Ms. Tshilidzi RamuedzisiChief Director: Energy Planning

Integrated Energy Plan: Introduction and Background

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CONTENTS• Scope and context of IEP• IEP Governance Structure• IEP Process and Methodology• Progress to Date and Way Forward

Integrated Energy Plan

What does IEP seek to achieve?

Inform regulation of

the sector Energy sector

Minimise Cost of cost

of energy

Climate change (Clean energy)

Demand management

Energy security

Access to energy

Diversity of supply

Safety

IEP Governance StructureCABINET

MINISTER OF ENERGY

DIRECTOR GENERAL (ENERGY)

INTEGRATED ENERGY PLAN STEERING COMMITTEE

TECHNICAL WORKING GROUP

INTEGRATED ENERGY PLANNING

STRATEGY WORKING GROUP

IEP REPORT WORKING GROUP

STAKEHOLDER OUTREACH

WORKING GROUP

IEP Governance StructureWG/SWG Key Purpose Key Deliverables

IEP Steering Committee

•Oversee the IEP development process•Approve ToR for SWGs•Recommend approval of key deliverables to DG and Minister

•IEP published for public comments by 31 March 2011

IEP Report WG •Define modeling approach and methodology•Selection of adequate energy modeling tool/system•Define policy questions•Define scenarios•Define key modeling parameters and values

IEP Report

IEP Strategy SWG •Draft IEPS with a clearly defined framework for the IEP development process

IEP Strategy

IEP Governance StructureWG/SWG Key Purpose Key Deliverables

Stakeholder Engagement WG

•Define stakeholder engagement framework•Ensure stakeholder representation and stakeholder engagement processes implemented•Define communication strategy and ensure implementation thereof

•Stakeholder Engagement Framework •Stakeholder Engagement Implementation Plan

Technical WG •Determine data requirements and develop Energy Data Inventory for modeling exercise•Collect data required for modeling exercise•Conduct modeling exercise•Conduct analyses of model outputs

•Energy Data Inventory •Centralized Energy Database•Technical Report

IEP Methodology

• Defines process that will be followed in development of IEP

• Ensures transparency of process to improve repeatability and enhancement

• Clarifies distinction between conceptual and technical processes

• Scenario-Based Methodology– Enables systematic and structured approach to consideration of

complex and competing objectives

– Forces one to consider only those key variables which have the most significant impact

– Structured approach to testing various policy options, often with competing objectives

PROBLEM FORMULATION

National Objectives

DoE Mandate

TECHNICAL PROCESS

Develop Reference Energy System and Energy Demand

Model

Model Base Case

Model Test Cases

Within each Plausible Future:•Project Demand•Test ‘Base Case’•Test ‘Test Cases’

Key Policy Question

Define Plausible Futures

Define Policy Options

Evaluate Outcomes

RecommendationsModel Output/Results

Defining of Plausible Futures

• Premised on the principle that the future is unknown and an indeterminate set of futures can unfold

• Allows focus on those factors that affect the economy which can have most significant impact on the realisation of objectives

• The demand trajectory will be shaped by the assumptions which describe particular future

• Objective is to develop plan which is robust or flexible enough for different pictures of the future

Plausible Futures

Plausible Future 1•Constrained Global Environment•Unfavourable Socio-Economic Development

Plausible Future 2•Constrained Global Environment•Favourable Socio-Economic Development

Plausible Future 4•Constrained Global Environment•Unfavourable Socio-Economic Development

Plausible Future 3•Relaxed Global Environment•Favourable Socio-Economic Development

Socio-Economic Factors

Key Driving ForcesSocio-Economic Factors

Key Driving Force

Key Indicator Government Goal

Average over between 1993 and 2008

Current Unfavourable Local Socio-Economic Development

Favourable Local Socio-Economic Development

Local Economic

Growth

GDP 6% per annum

3.50% 3.10% Less than 4% Greater than 4%

CPIX 3-6% 6.81 (Between 1998 and 2008)

11.30% Less than 3% or greater than 6%

Between 3-6%

CPI 3-6% 6.65% 11.50% Less than 3% or greater than 6%

Between 3-6%

Poverty Levels

Inequality measure (Gini Coefficient)

Reduction in income inequality

0.68 0.66 Greater than 0.5 Less than or equal to 0.5

Poverty Headcount Index

Meeting basic needs of all South Africans

48% 39% Some South Africans still living below poverty line

No South Africans living below poverty line

ILLUSTRATION

Key Driving ForcesGlobal Environment

Key Driving Force Key Indicator Unfavourable Global Environment

Favourable Global Environment

International StabilityInternational Commodity Prices

High prices of commodities in international markets(i.e. Price of crude oil > $150/bbl)

High prices of commodities in international markets(i.e. Price of crude oil <$150/bbl)

Regional StabilityRegional Commodity Prices

High prices of commodities in regional marketsLack of cooperation amongst regional players

Competitive prices of commodities in regional marketsCooperation amongst regional players

Level of global competition for technology

International technology prices

High levels of global competition for technology driving technology prices up

Healthy levels of global competition for technology driving technology prices up

Lead time for delivery of equipment needed to build new energy infrastructure

Long lead times Acceptable lead times

Availability and cost of funding from international markets

Sovereign credit ratingUnfavourable sovereign credit rating

Good sovereign credit rating

Large enterprises credit rating

Unfavourable credit rating of large enterprises

Good credit rating of large enterprises

ILLUSTRATION

Defining Policy Options to be tested

• Energy planning is about making choices, often between imperatives with competing objectives

• Classification of policies – Existing and implemented– Approved but not yet implemented or effected– New and future policies to be considered

• Choosing the most appropriate set of policy options to achieve objectives

NEXT STEPSActivity

Presentation of IEP Methodology to Cabinet

Approval and publishing of Plausible Futures

Public Participation Workshops

Finalise Scenarios and Test Cases to be considered in IEP

Conduct technical work

Analysis of Results

Draft recommendations for IEP

THANK YOU