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Dr Tobias [email protected]+49 172 304 7749 +27 83 403 1108
South Africa’s Energy TransitionComments on the IRP2018
Presentation at the NBI, Johannesburg
20 September 2018
2
What we want you to take away from the book
A power-system in South Africa that is based on renewables is
• Cheaper than all alternatives
• Cleaner than all alternatives
• Creates more jobs and localisation potential
It helps re-industrialising the country on the back of a low-cost, low-carbon electricity platform
Authors: Tobias Bischof-Niemz and Terence Creamer
Visit the book‘s website at
http://saenergytransition.net
3
7
2000 20172003
9
2001
7
2002 2009
271
56
18
2016
8
30
20132004 2007
112
2005
215
20082006
31320
2015
7
39
17
39
38
2010
5441
7
98
2011
31
57
45
2012
35
40
519
70
Total South Africanpower system(approx. 45 GW)
2014
4 817
2233
63
56
71 76 73
91
120 124
154
46
Solar PV
Wind
Global annual new capacity in GW/a
Subsidies Cost competitive
>150 GW of new solar PV and wind added to the grid in 2017 globally
4
Agenda
IRP 2018: Things that are great
IRP 2018: Things to consider
New Export Opportunities Arising from Cheap Renewables
5
There are many, many good things in the IRP 2018
The Draft IRP 2018 recognises unambiguously that the cheapest way to produce reliable new electricity in South Africa is through a mix of solar PV, wind and flexible power stations (gas-fired power in the IRP)
Unconstrained Least Cost scenario (with the assumptions used): “IRP1”, is well described and costed
Reporting of results has improved considerably
• All scenarios are clearly described
• The results are reported on, both in terms of capacity (MW) and in terms of energy (GWh)
• Most importantly: The scenarios are costed informs a value-for-money discussion
Bid Window 4 Expedited costs used for RE as start
Draft IRP 2018, page 37, http://www.energy.gov.za/IRP/irp-update-draft-report2018/IRP-Update-2018-Draft-for-Comments.pdf
Draft IRP 2018, page 35
6
10
0
20
30
40
20302024 20382020 2034
Operational coal-fired capacity in GW
2016 2018 2022 2028 2032 2036 2040 2042 2044 2046 2048 20502026
South Africa has scheduled to decommission 28 GW of coal by 2040
Sources: Eskom, IRP
Camden
Komati
Hendrina
Grootvlei
Arnot
Kriel
Medupi
Matla
Duvha
Kendal
Tutuka
MajubaDry
Lethabo
Matimba
MajubaWet
Kusile
Scheduled decommissioning until…
… 2030: -13 GW … 2040: -28 GW … 2050: -35 GW
7
0
250
200
50
100
300
350
150
400
2040
225
13
204
Electricityin TWh/a
91
321
14
265
187
2030
253
20202016
15
13
79
336
49
2050
241
362
397
CSP
Hydro
Supply Gap
Solar PV
Wind
Peaking
Gas
Nuclear
Coal
An Integrated Resources Planmodel fills the supply gap in theleast-cost manner, subject toany constraints imposed
Existing and committed power generators in South Africa (2016)
Electricity demand
Demand grows, existing fleet phases out: gap needs to be filled
Sources: DoE, IRP 2018
8
Wind
Unit cost in R/kWhand cost structure(April 2016 prices)
Solar PV Coal CCGT (Gas)Nuclear
Fuel (and variable O&M)
Fixed O&M
Investment
0.62 0.62
1.031.09
1.15
82%Assumed utilization(capacity factor) 50%90%23% 40%
Of all available technologies for bulk electricity generation, solar PV & wind are now the cheapest new-build options in South Africa, by far
IRP assumptionsActual tariffs
9
0
50
200
100
300
400
150
250
350
2016 2020
14
26
42
12
205
2030
54
130
14
109
167
2040
67
2050
240255
79
16
Total electricityproduced in TWh/a
2511
44204
28
397
358
318
Wind
Solar PV Hydro
Peaking
Gas
Nuclear
Coal
Others
Draft IRP 2018 (scenario: IRP1)ENERGY
Draft IRP 2018 (scenario: IRP1)CAPACITY
Renewables = 67%Wind/PV = 59%… of primary electricity
100
0
50
150
10
13
Total installed capacity in GW
12
37
2016 2020 2050
4
31
2030
8
22
38
148
31
2040
50
10
61
78
121
48
3625
10
6
6
3
17
1) No new nuclear2) No new coal
IRP 2018, scenario “IRP1”Least Cost expansion path: 67% renewables energy share by 2050
Sources: DoE, IRP 2018
10
What can give comfort to the Department of Energy regarding its results: Several studies independently come to the same conclusion
University ofCape Town
Meridian Economics
NRELCSIR
University of Frankfurt
Common thread: No new coal, no new nuclear
Eskom
Link
Link, Link, Link
Link, Link
Link
Link
Link
11
Agenda
IRP 2018: Things that are great
IRP 2018: Things to consider
New Export Opportunities Arising from Cheap Renewables
12
Some small technicalities in the IRP 2018 could improve…
Reporting of input assumptions has reduced in quality
