Comments on Draft IRP 2018 Terence Govender, Chairman October 2018 1
Agenda • Who is STASA? • What is CSP? • General statements • Assumptions in Draft IRP • Just Transition to Low Carbon Energy • Global status of CSP • Constraints for procurement of CSP • Advantages of CSP • Cost of CSP • Way Forward 2
STASA- Who We Are and Our Members • Established to promote CSP Technology in the Southern African Energy Market by large International/ Local companies. • Represents all CSP technologies • The advancement of CSP technology and its inclusion into the generation mix in South Africa IRP; and for grid benefits. • To ensure the sustainability of the CSP industry in the RE development landscape and its technology benefits 3
Key Summary of Presentation- General Comments 1. DOE & Update IRP 2018- Assumptions and modelling 2. We need to drive our Economic growth rather than depending on 12 000 MW of Eskom decommissioning for Growth in Power sector. We need to drive cheaper energy costs and access to power for Investors to invest in SA. 3. We must balance the needs of IRP with NDP, Just Transition, Emissions commitments and Procurement of Power in IRP. − LCOE Consumer − Grid Stability Requirements (Baseload, Mid Merit, Peakers- Hybrid tech) and not only LCOE. − Procurement vs. IRP outcomes 4. Procurement in c/kWh for baseload + mid merit + peaker − Allow competition in technology innovation and tariffs − Consider all factors- fuel costs, Fx, system requirements and policies − Benefits of Fuel costs + emissions over life of plant − Not based on input assumptions. 4
What is CSP? • Concentrated Solar Power (CSP) technology uses sun tracking mirrors to concentrate the sun’s energy on a solar thermal receiver. Liquid molten salt, water or oil is used as the heat transfer fluid and the storage medium (salt) , which allows it to separate energy collection from electricity generation. Molten salt is passed through a heat exchanger to generate steam, which then is used to drive a conventional power Steam Turbine Generator, which generates electricity. Operational Modes of CSP: Baseload Mid-merit Peaking 5
CSP Technologies Stirling Dish Parabolic Trough Linear Fresnel Molten Salt Power Tower with storage 6
CSP- Power Tower Baseload vs. Mid Merit vs. Peaker Storage = >12 hours or >24 hours 7
CSP- Parabolic Trough 8
A Just Transition to Low Carbon Energy World Moves Comment Adoption of RE wrt to Government policy, job Transition to a low carbon RE is gathering pace factors, industry view. with plunging costs of RE. View from funding agencies and investors. Global policies are widely accepted and We see International funding agencies moving away from certain technologies and as such we implemented contributing to low carbon need to focus on the technology of tomorrow. acceleration. This is happening internationally, we have to move Economic sectors, communities and regions are all forward and ensure we procure for jobs, SED, ED, impacted by a rapid low - carbon transition. local content, and create new industries to ensure we can raise funding for our future power needs. Mechanisms need to be implemented to achieve a just and equitable transition to low- carbon future i.e. to avoid: • Job losses in the fossil fuel extraction sector and loss of reskill/ retrain • Energy rise prices for poorer households (as a result of decreased use of fossil fuels) • Compromise of sustainable land (affecting livelihoods) for RE rapid expansion • Successful transitions can be implemented through policies to avoid abrupt changes • Government, businesses and labor unions must have a consolidated voice to achieve a smooth and just transition to lower carbon energy production. 9
GLOBAL STATUS OF RE Source: http://www.ren21.net/gsr-2018/chapters/chapter_01/chapter_01/ 10
GLOBAL STATUS OF RE Source: http://www.ren21.net/gsr-2018/chapters/chapter_01/chapter_01/ 11
Assumptions in Draft IRP 2018 Issue Comment Decommissioning of Eskom 12 000MW • Decommissioning of Eskom 12 000MW drives IRP way forward. • What if Eskom does not decommission, what will kick start economy growth? LCOE modelling • Does not benefit SA customer directly • Ignores grid sustainability and key policy issues- Emissions targets and LCOE, promotion of Economic Development • Learning curves for CSP was omitted, but procurement was constrained. Table 7 or Draft IRP is limited • The output table- technology specific- is based on assumptions, but procurement is directly related to the IRP outcomes • All technologies were not modelled, so IRP must not stop investment in new technologies Learning curves • Not applied to all technologies viz CSP. • No learning curves applied to the 600MW procured in SA to date. • CSP was procured on a constrained manner to date EPRI report was used as a guideline EPRI vs. ESKOM modelling- no clear transparecy document to for inputs to IRP. 12
