Accelerating the Uptake of Renewable Energy Promoting the deployment of Wave Energy Conversion Technologies KM Nassiep Chief Executive Officer SA National Energy Research Institute
Contents The Global push for increased RE uptake The local context and drivers for RE uptake The continued barriers to significant deployment in the region Short to mid-term Financing Model for Grid-Connected RE Biofuels Strategy Implications Energy R&D Priorities for RE 2
Why is the time right for RE uptake? International market development for RE continues to grow, exponentially in some cases Global climate change dialogue focuses heavily on contribution from RE in the post 2012 new commitment Continued rise in oil prices internationally, forecast even gloomier Local planning for SA contribution to post 2012 debate takes into account significant contribution from RE Local power generation sector stress (even distress!) Local water supply (potable) under threat 3
International Market Developments in 2007 Investment in RE in 2007 estimated at 66 billion USD (cf. 39 billion in 2005 and 55 billion in 2006) Germany leads the way in terms of capacity added in 2006, although China dominates totalled installed RE capacity as of 2006 RE currently supplies 17% of the world’s primary energy, with large hydro supplying 15% of global electricity production in 2006 Wind power increased more than any other RE technology with estimated 19-20 GW added (USA leads with 2.5 GW installed followed by Germany with 2.2 GW) Grid-connected PV continued to be the fastest growing power generation technology in the world, with 50% annual increases in cumulative installed capacity during 2006/7 – estimated 7.8 GW by end 2007 All together, RE electricity capacity worldwide reached an estimated 207 GW in 2006 (excluding large hydro) 4
International Market Developments in 2007 Ethanol production for vehicles reached 38 billion litres in 2006, an increase in 15% from 2005 USA leads increase in production, with significant increases in Brazil, France, Germany and Spain USA became largest producer of ethanol in 2006, with over 18 billion litres, surpassing Brazil for the first time Biodiesel production jumped by 50% in 2006, to 6 billion litres globally Almost half of world’s production continued to be in Germany, with notable increases in Italy, USA and parts of SE Asia 5
Global Climate Change dialogue Bali COP meeting in Dec 2007 culminated in development of a Bali Roadmap, that incorporated actions on the part of developing countries and developed countries Principle of “common but differentiated responsibilities” applies, with developing countries expected to focus more on sustainable development in the short to medium term, and developed countries more on emission reduction Either path relies on low carbon future, with RE expected to play major role See 2050 as the long term point at which CO 2 concentration in atmosphere should be stabilised at 450 ppm or less Also need to ensure that global temperature increase by 2050 is limited to 2 o C Sectoral approach proposes focus on power generation, transport, energy efficiency and adaptation as priorities 6
SA Role in Climate Change Dialogue Studies conducted by Banks and Schaeffler concluded that a 50% contribution from RE to primary energy supply was possible by 2050 Long Term Mitigation Scenarios studies undertaken by Winkler et al incorporates significant contribution from RE in the stabilisation wedges required by science to reduce emissions to appropriate level SA will consider voluntary emission targets for the post 2012 period If we are serious about these goals then policy, regulatory and financial support has to be forthcoming soon 50% goal for Southern Africa by 2050 is possible, if regional projects that build on geographic strengths are developed, e.g. biodiesel production 7
The time to act has come and …. “We are not starting to address climate change with the technology we have in hand, and we are not accelerating our investment in energy technology research and development,” Prof John Holdren (Harvard University Professor, Director of WHRC, President of AAAS) 8
SA local context Current electricity crisis a powerful incentive for RE industry because of Shorter lead times for construction (generally) Proximity to end use Reduced transmission and distribution costs (if located at source of demand) Narrowing gap in prices of RE technology versus cleaner fossil fuel plants (particularly if fitted with FGD and CCS technology) Policy framework in place RE target in place since 2003 So what’s the problem??? 9
Barriers to Rapid Deployment Regulatory framework not conducive to smaller IPPs entering market (grid access conditions are not ideal) Approval for green power trading only recently approved by Cabinet Top-Up Feed-in Tariff still not in place – only mechanism that will support RE uptake over 10 year period of target Legislation to make SWH mandatory not promulgated Prescribed contributions from RE not regulated even though Petroleum Products Amendment Act and Electricity Regulation Act make allowances for this Conditions precedent for financing of projects remain onerous, even though number of financing institutions have developed green financing options 1 0
So what’s the problem? SA among highest emitters of carbon dioxide in the world More than 75% of primary energy requirement from coal More than 90% of electricity generation from coal About 25% of final energy demand from transport sector SA ranked 14 th in the world in terms of top emitters Eskom ranked as one of the largest emitters as a company Sasol II plant ranked as single largest emitter Congested roadways – rapidly increasing car park Link this to energy consumption � low price elasticity of demand Conventional IC engines remain dominant – despite improvements in efficiency and emission controls No emphasis on modal shift from road to rail for freight and commuters No major shift to biofuels yet No stringent measures to ensure energy efficient vehicles on roads (no scrapping age for vehicles) No attempts to integrate ticketing and ensure interoperability of different modes of public transport 1 1
Trend in CO 2 produced per unit GDP (2000) CO 2 /GDP 3000 2500 South Africa 2000 2 /GDP Germany 1500 Korea CO Malaysia 1000 Spain 500 0 1960 1970 1980 1990 2000 2010 Year Source: IEA, 2006 1 2
Regional issues SADC task team on energy not focused on these issues Regional project development not taking shape, even with donor support Potential exists for regional biofuel project, combining agricultural strengths of SADC countries with market opportunities in SA Coherent legislation supporting common principles not evident, particularly in the case of development of feed-in tariffs RE not seen as major contributor to Eskom Build Programme and hence SA Power Pool 1 3
Background to RE on the Grid Limited project development to date Klipheuwel Experimental Wind Farm 3,2 MW – offtake by Eskom Distribution on cost neutral basis Proposed Darling National Demonstration Wind Farm Phase 1 – 5 MW Project at advanced stage – EIA, PPA concluded Plant scheduled for commissioning in November 2007 Numerous small mini-hydro schemes Used mainly for grid stability Proposed wave energy conversion projects Stellenbosch Wave Energy Converter (W Coast) Pelamis Wave Energy Project (S Coast) Large scale imported hydropower Cahora Bassa in Mozambique (~2000 MW) Hybrid Mini-grid projects Projects in Hluleka, Lucingweni (E Cape) 10 kW wind, pv and diesel hybrids 1 4
Background to RE on the Grid What are the impediments to further project development? Lack of market rules governing third party access to the national grid Lack of incentives for purchasers of green power Capital intensive nature of most renewable energy technologies Lack of equitable cost structures for different energy carriers – no externalities factored in Lack of incentive schemes for power producers, either tax concessions or subsidy schemes 1 5
White Paper on Renewable Energy Approved by Cabinet in November 2003 Follows on the direction set by the Energy White Paper (1998) White Paper calls for real, measurable increase in renewable energy use, based on prescribed target Calls for strategies to be developed to promote specific areas where RE could be developed Policy aimed to create an enabling environment for renewable energy, setting a platform for industry development. 1 6
Contribution to RE target Macro-economic Analysis: 10 000 GWh least cost renewable energy contribution (excl biofuels, solar thermal power generation and wave) Solar Water Heating: Biomass Pulp & Residential Paper 9% Wind 1% 1% Solar Water Heating: Commercial 14% Sugar Bagasse Hydro 59% 10% Landfill Gas 6% 1 7
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