IRP relativenew-build limit

decreasesover time

Leader

Follower

Follower2nd wave

Sources: SolarPowerEurope; CIGRE; websites of System Operators; IRP 2016 Draft; CSIR analysis

RSA new-build limits in 2030 and 2050

32

Today: Both leading and follower countries are installing more new wind capacity per year than South Africa’s IRP limits for 2030/2050

7%

6%

4%

3%2%

2%

2%2%2%

3%

6%

8%

3%3%

6%

3%4%

5%5%

7%

3%

4%

6%

5%

5%

8%

4%

4%

3%

3%

4%

3%3%

2%2%

2%

1%

2%2%

2%2%

5%4%

2%2%

1%1%0%

0%0%0%

3%

1%

2%

20092008

2%

0%

2014

1%

2011

1%

0%

2012

1%

0%

2013 2016

2050 (1.9%)

2030 (2.8%)

2015

1%

2%

2010

1%

2007

1%1%

2006

0%0%

2%

Brazil

South Africa

India

China

Ireland

Spain

Germany

RSA’s IRP relativenew-build limit

decreasesover time

Leader

RSA new-build limits in 2030 and 2050

Sources: GWEC; CIGRE; websites of System Operators; IRP 2016 Draft; CSIR analysis

Follower

Annual new wind capacity relative to system peak load

33

Solar PV penetration in leading countries today is 2.5 times that of South Africa’s Draft IRP 2016 Base Case for the year 2050

0%

10%

20%

30%

40%

50%

60%

70%

2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Tota

l so

lar

PV

cap

acit

yre

lati

ve t

o s

yste

m p

eak

load

Year

Spain

UK

Italy

Japan

Germany

Australia

China

South Africa

India

South Africa IRP 2016 Base Case

Sources: SolarPowerEurope; CIGRE; websites of System Operators; IRP 2016 Draft; CSIR analysis

Leader

Follower

Follower2nd wave

34

Wind penetration in leading countries today is 1.7-1.8 times that of South Africa’s Draft IRP 2016 Base Case for the year 2050

0%

10%

20%

30%

40%

50%

60%

70%

2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Tota

l win

d c

apac

ity

rela

tive

to

sys

tem

pe

ak lo

ad

Year

Spain

Germany

Ireland

Brazil

India

China

South Africa IRP 2016 Base Case

South Africa

Sources: GWEC; CIGRE; websites of System Operators; IRP 2016 Draft; CSIR analysis

Leader

Follower

35

Agenda

Background




Summary

36

Agenda

Background




• Input Assumptions

• Results

Summary

37

550

500

450

400

350

300

250

200

150

100

50

02020 2030 2040 2050

Electricity

in TWh/yr

2016

522

428

344

280

244

Input as per IRP 2016: Demand is forecasted to double by 2050Forecasted demand for the South African electricity system from 2016 to 2050

Sources: DoE (IRP 2016); Eskom MTSAO 2016-2021; StatsSA; World Bank; CSIR analysis

Note: by 2050 the electricity demand per capita would still be less than that of Australia today

Demand

38

550

500

0

200

150

100

50

400

300

250

350

450

2016 2040

82

2030

174

259

Electricity

in TWh/yr

20502020

Input as per IRP 2016: Decommissioning schedule for existing plantsDecommissioning schedule for the South African electricity system from 2016 to 2050

Solar PV

CSP

Wind

Other

Peaking

Gas (CCGT)

Hydro+PS

Nuclear

Coal

Decommissioning of Eskom’s coal fleet

All power plants considered for “existing fleet” that are either:1) Existing in 20162) Under construction3) Procured (preferred bidder)

Demand

Sources: DoE (IRP 2016); Eskom MTSAO 2016-2021; StatsSA; World Bank; CSIR analysis

Existing supply

39

Demand grows, existing fleet phases out – gap needs to be filledForecasted supply and demand balance for the South African electricity system from 2016 to 2050

