south africa’s energy transition · eskom / irp. south africa has great solar resources vaisala....
TRANSCRIPT
South Africa’s Energy Transition:contestation, reform and promise
______________________________________
Prof Anton Eberhard
Graduate School of BusinessUniversity of Cape Town
Windaba 7 November 2018
@AntonEberhard
We’re at a tipping point in the global power generation mix
Source: BNEF
Nuclear energy’s share of global electricity production peaked in 1996
WNISR 2018
Coal is being phased out in the UK and elsewhere
Electricity production is also changing in the US: coal use is down, renewable energy up
EIA
Despite Trump, new power capacity additions in the US are gas, solar and wind, not coal or nuclear
Share of wind and solarin electricity production (USA)
Indiana’s new electricity plan
1,8c
2,0c
2,2c
5,9c
5,4c
4,8c
4,6c
4,3c
3,7c
3,8c1,8c 3,1c
4,3c
3,8c
3,8c
4,7c
5,4c
4,9c
3,8c
5,4c
Renewable energy is breaking through globally:record low auction prices for solar and wind energy
Solar PV
Wind energy
4,3c
6.0c
6.0c
2.9c
US$ c/kWh
Global solar + wind capacity additionsare growing exponentially
BNEF
What are the implications of these global energy
innovations and transitions for South Africa?
Many of South Africa’s coal power stations are reaching their end-of-life
Eskom / IRP
South Africa has great solar resources
Vaisala
Parts of South Africa also have very good wind resources
Vaisala
South Africa’s renewable energy auctions are now delivering prices cheaper than Eskom’s average cost of supply
0,00
50,00
100,00
150,00
200,00
250,00
300,00
2011 2012 2013 2014 2015
ZAR
c/kW
h
Average Bid Prices – South African RE IPP Procurement Programme
Solar PV
Wind
Eskom
Data assumptions in the IRP 2018 are conservative
IRP 2018 / Bischof-Niemz
Nevertheless all least-cost model scenarios pick mostly solar and wind with no new coal or nuclear
IRP 2018 / Bischof-Niemz
IRP 2018 could be improvedbut is a vast improvement compared to IRP 2010
Distributed generation is multiplying in South Africa
Hydro
Wind
Solar, PV
Landfill
Biomass
IPPs
Eskom
LEGEND
Coal-fired
Nuclear
Gas turbine
Pumped storage
Solar, CS
2011 2017
Non-utility solar + batteriesare becoming competitive
As consumers become also producers of electricitynetworks will look very different in the future
Changes are proving devastating for business models and finances of conventional utilities
As power flows both ways, advanced metering and payment systemsneed to reflect time differentiation in energy costs as well as
peak-coincidental capacity charges for networks and flexible resources
Power Flows
Meter DERs and Loads
Block chain payment systems are emerging
People will increasingly choose how to controltheir energy use and from/to where
But economies of scale still matter in renewable energyWe should unlock value of DER but should be aware of economies of scale and locational aspects
and economies of scale and location matter in storage too
National control centres will need to integrate with numerous decentralized control centres and systems
Eskom National Control CentreGermiston
Scatec control centre in Cape Townmonitoring and controlling a global
portfolio of solar projects
Many countries are now beginning to anticipate the changesthese disruptive technologies will bring to power markets
What are the implications for Eskom and reforms to South Africa’s Power Market?
Eskom Performance
2007 2017
Total installed capacity (MW) 42 618 44 134
Electricity sales (GWh) 218 120 214 121
Revenue (R millions) 39 389 177 136
Average selling price (c/kWh) 18 83.6
Coal purchases (Mt) 117.4 120.3
Coal costs (R millions) +/- 10 000 50 300
Employee costs (R millions) 9 451 33 178
Employee numbers 32 674 47 658
Debt securities & borrowings (R millions) 40 455 355 300
Source: Eskom Annual Reports
Eskom is in trouble: it is facing a classic utility death spiral and cannot trade its way out of its financial difficulties
Eskom generation and transmission need to be unbundled to enable an independent grid
30
Tx
Eskom Holdings
Generation
SOBuyer
Dx
IPPs
Eskom
IPPsEskom Holdings
Tx
ITSMOEskom
Generation
Eskom Dx
SOPlannerProcurer
Buyer
Also need regulatory reform to free up market for distributed energy resources
The energy transition is being contested
Your commitment
• Sharpen your pencils! The next utility-scale RE procurements will be sooner rather than later and we need to see globally competitive prices in SA
• Never be complacent around your SED performance. You need to be better
• Engage government persistently and consistently around pragmatic, achievable high-impact policy, regulatory and market reforms, as well as a just transition
• Be louder in making your case around competitive pricing and significant investment, jobs and development impacts
• Fill the (social) media space with positive stories and don’t hesitate to take on those who cloud the IPP and renewable energy space
Economics of energy transition inexorable
• “We can have a managed transition or a chaotic disruption. In a chaotic disruption people get hurt, whether they are consumers, employers or prime ministers.”
• We can’t predict the future with certainty, but we can put in place a framework for pro-active policy, regulatory, market and institutional reforms that are:
• Robust in terms of uncertain changes already underway
• Capable of facilitating emergence of a efficient portfolio of both centralized and decentralized energy resources
