Comments on Draft IRP 2018 Terence Govender, Chairman October 2018 - - PowerPoint PPT Presentation

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Comments on Draft IRP 2018

Terence Govender, Chairman

October 2018

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• 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

Agenda

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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

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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.

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What is CSP?

• Concentrated

Solar Power (CSP) technology uses sun tracking mirrors to concentrate the sun’s energy

• n 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

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CSP Technologies

Stirling Dish Parabolic Trough Linear Fresnel Molten Salt Power Tower with storage

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CSP- Power Tower

Baseload vs. Mid Merit vs. Peaker Storage = >12 hours or >24 hours

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CSP- Parabolic Trough

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A Just Transition to Low Carbon Energy

World Moves Comment

Transition to a low carbon RE is gathering pace with plunging costs of RE.

Adoption of RE wrt to Government policy, job factors, industry view. View from funding agencies and investors.

Global policies are widely accepted and implemented contributing to low carbon acceleration.

We see International funding agencies moving away from certain technologies and as such we need to focus on the technology of tomorrow.

Economic sectors, communities and regions are all impacted by a rapid low - carbon transition.

This is happening internationally, we have to move forward and ensure we procure for jobs, SED, ED, 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.

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GLOBAL STATUS OF RE

Source: http://www.ren21.net/gsr-2018/chapters/chapter_01/chapter_01/

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GLOBAL STATUS OF RE

Source: http://www.ren21.net/gsr-2018/chapters/chapter_01/chapter_01/

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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
• n 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 document to for inputs to IRP. EPRI vs. ESKOM modelling- no clear transparecy

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IRP inaccuracies may lead to misleading conclusions

• n 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.

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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
• 5 000

10 000 15 000 20 000 25 000 30 000 Planned CSP Projects Under Construction Operational

CSP is expected to record the highest growth amongst renewable technologies globally

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CSP - Projections

• CSP expected to grow 87% (4.3GW) by 2023
• China:

1.9GW

• Morocco:

1GW

• Middle East:

1 GW

• Australia:

300MW

• Chile:

300MW

• China expected to overtake USA to have

the 2nd largest CSP installed base by 2023.

• CSP growth could be 60% higher (2.6

GW), driven by faster progress of announced and permitted projects in China (0.6 GW), Morocco (0.4 GW), Chile (0.3 GW), and the UAE (0.3 GW). Source: http://helioscsp.com

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Western Cape Eastern Cape Mpumalanga North West Gauteng KwaZulu-Natal Limpopo Free State Northern Cape

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)
• Ilanga I (100MW)
• Kathu Solar Park (100MW)
• KaXu Solar One (100MW)
• Khi Solar One (50MW)
• Redstone Solar Thermal Power Plant (100MW)
• Xina Solar One (100MW)

Operational Construction/ Late Stage FC Only 600 MWs to date in SA under constrained RFP

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Current Constraints in Procuring CSP

Procurement in South Africa- REIPPP Procurement in other

Procured projects are Capped at 100 MW

World wide trends show CSP procurement in the 700 MW range. Allows for hybrid- mix of technologies

Zero compensation for the generation period between 10pm to 5pm

The PPA is constrained

Only one peak is allowed for in the PPA, vs the two peaks demand in reality

Inefficient use of STG power plants

Fixed short term PPA- 20 years

The plant is designed for 30 years

Limited Policy Support only 2 projects per procurement round

Limited capacity to date in terms of procurement and limited scale. 10% of RE mix to date

Procurement pipeline has limited cap on CSP 600 MW to date

DEWA procurement of 700 MW in one bid window

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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
• utput

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Output from Eskom Presentation

Date: 8 October 2018 Presenter: Keith Bownen Input data incorrect Only one CSP technology considered to build case (Trough) No learning curves applied Range for unconstrained procurement

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Make up of CSP Tariff

c/kWH = Base Tariff + 0% fuel cost + 0% cost to emissions + System

• ps

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

Procure by c/kWh over baseload  mid merit  peaking times Overnight = TPC + O&M cost of fuel, hence incorrect in IRP.

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The Cost of CSP

R- R0.50 R1.00 R1.50 R2.00 R2.50 R3.00 R3.50 R4.00 150 MW 50 MW 200 MW 200 MW BW1 BW2 BW3 BW3.5 CSP BW4 BW Expedited Future Trend

Average Price per kW/h - PV

LCOE reduction is due to –

• Economies of scale
• Increased technology awareness and
• perational experience
• CAPEX Cost reductions
• Reduction of soft costs through de-risking
• Increased plant and technology

performance

• Lower cost and alternative Financing

Structures

• O&M Costs through familiarization,

economies of scale & more efficient contracting

• Advancement in technology
• Optimum configuration of plant (baseload,

mid-merit & peaker) in order to displace less cost effective technologies

• 6%
• 42%
• 7%
• 31 %

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CSP is a competitive dispatchable technology for South Africa

• CSP should be compared with technologies such as CCGT,

Nuclear and Coal as it is one of the few RE technologies that is dispatchable and provides synchronous generation.

• It has a long economic life which justifies a 30 year PPA. We

understand that Coal and other similar technologies have 30 year PPAs.

• Given the high solar resource in South Africa, CSP could be

the most competitive generator, if allowed to dispatch at 200MW or more and with capacity factors of over 70%

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CSP Tariff

Current Range: R 0,80c to R 1,50/ kwh Depending of uncapped procurement, uncapped PPA

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Way Forward

• IRP must not limit investment in SA

− Development of projects- long lead and expensive − Equity investment − Technology limitations

• Allow procurement of technology agnostic projects that are uncapped which allows for

bigger plants to be planned

− Base load, Mid Merit, Peakers on competitive basis. No one technology over another. − Procure energy needed during such times with PPAs to match − Procure

• Consider procuring CSP in the base load programme, mid merit or peaking demand

profiles, with PPAs structured for such operations

• PPAs must be structured to match the load profile
• Take or Pay and Take and Pay options to be considered
• Reductions in emissions and costs must be factored into the assessments
• Consider longer term PPA to bring down tariff
• CSP can stabilise Network, and avoid intermittent disruptions
• IRP to be updated every 2 years and energy supply must stimulate economic growth

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Terence Govender STASA Chairman +27 11 582 6880 +27 83 449 0433 Terence.Govender@SolarReserve.com www.stasa.energy Twitter: @STASA_Energy Facebook: @STASA.Energy For membership enquiries please contact: Alicia Govender Alicia.Govender@SolarReserve.com