350

450

200

250

300

400

500

550

0

50

100

150

428

254

522

2040

439

2030

Electricity

in TWh/yr

344

2016

84

2020 2050

Other

Coal

Peaking

Gas (CCGT)

Hydro+PS

Nuclear

CSP

Solar PV

Wind

Supply gap

Decommissioning of Eskom’s coal fleet

The IRP model fills the supply gap in the least-cost manner, subject to any constraints imposed on the model

Demand

Note: All power plants considered for “existing fleet” that are either Existing in 2016, Under construction, or Procured (preferred bidder)Sources: DoE (IRP 2016); Eskom MTSAO 2016-2021; StatsSA; World Bank; CSIR analysis

41

0.620.62

Gas (OCGT)

3.69

Diesel (OCGT)

2.89

Mid-merit CoalGas (CCGT)

1.41

Nuclear

1.411.09

Baseload Coal (PF)

1.00

WindSolar PV

Variable(Fuel)

Fixed(Capital, O&M)

Inputs as per IRP 2016:Key resulting LCOE from cost assumptions for new supply technologies

50%90% 50% 10%Assumed capacity factor2 10%

Lifetime cost per energy unit1

(LCOE) in R/kWh(Apr-2016-R)

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-2012 escalated to May-2016 with CPI; assumed EPC CAPEX inflated by 10% to convert EPC/LCOE into tariff; Sources: IRP 2013 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

82%

Same assumptions used as per IRP 2016

0 0 1 000 0 1 000400 600 600

CO2 in kg/MWh

43

IRP 2016 increases cost assumptions for solar PV compared to IRP 2010

0.62

3.65

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2010 2015 2020 2025 2030 2035 2040 2045 2050


Year

0.911.17

2.18Actuals: REIPPPP (BW1-4Exp)



Assumptions: IRP2010 - low

Assumptions: IRP2010 - high


∑ = 2.8 GW


44

CSIR study cost input assumptions for solar PV:Future cost assumptions for solar PV aligned with IRP 2010

0.490.520.62

3.65

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2010 2015 2020 2025 2030 2035 2040 2045 2050

0.91

2.18

1.17


Year

0.56






Assumptions for this study


∑ = 2.8 GW


45

IRP 2016 increases cost assumptions for wind compared to IRP 2010

0.62

0.69

1.19

1.52

0.00

0.25

0.50

0.75

1.00

1.25

1.50

1.75

2010 2015 2020 2025 2030 2035 2040 2045 2050


Year

0.87

Assumptions: IRP2010




∑ = 4.0 GW



46

CSIR study cost input assumptions for wind: Future cost assumptions for wind aligned with results of Bid Window 4

0.620.62

0.620.62

0.69

1.19

1.52

0.00

0.25

0.50

0.75

1.00

1.25

1.50

1.75

2010 2015 2020 2025 2030 2035 2040 2045 2050


Year

0.87

Assumptions: IRP2010





∑ = 4.0 GW



47

CSIR study cost input assumptions for CSP: Today’s latest tariff as starting point, same cost decline as per IRP 2010

1.201.201.20

3.55

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2010 2015 2020 2025 2030 2035 2040 2045 2050


Year

2.02

2.903.11

3.32







For bid window 3, 3.5 and 4 Exp, weighted average tariff of base

and peak tariff calculated on the assumption of 64%/36%

base/peak tariff utilisation ratio



48

200

250

0

50

100

150

200

250

300

2010 2015 2020 2025 2030 2035 2040 2045 2050

CO2 Emissions Cap(electricity sector)[Mt/yr]

275275

CO2 emissions constrained by RSA’s Peak-Plateau-Decline objectivePPD that constrains CO2 emission from electricity sector

PPD = Peak Plateau DeclineSources: DoE (IRP 2010-2030 Update); StatsSA; CSIR analysis