• Cost and technical parameter tables (“as used” in the model) are not available (yet)
The recommended plan is does not report energy shares (only capacity)
• The energy shares of the recommended plan are not reported on, which makes it difficult to assess how much gas volumes are required in the recommended plan
Very conservative assumptions make the cost differential between scenarios seem smaller than they are
• Very high costs assumed for the grid connection of renewables, very low costs for coal/nuclear
• Very low cost reduction assumed for renewables until 2050
• However, both assumptions do not change the fundamental output of no new coal/no new nuclear
13
… but there are also some bigger issues
The two coal IPPs are included in the recommended plan (after policy-adjustment of “IRP1” scenario)
• The inclusion of the two coal IPPs increases the NPV of the total system cost by R20 billion (UCT ERC)
• This is also confirmed by the IRP2018 itself in Figure 19: 3 R-cents/kWh increase in the early 2020s
• That cost increase is not necessary if the two coal IPPs are taken out and replaced with the least-cost new-build mix of solar PV, wind and flexibility
• Compensation of the IPPs for cost incurred would be possible because of the overall huge net saving of not building the two coal-fired power stations
Additional existing supply-side options are treated very optimistically
• What if Medupi and Kusile come online later than assumed or if we decide not to finish them?
• What if the Eskom’s fleet availability will be less than assumed in the IRP (assumed to be 80% by 2020, but sits at low 70% levels today; every percentage-point is roughly 400 MW of baseload capacity)?
• What if existing Eskom plants are decommissioned earlier than currently planned (some might have to, for pure technical and environmental compliance reasons)?
The effect of this optimistic treatment of the existing supply-side options could potentially be as severe as load shedding in the early 2020s. The MTSAO will shed more light on this (to come out in October 2018)
It is certainly a sensible precautionary measure to bring new capacity deployments forward (wind, PV, gas)
14
In the longer term: Three key disruptions have not been considered yet
Electric Vehicles uptake
• Small effect on overall electricity demand (1 million Evs 3 TWh/a)
• But potentially huge effect on demand-side flexibility (smart charging), which makes integration of variable renewables easier and cheaper
Stationary batteries cost reductions
• A measure for smoothing intra-day fluctuations on demand and supply side
• Complements the deployment of pumped hydro (weekly storage) and gas-fired power (weekly / monthly storage)
• Costs today: 350 €/kWh, in future: 150 €/kWh
• Costs assumed: around 600-700 €/kWh, no reduction
Flexibility on the demand side
• Lots of flexibility option on the demand side available
• Flexible demand helps to absorb variability from solar PV/wind and makes integration easier & cheaper
• Low-hanging fruit: electric warm water provision
16
Demand shaping can provide ≈24 GW/3 GW (demand increase/decrease) with ~70 GWh/d of dispatchable energy by 2050
Sources: CSIR estimates; StatsSA; AMPS survey; Stastista; Eskom;
Property Unit 2016-2019 2020 2030 2040 2050
Population [mln] 55.7 - 57.5 58.0 61.7 64.9 68.2
Number of HHs [mln] 16.9 - 18.1 18.5 22.4 26.0 27.3
Residents per HH [ppl/HH] 3.29 - 3.17 3.13 2.75 2.50 2.50
HHs with EWH [%] 28 - 33 34 50 75 100
HHs with EWH [mln] 4.7 - 5.9 6.3 11.2 19.5 27.3
Demand shaping adoption [%] - 2 25 100 100
Demand shaping [TWh/a] - 0.4 5.4 28.3 26.4
Demand shaping [GWh/d] - 1.1 14.9 77.4 72.3
Demand shaping (demand increase) [MW] - 371 4 991 25 970 24 265
Demand shaping (demand decrease) [MW] - 46 620 3 226 3 015
18
Electric vehicle demand shaping can provide ~96 GW/4.2 GW (demand increase/decrease) with ~100 GWh/d daily dispatchable energy 2050
Sources: CSIR estimates; StatsSA; eNaTis
19
400
100
450
-100
-50
200
300
350
0
50
150
250
204
2020 2040
10535
2016
Total electricityproduced in TWh/a
79
53
417
-30
187
2030 2050
137
-57
139
179
49
243273
323
379
Battery Storage
Pumped Storage
Curtailed wind/PV
CoalSolar PV
Wind
Hydro
Peaking
Gas
Nuclear
CSIR Least Cost 2017ENERGY
CSIR Least Cost 2017CAPACITY
Renewables = 85%Wind/PV = 82%… of primary electricity(388 TWh in 2050)
150
50
100
200
0
250
216
37
2020
92
Total installed capacity in GW
2016 2050
8
20
188
30
2030
18
133
61
2040
57
15
