DoE presentation: IEP update - South African Photovoltaic Industry

Report
INTEGRATED ENERGY PLAN PRESENTATION
PORTFOLIO COMMITTEE ON ENERGY
20 NOVEMBER 2012
1
HIGH-LEVEL APPROACH
Identify key
objectives
• Guided by National Objectives
• Informed by Energy White Paper and other energy policies
• Described in National Energy Act
• Influenced by various government policies
for IEP
Define Status
Quo and
implications for
future trends
Define Problem
Statement
• Local and global challenges
• Informed by implemented policies with high impact on energy sector
• Macroeconomic factors, existing and implemented policies
• Informs assumptions about future energy demand
• Informs assumptions about technology trends
• Key Policy Questions that IEP should deal with
• Define key criteria and relative importance (weightings)
2
HIGH-LEVEL APPROACH
Identify policy
alternatives
Analyse and
Evaluate Policy
Alternatives
• Test Cases/Scenarios: Impact of existing high-impact policies
• Test Cases/Scenarios: New and proposed high-impact policies and policy options
• Desktop studies: New policy considerations
• Supply optimisation based on projected future demand (for Base Case and Test Cases)
• Evaluation of output from Supply Optimisation using Multi-Criteria Decision-Making
Approach (MCDA)
• Will be informed by outcomes from previous step (MCDA)
Make
recommendati
ons
3
KEY PLANNING PARAMETERS AND
ASSUMPTIONS
4
BASE CASE
The Base Case (also referred to as Baseline or Reference Case)
encapsulates the state of energy demand and supply over the
planning horizon, which is most closely informed by current
energy market trends; the national macroeconomic outlook;
assumed energy prices; existing energy infrastructure and the
existing suite of policies and government programmes
The Base Case is not a representation of the most likely future or most likely
scenario, but is rather a simplistic representation of a future outcome that
could materialise in light of current policies and macroeconomic trends. It
represents a Business-As-Usual or Status Quo scenario where current trends
continue into the future.
5
TEST CASE
A deviation from the status quo where current trends do not
continue into the future and deviations are as a result of
specific policy interventions. A Test Case therefore defines a set
of circumstances and resultant outcomes or impacts which is
informed by the possible impacts of policies and policy
interventions. A Test Case does not indicate what will happen
but rather tests what could happen if a particular course of
action takes place.
While Test Cases are sometimes also referred to as scenarios, for the
purposes of common interpretation, a Test Case is specifically differentiated
from a scenario in that a scenario is largely influenced by exogenous forces
which the policy maker has no control over.
6
KEY GLOBAL PLANNING
PARAMETERS
HIGH-IMPACT
POLICIES
• Energy White Paper
• Integrated Resource
Plan (IRP 2010)
• National
Development Plan
• New Growth Path
• National Climate
Change Response
White Paper
• National Transport
Master Plan
• Beneficiation
Strategy
• Proposed Carbon Tax
Policy
POLICY-DRIVEN
PLANNING
PARAMETERS
• Minimum Renewable
Energy Production
Target
• Reserve Margin
• Annual Emissions
Limits
• Emission Penalties
MACROECONOMIC
PARAMETERS
• Discount Rate
• Economic Growth
• Global Oil Prices
7
KEY BASE CASE ASSUMPTIONS
8
HIGH-IMPACT POLICY:
COMMITTED IRP 2010
The IRP committed build plan is included in the Base Case
New build options
Non IRP
Committed
Coal
Import Gas – Peak –
1
imports Nuclear hydro CCGT OCGT Wind
MW
MW
MW
MW
MW
MW
CSP Solar PV Coal
MW
MW
MW
CoDoE
Other generatio
2
Peaker Wind Renew. n
TOTAL
MW
MW
MW
MW
MW
Other
MW
2010
-
-
-
-
-
-
-
-
380
260
-
-
-
-
2011
-
-
-
-
-
-
-
-
679
130
-
-
-
-
809
2012
-
-
-
-
-
-
-
300
303
-
-
400
100
-
1,103
2013
-
-
-
-
-
-
-
300
823
333
1,020
400
2014
500
-
-
-
-
400
-
300
722
999
2015
500
-
-
-
-
400
-
300
1,444
2016
-
-
-
-
-
400
100
300
2017
-
-
-
-
-
400
100
2018
-
-
-
-
-
400
2019
250
-
-
237
-
2020
250
-
-
237
-
2021
250
-
237
-
487
2022
250
1,143
805
2,198
2023
250
1,183
805
2,238
2024
250
283
-
533
805
805
2025
640
25
-
2,901
100
-
3,021
100
200
2,944
722
200
1,722
300
2,168
200
3,168
100
300
723
200
1,723
400
100
300
1,446
2,733
400
100
300
723
2,010
2026
-
2027
-
2028
-
2029
-
2030
Total
2,500
-
2,609
711
2,415
2,800
500
2,700
10,133
1,722
1,020
800
325
800
29,035
Eskom Commitments (Pre IRP)
2011 determinations
2012 determinations 9
POLICY-DRIVEN PARAMETERS
•
•
•
•
Annual Emissions Limits
Emissions Penalties
Minimum Renewable Energy Production
Reserve Margin
10
POLICY-DRIVEN PARAMETERS: MINIMUM
RENEWABLE ENERGY PRODUCTION
•
•
Electricity: Will be based on total renewable energy in IRP2010
Liquid Fuels/Petroleum: Regulations on Blending of Biofuels not yet
promulgated
New build options
Wind
MW
CSP
MW
Committed
Other
Renew.