49

Agenda

Background




• Input Assumptions

• Results

Summary

50

Draft IRP 2016 Base Case

Overview of scenarios available for comparison

ScenarioDifference to

Draft IRP 2016 Base CaseSource

Draft IRP 2016 Carbon Budget

Draft IRP 2016 “Unconstrained Base Case”

Least Cost

Department of EnergyDraft IRP 2016 as of November 2016

Department of EnergyDraft IRP 2016 as of November 2016

Department of EnergyScenario run by DoE/Eskom as per request of the Ministerial Advisory Council on Energy (MACE)

CSIRDraft Least Cost as of February 2017

N/A

Tighter carbon reduction targets

No constraints on solar PV and wind

• No constraints on solar PV/wind

• Solar PV, wind and CSP costing aligned with latest IPP results

• Demand response by 2050 in residential warm water provision

51

Common reporting layout applied to all scenarios by DoE and by CSIR

Determine total operational capacity per year

• Add existing fleet & its decommissioning schedule

• Decommission new power plants at the end of their economic life (wind = 20, solar PV = 25 years)

Determine energy balances with typical load factors for different technologies and calibrate with IRP numbers

… are analysed with respect to total installed capacity (GW) and energy balance (TWh/yr)

Scenarios of the Draft IRP 2016 show the annual new installed capacity per year per technology

Sources: Draft IRP 2016, http://www.energy.gov.za/IRP/irp-presentaions/IRP-Update-Presentation-22-Nov-2016.pdf; CSIR analysis

0

300

550

500

450

400

350

250

200

150

100

50

22

2030

344

235

2050

23

36

13

2016

24813

207

1517

523

159(30%)

165(32%)

33(6%)

39(7%)

93(18%)

28(5%)

2040

33

431

229

35

34

66

Total electricity produced in TWh/yr

Coal

Nuclear

Hydro+PS

Gas (CCGT)

Peaking

Wind

CSP

Solar PV

IRP scenarios as published by the DoE …

http://www.energy.gov.za/IRP/irp-presentaions/IRP-Update-Presentation-22-Nov-2016.pdf

52

Draft IRP 2016 Base Case is a mix of roughly 1/3 coal, nuclear, RE each


50

150

250

0

300

200

500

350

400

450

550

100

33(6%)

165(32%)

2040

39(7%)

28(5%)

93(18%)

523

15


431

229

35

159(30%)

34

33

66

20502030

344

235

1323

22

13

2016

248

207

17

36

Wind

Peaking

Gas (CCGT)

Hydro+PS

Nuclear

CoalCSP

Solar PV

Sources: DoE Draft IRP 2016; CSIR analysis

As per Draft IRP 2016

More stringentcarbon limits

53

Draft IRP 2016 Carbon Budget case: 40% nuclear energy share by 2050

Draft IRP 2016 Base Case Draft IRP 2016 Carbon Budget

50

150

250

0

300

200

500

350

400

450

550

100

33(6%)

165(32%)

2040

39(7%)

28(5%)

93(18%)

523

15


431

229

35

159(30%)

34

33

66

20502030

344

235

1323

22

13

2016

248

207

17

36

Wind

Peaking

Gas (CCGT)

Hydro+PS

Nuclear

CoalCSP

Solar PV

300

450

500

550

50

0

100

400

250

200

150

350345

161

433

2030

103

44(8%)

85

2040

33

134

109(21%)

17

39

29


2050

15

35(7%)

206(39%)

63(12%)

525

207

23

248

2016

23

63

57

63(12%)




No RE limits, reduced wind/solar PV costing, warm water demand flexibility

54

Least Cost case is largely based on wind and solar PV

Draft IRP 2016 Base Case Least CostDraft IRP 2016 Carbon Budget

50

150

250

0

300

200

500

350

400

450

550

100

33(6%)

165(32%)

2040

39(7%)

28(5%)

93(18%)

523

15


431

229

35

159(30%)

34

33

66

20502030

344

235

1323

22

13

2016

248

207

17

36

Wind

Peaking

Gas (CCGT)

