ENERGY PLANNING COLLOQUIUM

OVERVIEW OF THE NATIONAL ENERGY PLANNING PROCESS

30 MARCH 2012

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Ms T Ramuedzisi

Chief Director: Energy Planning

Department of Energy

PRESENTATION OUTLINE

• ENERGY SECURITY

• ENERGY VALUE CHAIN

• TAKING INTO CONSIDERATION OTHER POLICIES

• ENERGY PLANNING APPROACH

• OVERVIEW OF CURRENT ACTIVITIES

• INTENDEND OUTCOME OF TODAY

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Energy Security and Integrated Energy Planning

Fragmented approach to energy

Energy Security

Energy security means “ensuring that diverse energy resources, in sustainable quantities and at affordable prices, are available to the South African economy in support of economic growth and poverty alleviation, taking into account environment management requirements and interactions among economic sectors.”

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The IEP is a multi-faceted policy which has multiple objectives:

• Describes the recommended energy roadmap of South Africa •Guides the development of energy policies and where relevant set the framework for regulations in the energy sector. •Guides the selection of appropriate technology to meet energy demand (i.e. what types and size of new power plants and refineries should be built and what prices should be charged for fuels) •It therefore also guides the investment and development of energy infrastructure in South Africa.

DIVERSITY OF SUPPLY

LOCALISATION AND

TECHNOLOGY TRANSFER

ACCESS TO ENERGY

DEMAND MANAGEMENT

MINIMISE COST OF ENERGY

RESERVES AND SCARCE RESOURCES

EMISSIONS CAPS

WATER CONSTRAINTS

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Sustainable Energy Planning takes a holistic approach to the problem of planning for

future energy needs. It entails ensuring that social development, environmental

sustainability and economic growth are all considered in a balance manner

ENVIRONMENTAL

SUSTAINABILITY

SOCIAL

DEVELOPMENT

ECONOMIC

DEVELOPMENT

ENERGY VALUE CHAIN

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PRIMARY ENERGY/

RESOURCES

• RENEWABLES

• Solar

• Wind

• Biomass

• Hydro

• FOSSIL FUELS

• Coal

• Crude Oil

• Natural Gas

• NUCLEAR FUELS

• Uranium

CONVERSION TECHNOLOGIES

• POWER GENERATION

• Conventional Coal Plant

• Nuclear

• CCGT

• OCGT

• Solar

• Wind

• FUEL PROCESSING

• Oil refineries

• GTL

• CTL

• REGASIFICATION

SECONDARY ENERGY

CARRIERS

• Electricity

• Heat

• Refined Petroleum Products

END-USE TECHNOLOGIES

• INDUSTRY

• Steam boilers

• Furnace

• Machinery

• COMMERCE

• Air Conditioning

• Light Bulbs

• HOUSEHOLDS

• Space Heaters

• Refrigerators

• Stoves

• Geysers

• AGRICULTURE

• Irrigation pumps

• TRANSPORT

• Vehicles

• Aircraft

• Rail

DEMAND FOR ENERGY

SERVICES

• INDUSTRIAL SECTOR

• Process Steam

• Motive Power

• COMMERCIAL SECTOR

• Electronic Communication

• Cooling

• RESIDENTIAL SECTOR

• Space Heat

• Refrigeration

• Cooking

• Hot water

• AGRICULTURAL SECTOR

• Water supply

• TRANSPORT SECTOR

• Person kms

The Integrated Energy Plan will consider all the key elements of the energy value chain

Energy Planning entails understanding the Key Drivers and Macroeconomic factors that influence Supply and Demand dynamics within the Energy Sector

ENERGY VALUE CHAIN

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PRIMARY ENERGY/

RESOURCES

• All energy resources will be considered

• Availability of energy resources and reserves

• Geopolitical issues and International supply issues

• Regional cooperation

• Cost of energy resources

• Extraction technologies

• Emissions associated with energy resource when processed through a particular technology

CONVERSION TECHNOLOGIES

• All known current and future technologies will be considered

• Learning rates/penetration rates of new and future technologies

• Costs (capital, operating)

• Water Usage

• Operational life

• Efficiency (Rate of fuel consumption and production)

SECONDARY ENERGY

CARRIERS

• Price

• Accessibility

• Environmental and health-related impacts

END-USE TECHNOLOGIES

• Efficiency

• Cost

• Availability

• Supporting infrastructure

• Potential for fuel-switching

DEMAND FOR ENERGY

SERVICES

• End-User trends and behaviour

• Economic factors

• Social development and transformation

Different factors must be considered within all parts of the energy value chain

OTHER GOVERNMENT POLICIES

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Individual Policies,

Strategies within DoE

The IEP is developed within broader national objectives and

overarching national plans and roadmaps. However it also needs to

take other sector plans and strategies into consideration

NEW GROTH PATH, NATIONAL

DEVELOPMENT PLAN

Transport

Plan

Climate Change Policy

IEP Water

Infrastructure Plan

New Growth Path,

National Development Plan

IEP

IRP, LFP

DIFFERENT POLICIES HAVE DIFFERENT TYPES OF IMPACTS ON ENERGY SECTOR

OVERARCHING NATIONAL POLICIES

• New Growth Path

• Sets aspirational targets for employment, economic growth and green economy

• National Development Plan

• Defines alternatives that should be considered for ensuring security of liquid fuel supply is met