MW
Wind2
MW
Solar PV
MW
TOTAL
MW
2010
-
-
-
-
-
2011
-
-
-
-
-
-
2012
-
-
300
400
100
800
2013
-
-
300
400
25
725
2014
400
-
300
-
100
800
2015
400
-
300
-
100
800
2016
400
100
300
-
-
800
2017
400
100
300
-
-
800
2018
400
100
300
-
-
800
2019
400
100
300
-
-
800
2020
400
100
300
-
-
800
2021
400
100
300
-
-
800
2022
400
100
300
-
-
800
2023
400
100
300
-
-
800
2024
800
100
300
-
-
1,200
2025
1,600
100
1,000
-
-
2,700
2026
400
-
500
-
-
900
2027
1,600
-
500
-
-
2,100
2028
-
-
500
-
-
500
2029
-
-
1,000
-
-
1,000
2030
-
-
1,000
-
-
1,000
Total
8,400
1,000
8,400
800
325
18,925
-
RE IPP Window 1
RE IPP Window 2
Future Windows
11
RESERVE MARGIN
• The Energy Security Master Plan for Electricity, ESMPElectricity, of 2007 recommended a reserve margin of 19% for
electricity generation capacity in South Africa
• A reserve margin of 19% indicates the point where the tradeoff between costs and reliability is minimum. (Based on costs
as calculated during the drafting of the ESMP 2007)
12
MACROECONOMIC INDICATORS
• Discount Rate:
– 11.3% as provided by National Treasury
• Economic Growth:
– Based on National Treasury 2012 Budget Forecast (Provided prior to
the 2012 Medium-Term Budget Policy Statements - MTBPS)
• Global Oil Price:
– Based on the Energy Information Administration (EIA) Annual Energy
Outlook 2012 (AEO2010) Projections
13
GDP GROWTH RATE
GDP growth scenarios are based on National Treasury 2012 Budget
Forecast
Base Case: GDP growth forecasts will be based on “Moderate Growth Scenario”
Low growth scenario
Short Term
Medium Term
Long Term
2012
2013
2014
2015-2020
2021-2031
2.7%
3.0%
3.3%
3.2%
3.0%
Moderate growth scenario
Short Term
Medium Term
Long Term
2012
2013
2014
2015-2020
2021-2031
2.7%
3.6%
4.2%
4.0%
4.0%
Medium Term
Long Term
High growth scenario
Short Term
2012
2013
2014
2015-2020
2021-2031
2.7%
3.6%
4.2%
4.6%
5.0%
14
GDP GROWTH RATE
Low growth assumption:
National Treasury 2012 Forecast then growth of 2.9% over the forecast period
Assumptions
Upside Risks
Continued skills constraints
Strong commodity price growth
Infrastructure bottlenecks
Reduced skills constraints
Low global growth
Reduced infrastructure bottlenecks
Improved global growth outlook
Moderate growth assumption:
National Treasury 2012 Forecast, followed by
Assumptions
Risks
Continued skills constraints
Risks to the moderate forecast can be either up- or downside risks
Infrastructure bottlenecks
Upside risks to gorwth forecasts are the same as the risks faced in the low growth assumption
Downside risks to growth forecasts are the same as the risks faced in the high growth assumption
High growth assumption:
National Treasury 2012 Forecast,
Assumptions
Downside Risks
Strong commodity price growth
Continued skills constraints
Reduced infrastructure bottlenecks
Infrastructure bottlenecks
Improved global growth outlook
Low global growth
Skills shortage alleviates
15
GDP GROWTH RATE
Historical
2011
Projections
16
GLOBAL OIL PRICE PROJECTIONS
•
•
•
•
•
•
•
The Global Oil Price projections made by the Energy Information Administration (EIA) on an annual
basis within the Annual Energy Outlook, 2012 (AEO2012) have been used as a basis for the
projection of future global oil prices for the purposes of the IEP
The AEO2012 makes projections for High, Moderate and Low price scenarios which are informed by
various assumptions about the global geopolitical and macroeconomic environment.
