SECRET INTEGRATED ENERGY PLAN (IEP) 22 November 2016 2 INTEGRATED - PowerPoint PPT Presentation

SECRET

INTEGRATED ENERGY PLAN (IEP) 22 November 2016 2 INTEGRATED ENERGY PLAN

PROBLEM STATEMENT • Energy is the life blood of the economy which impacts on all sectors as well as individual livelihoods. Integrated energy planning is required to ensure that current and future energy service needs can be met in the most cost effective, efficient and socially beneficial manner while also taking into account environmental impacts. • A lack of coordinated and integrated national planning for the energy sector has led to underinvestment in much needed energy infrastructure. – There is currently inadequate supply in both the electricity and liquid fuel industries due to a lack of timely investments in new capacity. – Electricity generation is constrained due to insufficient capacity and inadequate availability of existing infrastructure. – There is a high dependence on import of liquid fuels as the current production capacity does not meet national and export demand. No investments have been made in new capacity since the start of the new democracy. • Planning at individual organisation level is commercially driven and therefore investments which are required in order to ensure that the policy objectives of the country have been left under invested. • The IEP aims to guide future energy infrastructure investments, identify and recommend policy development to shape the future energy landscape of the country. 3 INTEGRATED ENERGY PLAN

IEP AND SECTOR PLANS • Informs development of future energy sector roadmaps The IEP takes into consideration • Provides feedback to development & review of external policies existing policies Solar Energy Transmission Distribution Integrated Biofuels Technology Development Infrastructure Resource Strategy Road Map Plan Plan Plan (IRP) Gas Renewable Energy Liquid Electricity Roadmap Coal Roadmap (GUMP) Roadmap Fuels Roadmap Roadmap Security of Supply Diversity of Supply Energy Efficiency Strategy Carbon Tax Policy Universal Energy Access Strategy Beneficiation Strategy National Climate Change Transport Plan Policy CLIMATE SUPPLY DEMAND IEP 2015 CHANGE THE INTEGRATED 4 ENERGY PLAN (IEP)

ENERGY PLANNING FRAMEWORK The Energy Planning Framework considers all energy carriers, all technology options and all key national policy imperatives and proposes an energy mix and policy recommendations which ensures that the energy sector can help achieve these in the most optimal manner. PRIMARY SECONDARY DEMAND FOR CONVERSION END-USE ENERGY/ ENERGY ENERGY TECHNOLOGIES TECHNOLOGIES RESOURCES CARRIERS SERVICES • RENEWABLES • POWER • Electricity • INDUSTRY • INDUSTRIAL SECTOR GENERATION • Solar • Heat • Steam boilers • Process Steam • Conventional Coal • Wind • Refined Petroleum • Furnace • Motive Power Plant Products • Biomass • Machinery • COMMERCIAL • Nuclear SECTOR • Hydro • COMMERCE • CCGT • Electronic • Air Conditioning • OCGT Communication • FOSSIL FUELS • Light Bulbs • Solar • Cooling • Coal • HOUSEHOLDS • Wind • RESIDENTIAL SECTOR • Crude Oil • Space Heaters • Space Heat • Natural Gas • Refrigerators • Refrigeration • Stoves • FUEL PROCESSING • Cooking • NUCLEAR FUELS • Geysers • Oil refineries • Hot water • Uranium • AGRICULTURE • GTL • AGRICULTURAL • Irrigation pumps SECTOR • CTL • Resources extraction • TRANSPORT • Water supply and sourcing • Vehicles • TRANSPORT SECTOR • REGASIFICATION • Aircraft • Person kms • Rail 5 INTEGRATED ENERGY PLAN

8 KEY ENERGY PLANNING OBJECTIVES Ensure Security of Supply Minimise Promote Cost of Energy Energy Access Promote Job IEP Promote Creation and Energy Efficiency Localisation Diversify Minimise Supply Environmental Sources Impacts Minimise Water Consumption 6 INTEGRATED ENERGY PLAN

ENERGY PLANNING FRAMEWORK IEP IRP LFRM GUMP • SCOPE Entire energy sector Electricity Liquid Fuel Supply Gas supply and • All energy carriers generation build Infrastructure infrastructure • Cross-cutting issues plan - Location and • that span entire Transmission logistics energy sector build plan • System Adequacy • Electricity Price Path • • • • ENERGY All primary fuels Primary fuels Primary fuels Primary fuels CARRIERS - Coal - Coal - Coal - Imported CONSIDERED - Natural Gas - Natural Gas - Natural Gas Natural Gas (Imported LNG and (Imported LNG (Imported LNG - Indigenous gas indigenous sources) and indigenous and indigenous (Shale gas, - Crude oil sources) sources) CBM, other - Renewables (Solar, - Renewables - Renewables natural gas) Wind, Hydro, (Solar, Wind, (Biomass, Biomass, etc.) Hydro, Crops) • All secondary fuels Biomass, etc.) - Crude Oil • • - Electricity Secondary fuels Secondary fuels - Petroleum Products - Electricity - Petroleum - Petroleum Products Products 7 INTEGRATED ENERGY PLAN

