CONTENT OF THE PRESENTATION INTRODUCTION BREIFLY ON SAIPPA BRIEFLY - - PowerPoint PPT Presentation

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CONTENT OF THE PRESENTATION INTRODUCTION BREIFLY ON SAIPPA BRIEFLY - - PowerPoint PPT Presentation

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IPPs AND ELECTRICITY MARKET REFORM THE CONTEXT, TRENDS AND LESSONS [ Promethium Carbons presentation of a research project: Licensing Process for IPPs in Southern Africa] PRESENTED BY SISA NJIKELANA - CHAIRPERSON, SA INDEPENDENT POWER

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IPP’s AND ELECTRICITY MARKET REFORM – THE CONTEXT, TRENDS AND LESSONS

[Promethium Carbon’s presentation of a research

project: Licensing Process for IPPs in Southern Africa]

PRESENTED BY SISA NJIKELANA - CHAIRPERSON, SA INDEPENDENT POWER PRODUCERS ASSOCIATION VENUE: THE JSE, ONE EXCHANGE SQUARE, GWEN LANE, SANDOWN., JOHANNESBRG

DATE: 31ST MARCH 2016

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CONTENT OF THE PRESENTATION

  • INTRODUCTION
  • BREIFLY ON SAIPPA
  • BRIEFLY ON THE EVOLUTION OF THE ELECTRICITY MARKET
  • 1998 ENERGY POLICY AND ITS IMPACT ON ELECTRICITY MARKET REFORM
  • CURRENT CHANGES – ARE THEY INDUCED OR THROUGH OWN VOLITION?
  • TRENDS, PATTERNS AND CHALLENGES IN MARKET REFORM – WHAT

LESSONS CAN WE DRAW?

  • THE STOCK EXCHANGE – DOES IT MIRROR THE REFORM?
  • WHITHER TO FROM HERE?
  • CONCLUSION

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BRIEFLY ON SAIPPA

  • AIMS TO PROMOTE THE COLLECTIVE INTERESTS OF IPP’S IN SOUTH AFRICA/SADC & ASSIST

WITH PUBLIC POLICY FORMATION AND IMPLEMENTATION

  • Primary focus is on:

INFORMATION FACILITATION SERVICES LOBBYING AND ADVOCACY EMPOWERMENT PROGRAMMES NETWORKING

  • Absence of private sector in power generation = EXXARO initiate SAIPPA to influence policy and regulation.
  • SAIPPA was part of the team that drafted the IRP 2010
  • SAIPPA engaged with DoE/National Treasury regarding REIPPP
  • SAIPPA lobbied for power cogeneration
  • Strong focus on grid access for IPP’s

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INTRODUCTION

  • Significance of presenting research project report at the JSE

Stock Exchange

  • The research project:
  • Considers changes in SADC regulatory and market frameworks

in electricity sector.

  • Aims at providing insight in potential pathways to market

reform in SADC – will assist in unlocking the region’s energy potential.

  • Focus will be primarily on SA and less on SADC

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BRIEFLY ON THE EVOLUTION OF THE ESI Market Structure - 2012

data ELECTRICITY MARKET:

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BRIEFLY ON THE EVOLUTION OF THE ELECTRICITY MARKET

  • ANCHOR OF POWER GENERATION = ACCESS, ADEQUACY, ACCESSIBILITY IN A SUSTAINABLE

MANNER

  • Government policy as manifest in IRP 2010-2030 plus reviewals
  • This is what will shape the future of power sources.
  • Major thrust by government to be inclusive
  • Ownership to follow pattern i.e. IPP = private & base load bulk

(nuclear) = government owned

  • Promotion of short and mid-term agile technologies:

cogeneration, embedded generation, hybridisation, power storage, gas – LPG, LNG, Waste-to-Energy

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BRIEFLY ON THE EVOLUTION OF THE ELECTRICITY MARKET

The ESI in South Africa is a complex interaction of institutional and regulatory frameworks, the development of which has been partly shaped by political power relations and competing interests over the decades.

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1998 ENERGY POLICY AND ITS IMPACT ON

ELECTRICITY MARKET REFORM

Energy White Paper - success of the electricity supply industry to be:

Affording customers the right to choose supplier Introduction of competition especially generation sector Access to the transmission network Private sector participation in the industry

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1998 ENERGY POLICY AND ITS IMPACT ON ELECTRICITY MARKET REFORM: SHORT-TERM POLICY PRIORITIES

  • Objective 1 - Increasing access to affordable energy services
  • Objective 2 - Improving energy governance
  • Objective 3 - Stimulating economic development
  • Objective 4 - Managing energy-related environmental impacts
  • Objective 5 - Securing supply through diversity

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CURRENT CHANGES – ARE THEY INDUCED OR THROUGH OWN VOLITION?

  • Power industry in SA highly regulated
  • Market reforms have been largely induced by government initiatives

– REIPPPP!

  • The extent to which the market can develop on its own volition –

how far?

  • NOTE: Probable increasing role of municipalities

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TRENDS, PATTERNS AND CHALLENGES IN MARKET REFORM – WHAT LESSONS CAN WE DRAW?