Hydro+PS

Nuclear

CoalCSP

Solar PV

300

450

500

550

50

0

100

400

250

200

150

350345

161

433

2030

103

44(8%)

85

2040

33

134

109(21%)

17

39

29


2050

15

35(7%)

206(39%)

63(12%)

525

207

23

248

2016

23

63

57

63(12%)

350

200

0

50

250

400

550

500

450

100

150

300

15

83

433

2040

130(25%)

22

87

189

916

282(54%)

44(8%)

2050

49

2215

527

15


20(4%)36(7%)

346

2030

17

207

248

2016

35

212





55

Least Cost means no new coal and no new nuclear until 2050, instead 90 GW of wind and 70 GW of solar PV plus flexible capacities


250

200

150

100

50

02050

135

25

208

22

13

30

16

2040

111

33

5 81712

21

12

2030

85

39

2 68

117

2016

51

37

5 3


Coal

Nuclear

Hydro+PS

Gas (CCGT)

Peaking

Wind

CSP

Solar PV

250

0

200

150

100

50


2050

149

10

26

8

33

10

36

25

2040

129

19

178

198

34

22

2030

98

34

78

10

20

13

2016

51

37

5 3

100

0

50

250

150

200

60

52

2030

100

31

34

2050

510

18

237

2016


7

2040

178

1925

73

537

2

19

22

93

51

5

37

16

3



Plus 25 GW demand response from residential

warm water provision

Note: REDZ = Renewable Energy Development ZonesCurrent REDZ cover 7% of South Africa‘s land massSources: DoE Draft IRP 2016; CSIR analysis


535 GW

1 782 GW

Technical potential in REDZ only

56

On request by the Ministerial Advisory Council on Energy (MACE) the DoE re-ran the IRP 2016 Base Case without constraining solar PV/wind

Source: MACE’s presentation during the IRP public consultations on 7 December 2016 in Johannesburg

Sources: http://www.energy.gov.za/IRP/irp-presentaions/Comments-on-IRP-2016-Draft-KabiSolar.pdf

http://www.energy.gov.za/IRP/irp-presentaions/Comments-on-IRP-2016-Draft-KabiSolar.pdf

57

The DoE’s “Unconstrained Base Case” is similar to the CSIR’s Least Cost

Source: MACE’s presentation during the IRP public consultations on 7 December 2016 in Johannesburg

Sources: http://www.energy.gov.za/IRP/irp-presentaions/Comments-on-IRP-2016-Draft-KabiSolar.pdf

http://www.energy.gov.za/IRP/irp-presentaions/Comments-on-IRP-2016-Draft-KabiSolar.pdf

58

Demand and Supply in GW

110

120

90

60

70

80

30

40

50

100

0

10

20

Draft IRP 2016 Base Case: Nuclear and coal dominate the supply mix in 2050

Monday Tuesday Wednesday Thursday Friday Saturday Sunday

Sources: CSIR analysis, based on DoE‘s Draft IRP 2016

DemandNuclear

Coal

Gas (CCGT)

Hydro

Peaking

Wind

Solar PV

Exemplary Week under Draft IRP 2016 Base Case (2050)

59


60

50

40

30

20

10

0

120

110

100

90

80

70

Draft IRP 2016 Carbon Budget:Nuclear dominates the supply mix in 2050, gas required for balancing


DemandNuclear

Coal

Gas (CCGT)

Hydro

Peaking

Wind

Solar PV

Exemplary Week under Draft IRP 2016 Carbon Budget (2050)

Sources: CSIR analysis, based on DoE‘s Draft IRP 2016

60


10

50

60

80

90

70

120

110

100

30

20

0

40

Least Cost:Solar PV and wind dominate supply mix in 2050, with excess at times



DemandWindCurtailed solar PV and wind

Solar PV Peaking

Hydro

Gas (CCGT)

Coal

Nuclear

Exemplary Week under Least Cost (2050)

61

Total cost of power generation: Draft IRP 2016 Base Case R86 bn/year more expensive by 2050 than Least Cost (without cost of CO2)

522

398

286

132

518

413

300

436

359

262

2010 2020 2030 2040 2050

200

0

50

250

300

350

400

150

550

450

100

500

Total cost of power generation in bR/yr

(constant 2016 Rand)

+86(+20%)



Least Cost


2016

Note: Medium-term from 2016 to 2030 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.

