SOUTH AFRICAS ENERGY TRANSITION: A STORY UNFOLDING Faaiqa Hartley - - PowerPoint PPT Presentation

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SOUTH AFRICAS ENERGY TRANSITION: A STORY UNFOLDING Faaiqa Hartley - - PowerPoint PPT Presentation

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SOUTH AFRICAS ENERGY TRANSITION: A STORY UNFOLDING Faaiqa Hartley (Faaiqa.Hartley@uct.ac.za) WIDER Development Conference 13-15 September 2018 Helsinki, Finland ENERGY HISTORICALLY COAL BASED Coal accounts for 73% of primary energy

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SOUTH AFRICA’S ENERGY TRANSITION: A STORY UNFOLDING

Faaiqa Hartley (Faaiqa.Hartley@uct.ac.za) WIDER Development Conference

13-15 September 2018 Helsinki, Finland

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ENERGY HISTORICALLY COAL BASED

Coal accounts for 73% of primary energy usage in South Africa Coal power stations account for 74% of total electricity capacity and 82% of total generation Smaller shares are used by industry and the liquid fuels sector

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200 2016 2020 2030 2040 2050

Coal Nuclear Peaking Gas Hydro+pump Wind Solar PV Other RE Other

EXPECTATIONS FOR ENERGY TO REMAIN FOSSIL FUEL INTENSIVE

Integrated Resource Plan, 2010 (GW) Integrated Resource Plan, 2016 (GW)

Source: Department of Energy, South Africa

South Africa has sufficient capacity to meet demand to 2025 – electricity demand expected to increase by ~2.7% pa

71% 46% 13% 10% 9% 20 40 60 80 100 2020 2030 68% 45% 13% 9% 20 40 60 80 100 2020 2030

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1.5 0.6 3.7 0.6 1 (Nov. 2011) 2 (Mar. 2012) 3 (Aug. 2013) 4 & additional (Aug. 2014) 4e (Nov. 2015) Average tariff (R/kWh) Bid Window Wind Solar PV Solar PV Wind Coal IPP Coal Eskom Nuclear Gas (CCGT) Coal Variable Baseload Mid-merit Actual new-build tariffs Estimated new build cost Lifetime cost (R/kWh)

  • REIPPPP programme to ensure inclusion of RE → YTD 6 bid windows = 6.8GW (3.8 operational)
  • solar PV: 2.3; wind: 3.3
  • Inclusion of RE however capped (solar PV: 1GWpa; wind: 1.8GWpa)
  • Despite limited inclusion prices have decreased >50%
  • Local manufacturing industry stimulated through local requirements

Source: Arndt et al. 2018

LIMITED INCLUSION OF VRE, PRICE DECLINES HAVE BEEN LARGE

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AND WILL CONTINUE TO FALL

Source: Ireland and Burton, 2018

Conservative Optimistic Solar PV 35% 58% Wind 18% 37% Price declines to 2050

0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 2015 2020 2025 2030 2035 2040 2045 2050

Levelised Cost of Energy - LCOE: (2016 R/kWh)

SOLAR PV WIND

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LARGE, COMPLEMENTARY, RESOURCES

Source: Solar GIS, 2017; CSIR & Fraunhofer , 2016 SOLAR WIND

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LARGE, COMPLEMENTARY, RESOURCES

Source: IEA, 2016

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20 40 60 80 100 120 140 160 180 200 SATIM-LC-2030 CSIR-LC-2030 NREL-2030 SATIM-LC-2050 CSIR-LC-2050 NREL-2050

GW

Installed Capacity Comparisons with Other Studies

Other Coal Gas/Oil Nuclear PumpStorage CSP Battery PV Wind

LEAST COST PLANNING - LARGER ROLE FOR VRE

Recent least cost studies

  • Wright et al. (2017)
  • Merven et al. (2018)
  • Reber et al. (2018)

Wright/Reber: extensive adequacy testing at very high temporal resolution, only electricity; Merven: full energy system No new capacity needed over medium term Capacity thereafter → 4GW wind; 3GW solar pa to 2040 Solar PV and wind capacity reaches 20% and 16% of total capacity in 2030 (IRP 2016: 9%;13%)

Source: Merven et al., 2018

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VRE = 68% OF GENERATION BY 2050

50 100 150 200 250 300 350 400 450 500 2015 2020 2025 2030 2035 2040 2045 2050

TWh

Production Mix

Biomass Coal Gas Hydro Imports Nuclear Oil PumpStorage CSP Battery_Cent Battery_Dist PV_Cent PV_Dist Wind 5% 9% 8% 30% 38% 61% 68% 68% 0% 10% 20% 30% 40% 50% 60% 70% 80% 2015 2020 2025 2030 2035 2040 2045 2050