  • Some of the developments not yet realised
  • Significant strides on introduction of private sector
  • Opening up of the transmission network
  • Introduction of competition sector will be “kick-started” through

following allocations:

2500MW from conventional coal sources 800MW from co-generation 3126MW from various gas sources Round 5 and beyond

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TRENDS, PATTERNS AND CHALLENGES IN MARKET REFORM – WHAT LESSONS CAN WE DRAW?

DoE briefing to Portfolio Committee on Energy 27-Feb-13 on ISMO Bill:

IPP’s not been forthcoming in significant volumes due to:

  • Perceptions of conflict of interests in vertically integrated Eskom
  • Perceptions that government is not serious about reforming the industry
  • Perceptions about long-term viability of (ESI) structure
  • Lack of clear policy specifically aimed at IPP’s
  • Lack of enabling legal/ regulatory framework to facilitate IPP’s.

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TRENDS, PATTERNS AND CHALLENGES IN MARKET REFORM – WHAT LESSONS CAN WE DRAW? OWNERSHIP PATTERNS AND IMPLICATIONS THEREOF

  • Difficult to predict likely ownership structure outside political debate
  • Probable following proportions of state vs. Private ownership:

Renewables (10:90) Coal (70:30) Gas (50:50) Nuclear (100:0) NOTE: PBMR not included! Any alternative option?

  • Largely informed by:

1. Scale, 2. Lead times and 3. Capital requirements of the projects

  • Opposite arguments true for private investors

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TRENDS, PATTERNS AND CHALLENGES IN MARKET REFORM – WHAT LESSONS CAN WE DRAW?

REGIONAL DEVELOPMENT

  • Regional market reforms lag global trends albeit on a slower and uneven pace excl.

SA

  • Uneven development of SADC markets - requisite attention = power generation to

Enable regional integration and Industrialisation programmes

  • Research Report: existence policies, legislation and regulations to support reforms at

early stages of development.

  • SAPP objectives = good cause for integration of IPP’s

Provide a forum for the development of an interconnected electrical system, Co-ordinate & enforce common regional standards of Quality of Supply Increase power accessibility in rural communities,

  • Inclusion of CEC in SAPP - indication and encouragement for participation

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THE STOCK EXCHANGE – DOES IT MIRROR THE MARKET REFORM?

EXTENT OF LISTING?

  • 23 DECEMBER 2014 - Donna Oosthuyse – JSE:
  • South Africa wants to triple its clean power generation through an initiative valued at US$12

billion.

  • This will put the JSE in a favourable position to generate interest from renewable energy firms.
  • Possible interest on listing in renewables space
  • Companies & advisors approaches – energy equity investors exit through listing/raise additional

capital

  • 9 June 2015: Alternative Energy RENERGEN became first SPAC from SA to list on

the JSE GREEN BONDS

  • First green bond to be issued on the JSE by IFC - 10 December 2015
  • Listing raises R1 billion ($71 million) targeted towards renewable energy projects
  • Builds on JSE’s commitment to supporting green financing for sustainable development

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WHITHER TO FROM HERE?

A CASE FOR OVERALL RESTRUCTURING OF THE ELECTRICITY SECTOR Recommendation from PCE-2011/12 BRRR* incl. “Restructuring of the electricity industry” Potential impact of restructuring on energy efficiency, socio-economic well-being of SA Regionalisation through SAPP in keeping SADC regional integration drive COLLECTIVE APPROACH IN GUIDING THE MARKET REFORM PROCESS EXPLORE REGIONAL FRAMEWORK SUBJECT TO DOMESTICATION STRONG FOCUS ON TEETHING PROBLEMS ACCELERATION OF POLICY, LEGISLATIVE & EGULATORY REFINEMENT

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CONCLUSION

  • Market reform a reality influenced by various stakeholders
  • IPP industry = power generation model - exclude FULL value chain
  • Evolution of electricity market: public driven to hybrid model

inevitable

  • Logic to dictate stakeholders – both public and private – to manage

the evolution

  • Policy, legislative and regulatory lags developments in market

reforms

  • NOTE: 130MW of embedded power generated without regulations

disconcerting

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CONCLUSION

  • SAPP to include IPP’s in a structured manner
  • Promethium Carbon report

An indicator of SADC potential A call for concerted public-private effort to provide power ensuring guided market reform

WE NEED TO MAINTAIN A HIGH STANDARD IN FACILITATING THE MARKET REFORM

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NGIYABONGA NANRI SHALOM NAMASTE SHUKRAAN NAMASKARE ENKOSI THANK YOU NDAA

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SAIPPA CONTACT DETAILS

  • TEL: +27 11 061 5000
  • FAX: +27(0)86 688 7005
  • EMAIL: saippaservices@vdw.co.za
  • WEBSITE: www.saippa.org.za
  • TWITTER: @saippa_ipp
  • LINKEDIN
  • FACEBOOK
  • Physical Address:

4 Karen Street, Bryanston West, Johannesburg

  • CHAIRPERSON’s CONTACTS:
  • CELLNO: +27 72 474 9611
  • EMAIL: chair@saippa.org.za or sisanjikelana@gmail.com

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