62

Average tariff (without cost of CO2):Draft IRP Base Case tariff 17 cents/kWh higher than Least Cost by 2050

1.13

1.22

1.291.25

1.17

1.131.06

1.13

0.83

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

1.1

1.2

1.3

2010 2020 2030 2040 2050

+0.17(+15%)

Average tariff in R/kWh (constant 2016 Rand)


Least Cost


Note: Average tariff projections include 0.30 R/kWh for transmission, distribution and customer service (today‘s average cost for these items) Sources: Eskom on Tx, Dx cost; CSIR analysis


2016

63

Average tariff (with cost of CO2):Draft IRP Base Case tariff 20 cents/kWh higher than Least Cost by 2050

1.34

1.14

0.95

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

1.1

1.2

1.3

1.4

2010 2020 2030 2040 2050

+0.20(+17%)

Average tariff in R/kWh (constant 2016 Rand)

Least Cost




2016


64

Least Cost without renewables limits is R82-86 billion/yr cheaper by 2050 than IRP 2016 Base Case and IRP 2016 Carbon Budget case


R518 billion/yrØ tariff = 1.29 R/kWh


100 Mt/yr 70 Mt/yr

16 bn l/yr 9 bn l/yr


200 Mt/yr

38 bn l/yr



18%

32%

7%1%

30%

5%

6%

21%

1%

12%

7%

39%12%

8% 7%

2%

4%

1%

25% 8%

54%

~525 TWh/yr ~525 TWh/yr ~525 TWh/yr

Nuclear Hydro + Pumped Storage WindGas (CCGT) OtherCoal CSP Solar PVPeaking

65

200

220

20

0

-20

-40

160

180

140

120

100

80

60

40

Annual cost delta of Draft IRP – Least Cost

by 2050 in bR/yr

86

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

1.1

0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 1.1

Today (2016)

Study assumptions (2020-2050)

Relative RE/nuclear cost

(Today:RE = 0.62 R/kWh,

Nuclear = 1.09 R/kWh 0.57)

RelativeRE/coal cost

(Today:RE = 0.62 R/kWh,

Coal = 1.00 R/kWh 0.62)

Sensitivity on cost difference: Even if RE were 50% more expensive than assumed, Least Cost is still cheaper than Draft IRP 2016 Base Case


66

Agenda

Background




Summary

67

Summary: A mix of solar PV, wind and flexible power generators is least cost

Solar PV, wind & flexible power generators (e.g. gas, CSP, hydro, biogas, demand res.) is the cheapest new-build mix for the RSA power system. It is cost-optimal to aim for >70% renewable energy share by 2050

This “Least Cost” mix is > R80 billion per year cheaper by 2050 than the current Draft IRP 2016 Base Case

Additionally, Least Cost mix reduces CO2 emissions by 65% (-130 Mt/yr) over the Draft IRP 2016 Base Case

Therefore: Avoiding CO2 emissions and least-cost is not a trade-off anymore – South Africa can de-carbonise its electricity sector at negative carbon-avoidance cost

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, hydro, CSP, biogas, biomass, etc.)

Note: Wind and solar PV would have to be 50% more expensive than assumed before the IRP Base Case and the Least Cost case break evenSources: CSIR analysis

68

Thank you

Re a leboga

SiyathokozaEnkosi

Siyabonga

Re a leboha

Ro livhuha

Ha Khensa

Dankie

Note: „Thank you“ in all official languages of the Republic of South Africa