IRP inaccuracies may lead to misleading conclusions on CSP • The IRP assumes a levelised cost of electricity (LCOE) for CSP that is nearly 3 times the CSP tariffs achieved under REIPPP tenders in South Africa. • The REIPPP figures are based on April 2016 prices as per DOE official publications. • CSP auctions in the UAE in 2017 were less than R 1/kWh ($ 0.07/kWh), nearly 1/6th of the IRP estimate. South Africa has 1.5 times more solar resource compared to the UAE, making CSP an ideal baseload technology for this country. 13
CSP - Across the Globe • CSP technology implemented in 23 countries across the globe • Over 6,000MW in operation • Over 3,500MW in construction • Almost 25,000MW planned or in development stages CSP is expected to record the highest growth amongst renewable technologies globally 30 000 25 000 20 000 15 000 10 000 5 000 - Planned CSP Under Operational Projects Construction 14
CSP - Projections • China expected to overtake USA to have • CSP expected to grow 87% (4.3GW) by 2023 the 2 nd largest CSP installed base by • China: 1.9GW 2023. • Morocco: 1GW • CSP growth could be 60% higher (2.6 GW), driven by faster progress of • Middle East: 1 GW announced and permitted projects in • Australia: 300MW China (0.6 GW), Morocco (0.4 GW), Chile • Chile: 300MW (0.3 GW), and the UAE (0.3 GW). Source: http://helioscsp.com 15
CSP - A Success Story in the South African Context CSP projects in the late stages of development, under construction and/or operational in South Africa are listed below. • Bokpoort (50MW) Operational • Ilanga I (100MW) • Kathu Solar Park (100MW) Construction/ Late Stage FC • KaXu Solar One (100MW) • Khi Solar One (50MW) Limpopo • Redstone Solar Thermal Power Plant (100MW) • Xina Solar One (100MW) Mpumalanga North West Gauteng KwaZulu-Natal Free State Northern Cape Only 600 MWs to date in SA under constrained RFP Eastern Cape Western Cape 16
Current Constraints in Procuring CSP Procurement in South Africa- REIPPP Procurement in other World wide trends show CSP procurement in the Procured projects are Capped at 100 MW 700 MW range. Allows for hybrid- mix of technologies Zero compensation for the generation period The PPA is constrained between 10pm to 5pm Only one peak is allowed for in the PPA, vs the Inefficient use of STG power plants two peaks demand in reality Fixed short term PPA- 20 years The plant is designed for 30 years Limited capacity to date in terms of procurement and Limited Policy Support only 2 projects per limited scale. 10% of RE mix to date procurement round Procurement pipeline has limited cap on CSP DEWA procurement of 700 MW in one bid window 600 MW to date 17
Output from Eskom Presentation Date: 5 October 2018 Presenter: Bernard Magoro CSP is the solution to provide for other services wind and PV cannot cater to - Baseload - Peaker - Mid Merit - Dispatchable - Dry Cooled - Constant generation profile - Predictable output 18
Output from Eskom Presentation Date: 8 October 2018 Presenter: Keith Bownen Input data incorrect Only one CSP technology considered to build case Range for (Trough) unconstrained procurement No learning curves applied 19
Make up of CSP Tariff System 0% cost Base 0% fuel c/kWH = + + + to ops Tariff cost emissions benefits Scenario $/kW installed Procured 100 MW constrained 60 000 Expedited round: 150MW 40 000 Coal baseload 400MW 30 000 Peakers 300MW 23 000 Shifter 200MW 31 000 cost of fuel, hence incorrect Overnight = TPC + O&M in IRP. Procure by c/kWh over baseload mid merit peaking times 20
The Cost of CSP LCOE reduction is due to – Average Price per kW/h - PV R4.00 - • Economies of scale 6% R3.50 • Increased technology awareness and operational experience R3.00 - • CAPEX Cost reductions 42% • Reduction of soft costs through de-risking R2.50 - 7% • Increased plant and technology performance R2.00 • Lower cost and alternative Financing -31 % Structures R1.50 • O&M Costs through familiarization, economies of scale & more efficient R1.00 contracting • Advancement in technology R0.50 • Optimum configuration of plant (baseload, mid-merit & peaker) in order to displace R- 150 MW 50 MW 200 MW 200 MW less cost effective technologies BW1 BW2 BW3 BW3.5 BW4 BW Future CSP Expedited Trend 21
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