The AEO2012 global oil price projections are defined as the average price of crude oil similar to the
price for West Texas Intermediate (WTI) crude oil, which is traded on the New York Mercantile
Exchange
Although daily spot prices of crude oil from different sources vary, trends for annual averages are
similar and therefore the AEO2010 projections deemed independent and reliable source of future
projected prices
Projections up to 2035: The key assumptions which inform the global oil price projections and the
actual projections have been taken directly from the Annual Energy Outlook 2012, which has
projections up to 2035.
Projections from 2036 to 2050: The oil prices from 2036 and 2050 have been extrapolated using a
straight line based on the average price increases of each of the three scenarios from 2012 to 2035.
(More information available in the Annual Energy Outlook 2012 which is available at
www.eia.doe.gov)
17
GLOBAL OIL PRICE PROJECTIONS
Global Oil Price (real US dollars per barrel)
250
Historical Prices
2010 Projections from AEO2012
Extrapolation to 2050
200
150
HIGH OIL PRICE
MODERATE
(AEO2012 Reference)
100
LOW OIL PRICE
50
0
1980
1990
2000
2010
2020
2030
2040
18
ASSUMPTIONS FOR VARIOUS TEST
CASES
19
TEST CASES
BACKGROUND
The IRP 2010 determined that nuclear
power should form a large part, about
20 percent by 2030, of the country’s
energy mix from 5 percent in 2010. The
Fukushima nuclear crisis of 2011 has
made some governments around the
world to rethink the role of nuclear
energy.
One of the recommendations from the
National Development Plan was for
other alternatives, such as liquefied
natural gas for electricity generation, to
be compared against the construction
of a new nuclear fleet.
The burning of coal is responsible for a
significant amount of GHGs emissions.
While new technologies such as CCS are
being developed to curb the GHG
emissions, the use of natural gas in
power generation has gained steam.
POLICY QUESTION
TEST CASE
What will be the impact of removing
nuclear as an option on our targets to
significantly reduce emissions by 42
percent by 2025 as outlined in the
National Climate Change Response
Policy (NCCRP)?
Test Case 1: In this case, the new
nuclear build in the Policy-Adjusted IRP
2010 is excluded as a supply option. This
implies that all the committed capacity
from Policy-Adjusted IRP are included
with the exception of new nuclear.
Nuclear is replaced by the next best
supply options as chosen by the model.
What is the impact of removing nuclear Test Case 2: The new nuclear build in
and introducing more natural gas as an the Policy-Adjusted IRP 2010 is excluded
option on the total cost of energy and as a supply option. This implies that all
emissions target?
the committed capacity from PolicyAdjusted IRP are included with the
exception of new nuclear. The nuclear is
replaced by natural gas supply options.
20
TEST CASES
BACKGROUND
As a net importer of crude oil, South Africa is a price taker in the oil market and its market is highly sensitive to fluctuating
global oil prices.
The Department of Energy is in the process of introducing new fuel specifications (CF2) which will ensure refined product
with reduced sulphur content and thereby reducing the quantity of pollutants and greenhouse gas emissions from the
liquid fuel and transportation sectors.
South Africa is currently also considering the construction of new refining capacity which would be aligned with these
specifications.
While mobility is a key contributor to energy demand, developments in technology could see the move away from
traditional modes of transport to more efficient and less costly means of transportation. However for South Africa, it is
assumed that traditional modes of transport (i.e. fuel-powered vehicles, with minimal penetration of electric and hybrid
vehicles) will continue into the foreseeable future (NAAMSA presentation “Energy Planning Colloquium, March 2012”).
The National Development Plan has presented five different options that South Africa should consider:
1) Build new oil-to-liquid refinery
2) Build new coal-to-liquid refinery
3) Upgrade existing refineries or allow significant expansions of one or more of the existing refineries or both
4) Import refined product
5) Build a new refinery in Angola or Nigeria (and buy a share of the product of that refinery)
21
TEST CASES
POLICY QUESTION
Assuming more people will continue to drive fuel-powered
vehicles as their primary means of transport well into the
future, what is the best way of ensuring security of fuel
supply in the country? (Note: Fuels pertain to final product
and includes synfuels from CTL and GTL production
processes).
TEST CASE
The National Development Plan provides a high-level analysis
of the advantages and disadvantages associated with each of
the options presented therein. As South Africa is a price
taker, when all other investment costs have been taken into
consideration (capital costs, upgrade costs), the main
differentiating factor is the input costs (in this case the price
of crude oil). Equally important is the price of coal and shale
gas. Therefore sensitivity analyses (of different crude oil price
ranges) will also be conducted on all the alternatives
considered.