165
173
827
82
7550
58
1) No new nuclear2) No new coal
Taking all this into account: Probable “Least Cost”: same direction as IRP2018, higher RE share
Sources: CSIR
20
Agenda
IRP 2018: Things that are great
IRP 2018: Things to consider
New Export Opportunities Arising from Cheap Renewables
21
Inputs Conversion Power FuelsFuel Production
ElectricityH2 Hydrogen (H2)
Water
Air (N2 and O2) N2
Air Separation
Plant
Electrolyser
CO2
Hydrocarbons• Methane (CH4)• Methanol (CH3OH)• Diesel/Petrol/
Kerosene (CnHm)
Syngas (H2, CO)Existing CO2 streamsBiogas (CH4 and CO2)
Fischer-Tropsch Reactor
Reverse Water-Gas
Shift Reactor
Ammonia (NH3)Haber-Bosch
Reactor
H2O
H2
H2
South Africa exhibits key ingredients for cost-competitive power fuels
22
Electricity-based fuels and chemicals (“power fuels”, “e-fuels”) provide a huge potential export opportunity for South Africa
South African renewable electricity will always be cheaper than in most other countries in the world
• Combined solar, wind and land resources better than in most other parts of the world
• Cheapest renewable electricity is a competitive advantage that will never go away
In addition, South Africa has vast experience in the creation of synthetic liquid fuels
• The country gets roughly 1/3 of its liquid fuel demand from Coal-to-Liquid
• Sasol is one of the largest Coal-to-Liquid producers globally
This combination provides a huge opportunity for South Africa to commercialise renewable-electricity-based, carbon-neutral synthetic fuels and chemicals from Power-to-Liquid/-Gas processes
The EU has started to create the market for such fuels via its mandatory biofuels blending requirements
• EU’s aviation fuel demand alone: 60 billion litres/a
Global initiative started to connect off-takers with suppliers
23
PrimaryEnergy
Intermediary Energy Carrier
End UseConversion
E
T
H
Today: South Africa‘s energy flows are domestic coal and imported oil
24
PrimaryEnergy
End UseMultiple Conversion Steps on the Basis of Electricity and Hydrogen
E
T
H
Domestic Coal: 54 PJ
Imported Oil: 134 PJ
Domestic Wind: 1 270 PJ
Domestic Solar: 1 270 PJ
Natural Gas: 200 PJ
Domestic Biomass: 761 PJ(today + biogenic municipal waste)
Domestic Ambient Heat: 251 PJ Heat Pumps: 376 PJ
Biomass Boilers & Fireplaces: 661 PJ
Resistive Boilers & Heaters: 376 PJ
Seawater Desalination Plants: 126 PJ Fresh Water: 10 trillion litres
Power Plants: 2 840 PJ(120 GW wind, 180 GW solar PV, others)
Electricity: 2 680 PJ(~740 TWh)
Electrolysers: 1 314 PJ(~70 GW)
Hydrogen: 1 052 PJ(~7.4 million tonnes)
Liquefaction Plants: 336 PJ
Fertiliser Plants: 140 PJ
Hydrocarbons: 440 PJ
Chemicals: 188 PJExport PtL: 188 PJ (~5 billion litres)Export Fertiliser: 140 PJ (~3 million tonnes)
Airplanes: 72 PJ End-use Transport: 238 PJ
Losses: 953 PJ
End-use Electricity: 481 PJ
End-use Heat: 1 634 PJ
FCEVs: 183 PJ
BEVs: 138 PJ
Steel Furnaces: 200 PJ
Boilers: 193 PJ
Future: South Africa‘s energy flows based on solar, wind & hydrogen?
Export of power fuels: R50-60 billion/a; fertilizer/ammonia: R20-30 billion/a; 10 trillion litres/a fresh-water production
25
Summary: South Africa has a unique opportunity to re-position its energy system and re-industrialise at the same time!
It is cost-optimal to aim for 85% renewable electricity share by 2050
• Solar PV, wind and flexible power generators (e.g. gas, CSP, hydro, biogas, demand response, batteries, fuel cells) are the cheapest new-build mix for the South African power system
• From a pure cost perspective no new coal, no new nuclear, a deviation from that would be a subsidy
Proposed next steps
• Strategic direction: give a clear commitment to a new-build mix of solar PV, wind and flexibility (IRP)
• Implementation:
– Introduce a spatial component into the implementation to ensure new power generators are closer to where existing power generators will phase out, take over jobs from coal to renewables
– Separate Eskom generation from Eskom grid in order for Eskom grid to be able to facilitate the transition better
– “Sweat” Eskom’s coal fleet and gradually ramp it down while ensuring re-training of staff and deployment in RE
– Open up generation (and later retail) business for competition, keep control over infrastructure assets (grid)
– Create 2-3 national South African champions on the renewables generation side
• Export preparation: engage globally on export potential for renewable-electricity-based products
26
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