ENERGY PLANNING FRAMEWORK IEP IRP LFRM GUMP ENABLING National Energy Act Regulations for New No explicit legislation No explicit legislation LEGISLATION electricity Generation (Under Electricity Regulation Act) METHODOLOGY Optimise least cost energy Optimise least cost Optimise least cost Simulations of mix based on certain electricity generation liquid fuel supply mix possible gas scenarios assumptions (policy mix based on certain based on certain objectives, economic assumptions (policy assumptions (policy conditions, technology objectives, economic objectives, economic costs, etc.) conditions, conditions, technology costs, technology costs, etc.) etc.) INTENDED USE Descriptive: Prescriptive: Descriptive: Descriptive: OF PLAN Guiding policy which sets - Informs - Informs investments - Guide for future framework for: implementation of and implementation investments in gas - Development of the electricity of liquid fuel infrastructure Electricity, Gas and Liquid expansion build plan infrastructure Fuel “infrastructure” Plans -Selection of appropriate technologies to meet energy demand - Development of policies 8 INTEGRATED ENERGY PLAN and targets

ENERGY PLANNING FRAMEWORK IEP IRP LFRM GUMP • Demand-side • Projects different DEMAND Focuses on electricity Focuses on the driven demand and takes projected demand for scenarios of natural • Estimate demand into account peak petroleum products gas consumption for meeting an demand taking into account sectors and the energy need historical factors impact of this on (“energy end - use”) demand and the factors that may drive switching between different fuels in the future • Impact of vehicle technology improvements and fuel specifications considered FUEL-SWITCHING Considers fuel- No fuel switching No fuel switching No fuel switching switching options (i.e. considered considered considered electricity to gas, fuel- powered vehicles to electric vehicles) 9 INTEGRATED ENERGY PLAN

ENERGY PLANNING FRAMEWORK IEP IRP LFRM GUMP Macroeconomic Yes No No No Impact Assessment Jobs and Localisation Yes No No No Impact Externalities Yes Yes No No Location of new No Yes Yes Yes plants Transmission and High-level estimates Yes N/A N/A Distribution costs Pipeline Capacity No N/A Yes Yes Requirements and Location Storage No N/A Yes Yes Infrastructure Requirements and Location 10 INTEGRATED ENERGY PLAN

SUMMARY OF MACROECONOMIC ASSUMPTIONS PARAMETER ASSUMPTION Discount Rate 8.4% (unchanged) GDP projections Revised to 2016 Budget Vote Commodity Prices (Crude Oil and Revised to International Energy Agency (IEA) World Natural Gas) Energy Outlook 2015 projections Coal price Revised – instead of a fixed price, future price path derived from IEA World Energy Outlook 2015 projections 11 INTEGRATED ENERGY PLAN

GDP PROJECTIONS ST MT LT 2019- 2025- 2015 2016 2017 2018 2025 2050 Low 1.3 0.9 1.7 2.4 2.8 3.0 Moderate 1.3 0.9 1.7 2.4 3.7 4.2 12 INTEGRATED ENERGY PLAN High 2.0 3.3 3.7 4.0 4.9 5.5

SCENARIOS 13 INTEGRATED ENERGY PLAN

DRAFT BASE CASE* INDICATORS BASE CASE • All electricity generation determinations up to and including 31 December 2015 included Technology Constraints • Minimum Production constraints on crude oil refineries • No CF2 compensation mechanism for existing refineries GDP Treasury moderate GDP growth DEMAND-SIDE INTERVENTIONS DSM 1 million SWH Energy efficiency Business As Usual VEHICLE EFFICIENCY (new vehicle improvement per annum) Cars and SUVs 1.1% Trucks and buses 0.8% Electric vehicle penetration 20% annual rate Prices of Energy Commodities Moderate CLIMATE CHANGE Upper bound “Peak -Plateau- Decline” (PPD) emission limit trajectory from CO 2 emissions limits the National Climate Change Response White Paper Externality costs See previous slide 14 INTEGRATED ENERGY PLAN *More detail will be covered in the electricity plan slides