For given sets of crude oil price ranges and for each price
range:
Test Case 3: The cost of increasing refining capacity (green
field refinery which could be crude oil, CTL or GTL as
optimized by model) is determined together with total
emissions.
Test Case 4: The cost of upgrading/expanding existing
refineries. In this option any production shortfall would be
met by imports. (This test case takes into account possible
upgrade of port infrastructure that may be necessary as well
as the associated costs).
22
ANNUAL EMISSIONS LIMITS
•
•
The South African Government has made a commitment to reduce emissions by
34% by 2020 and 42% by 2025 which was informed by the outcomes from a study
on the Long-Term Mitigation Scenarios (LTMS)
Two scenarios:
–
–
•
•
•
“Business As Usual” which led to a range of trajectories - BAU lower and upper bounds
“Required by Science” which led to the “Peak Plateau Decline” emissions trajectory
The findings of the LTMS study also determined that South Africa’s energy use
emissions constituted just under 80% of total emissions, of which the majority
arose from electricity generation (40% of total emissions) in 2000.
Emissions from oil refining and production of synthetic fuels (CTL and GTL) were
estimated to contribute 9% towards total emissions. Therefore, total emissions
from the energy transformation and conversion processes contributes
approximately 49% towards total emissions.
The “Peak Plateau Decline” trajectory will inform the emissions constraints for
electricity generation and petroleum refining in one of the IEP Test Cases
23
TEST CASES
BACKGROUND
According to the National Climate
Change Response Policy (NCCRP), the
energy sector contributes about 80
percent towards total carbon emissions
for the country. South Africa has also
committed to reducing emissions by 34
percent by 2020 and 42 percent by 2025
‘below a business as usual baseline’.
These targeted reductions in total
emissions have been defined by the
Department of Environmental Affairs
(DEA) as the “Peak, Plateau, Decline
emissions trajectory” and have further
been translated into absolute reductions
required for the entire country and by
each sector based on contribution to the
total.
POLICY QUESTION
What are the impacts of meeting the
emission reduction targets as set by the
Department of Environmental Affairs for
the energy sector?
TEST CASE
Test Case 5: Refurbish the existing fleet
of plants so as to meet the targets set by
DEA.
Retrofit
on
the
existing
infrastructure. (Note: It is acknowledged
a retrofit programme would still leave
demand outstripping the supply of
electricity).
Test Case 6: The energy sector should
meet the 34 percent and 42 percent
emissions reduction target no matter
what. This includes mothballing the
power plants that are responsible for
emissions and investing in new
technologies.
24
EMISSIONS PENALTIES
• In 2010, the National Treasury published a discussion
document on a proposed carbon tax policy
• The policy document is near finalisation and could
potentially be promulgated in the short-to-medium
term
• The introduction of a Carbon Tax has significant
implications for the energy sector and will be
considered as a Test Case in the IEP
25
TEST CASES
BACKGROUND
POLICY QUESTION
In efforts to support the country’s What are the possible impacts of the
commitments of reducing emissions, proposed Carbon Tax by National
the National Treasury has published a Treasury on the energy sector?
Discussion Documents which seeks to
introduce a Carbon Tax across all
sectors.
TEST CASE
Test Case 7: Impact of the Carbon Tax
on the choice of energy technologies
throughout the entire value chain. The
current proposal is a tax of R75 per ton
of CO2 and with an increase to around
R200 per ton CO2 (at 2005 prices)
introduced as from 2015.
26
PROGRESS TO DATE
27
HIGH-LEVEL WORKPLAN
COMPLETED TO DATE
Key Planning Assumptions
- Global Planning Parameters and Policy Assumptions informed by High-Impact Policies
- Key Macroeconomic Parameters/Indicators
- Assumptions underpinning Demand Projections
- Base Case versus Test Cases
Demand Projections
- Approach to modelling demand for energy services within all demand sectors
- Demand Projections
Key Policy Questions and Alternative Options for each
- Test Cases to be considered in the model
- Other Policy Options to be considered
Key Criteria and approach for evaluating model output (Outcome of Base Case and Test Cases)
28
HIGH-LEVEL WORKPLAN
STILL TO BE COMPLETED
Quality-checking and finalisation of technology data collected
Address any data gaps that may arise
Configuring of Model for Base Case and model runs
Configuring of Test Cases in model and Model runs
Analysis and Evaluation of model output
Report Writing
Table Draft IEP Report in Cabinet
Stakeholder Consultations on Draft IEP Report
29
THANK YOU
30

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