Variable Renewable Energy Percentage Share of Electricity (%)

Projected Annual Percentage Shares of Electricity Provided by VRE (%)

SATIM-LC CSIR-LC NREL

Source: Merven et al., 2018

BUT COULD BE AS HIGH AS 80%

(lower costs, endogenous plant retirement)

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LOWER LONG-TERM ELECTRICITY PRICES

0.2 0.4 0.6 0.8 1 1.2 1.4 2016 2018 2020 2022 2024 2026 2028 2030 2031 2033 2035 2037 2039 2041 2043 2045 2047 2049 2050 Electricity Price Components (R/kWh) Fuel:Gas/Oil Fuel:Coal O&M Capital.Repayments SATIM-LC Constr.RE

Source: Merven et al., 2018

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LINKED ENERGY-ECONOMIC MODEL

SATIM eSAGE Technology Mix Electricity price Electricity production function Expenditure on expansion plan Production function of all activities (energy) Consumption function of households (energy) GDP Welfare Employment GDP Household income Energy/climate policy

  • Developed by ERC, UNU-WIDER

and RSA National Treasury

  • Combines ERC’s bottom-up SATIM

model (full energy model) with RSA National Treasury’s eSAGE model (dynamic CGE)

  • Combined model addresses the

limitations of each model in energy analysis while maintaining its strengths

  • Allows for a consistent framework

for assessing the economic implications of changes in energy systems and energy usage in South Africa

  • Useful for emissions analysis

Source: Arndt et al., 2016

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INCREASED VRE CAN LEAD TO HIGHER GROWTH AND EMPLOYMENT

Lower electricity investment and electricity price Positive impacts extend across economy

  • electricity and services experience the

largest gains Coal mining declines

  • Losses likely regardless due to changes in

global demand, prices and domestic capacity constraints Higher overall welfare

  • Similar gains experienced in poor and

non-poor households Impacts are however dependent on the availability of labour resources, primarily grade 12 and above

Source: Hartley et al., 2018

  • 500

500 1000 1500 2000 2500 0.0 1.0 2.0 3.0 4.0 5.0 6.0 2020 2025 2030 2035 2040 2045 2050 difference in employment ('000s) % difference in real GDP GDP (conservative) GDP (optimistic) Employment (conservative) Employment (optimistic)

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POWER SECTOR EMISSIONS DECLINE

0% 10% 20% 30% 40% 50% 60% 70% 50 100 150 200 250 300 350 400 450 500 2015 2020 2025 2030 2035 2040 2045 2050

Power Sector Share of Energy CO2eq CO2eq Emissions (Gton)

CO2_Energy (SATIM) CO2_Power (SATIM) CO2_Power (CSIR-LC) Power Sector Share (SATIM)

Source: Merven et al., 2018

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ASSIST IN MEETING GLOBAL COMMITMENTS

100000 200000 300000 400000 500000 600000 700000 2020 2025 2030 2035 2040 2045 2050

Electricity generation Liquid fuels and hydrogen production Energy use Agriculture Energy use Commerce Industry Energy use and IPPU Energy use Residential Energy use transport Other fugitive emissions AFOLU Waste

Source: ERC and EScience Associates, 2018

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2018 INTEGRATED RESOURCE PLAN

20 40 60 80 100 120 140 160 180 200

GW

Installed Capacity

Biomass Coal Gas Hydro Imports Nuclear Oil PumpStorage CSP Battery_Cent Battery_Dist PV_Cent PV_Dist Wind

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KEY MESSAGES

Large amounts of renewable energy can be included in the South African electricity generation mix, decreasing emissions, without negatively affecting

  • verall economic growth and employment.

Coal mining communities however will be negatively impacted by the decline in coal demand and a transition plan is needed to mitigate the impact on these communities. While the 2018 Integrated Resource Plan continues to constrain annual build limits in solar PV and wind to 2030 it acknowledges the importance of renewable energy in electricity mix and the potential role it could play in reducing electricity investments and prices.

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Thank you

Postgraduate studies at the Energy Research Centre available in 2019

  • MSc (Eng) specialising in Sustainable Energy Engineering by Coursework & Dissertation
  • MPhil specialising in Energy & Development Studies by Coursework & Dissertation

Visit www.erc.uct.ac.za/education