• National Treasury

• Economic Growth Projections

POLICIES WITH UNIDIRECTIONAL IMPACT

• Proposed Carbon Tax Policy

• Proposed Carbon Tax Policy will be included as a test case

POLICIES WITH BIDIRECTIONAL IMPACT

• National Climate Change Response White Paper

• Will include “Peak, Plateau, Decline” targets as a test case

• Beneficiation Strategy

• Implementation of strategy will affect demand profile of industrial sector

• Transport Plan

• Impact of modal shift from passenger vehicles to mass transit could be considered as a test case to assess impact

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HIGH-LEVEL APPROACH

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REC

OM

MEN

DA

TIO

NS Existing High-Impact Policies

and Legislation

EVA

LUA

TE M

OD

EL O

UTP

UT

AN

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OLI

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PR

OP

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(Mu

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Key Policy Questions

Proposed/ New

High-Impact Policies and Technology

Options

Key Criteria for Policy Analysis

(Policy Analysis Framework)

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Demand Models

Supply Optimisation

Model

MODELLING SYSTEM

Reference Energy System

MO

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Technologies Energy Carriers Energy

Services

Test Cases

Base Case

Key Indicators to deal with Uncertainties

Energy planning is an iterative process which entails many feedback loops

between the various stages

HIGH-LEVEL APPROACH

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REC

OM

MEN

DA

TIO

NS Existing High-Impact Policies

and Legislation

EVA

LUA

TE M

OD

EL O

UTP

UT

AN

D P

OLI

CY

PR

OP

OSA

LS

(Mu

lti-

Cri

teri

a D

eci

sio

n A

nal

ysis

)

Key Policy Questions

Proposed/ New

High-Impact Policies and Technology

Options

Key Criteria for Policy Analysis

(Policy Analysis Framework)

+=

Demand Models

Supply Optimisation

Model

MODELLING SYSTEM

Reference Energy System

MO

DEL

OU

TPU

T

(EN

ERG

Y R

ESO

UR

CES

AN

D

TEC

HN

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Technologies Energy Carriers Energy

Services

Test Cases

Base Case

Key Indicators to deal with Uncertainties

The chosen approach enables for:

1) A mechanism of dealing with quantitative (data-driven) as well as qualitative (expert

judgement) analysis

2) A parallel consideration of each of the following elements:

• Existing and future energy technologies and energy carriers

• Existing policies within government which have a high-impact on the energy sector

• Proposed policies within government which have an impact on the energy sector

• Key Indicators outside of control which characterise current and future uncertainties

• Conflicting criteria upon which different options should be evaluated

PRIMARY OUTPUT FROM THE IEP • ESTIMATED FUTURE DEMAND PER SECTOR

– Estimated Demand for Electricity and Petroleum Products (Petrol, Diesel, LPG, Jet Fuel) within each major demand sector (residential, commercial, industrial, agricultural)

• PROPOSED ENERGY MIX TO MEET DEMAND

– Combination of technologies , energy resources and secondary energy carriers/fuels to meet estimated future energy demand. (Total investment that should take place; timing; and indication of how total stock of technologies should be operated to determine the lowest cost system)

• FOR EACH TECHNOLOGY WITHIN ENERGY MIX

– Total production for secondary energy carriers/fuels

– Primary energy resources usage

– Water usage (Total and per unit of output)

– Emissions (Total and per unit of output)

– Costs (Total and per unit of output)

• PROPOSED POLICIES

– Proposed policy interventions to support future energy technology roadmap

– Proposed interventions to ensure that other objectives (e.g. emission reductions, efficiency improvements, demand management) are met by sector

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EXAMPLES OF POLICY QUESTIONS THAT THE IEP WILL ADDRESS

1. Given current policies and legislation, what is the most optimal energy mix that will ensure South Africa achieves security of energy supply at the minimum cost to the economy, while simultaneously minimising emissions and water usage?

2. What alternatives should be considered to best meet South Africa’s future transportation needs?

3. Assuming more people will continue to drive liquid fuelled vehicles as their primary means of transport well into the future, what is the best way of ensuring security of liquid fuel supply in the country?

4. What impact will long-term transport policies to encourage modal shifts from road to rail and from single transit to mass transit have on future transportation technologies? What impact will this in turn have on future transport demand patterns and how should the energy sector respond?

5. By how much and where in the energy value chain can we introduce efficiency?

6. What are the possible impacts to the energy sector (choice of energy carriers, technology options and costs) of meeting the constraints for greenhouse gas emissions defined in the National Climate Change Response White Paper?

7. What are the possible impacts (choice of energy carriers, technology options and costs) of the proposed Carbon Tax by National Treasury on the energy sector?

8. To what extent do regulated Liquefied Petroleum Gas (LPG) prices have an impact on electricity consumption patterns?

9. What are the most appropriate energy sources that could meet the demand for energy services of heating, cooking and lighting?

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WHAT IEP WILL NOT ADDRESS

• Planning for Transmission and Distribution of electricity

• Logistics (transportation and storage) for liquid fuels

• Location of new plants and refineries

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The following issues will not be addressed in the current iteration of the IEP

and will be considered in future iterations

These aspects are addressed in infrastructure plans such as the Liquid

Fuels Roadmap

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Estimate Future Demand

Energy planning is not a linear process. It is an iterative process which entails many

feedback loops between the various stages

Define attributes for technologies, energy resources, secondary energy

carriers

Optimise supply options for estimated demand

Evaluate Outcomes

Recommendations

Key Demand Drivers (Social, Economic, etc)

Local conditions, Macroeconomic factors

Constraints and targets

Objectives and Criteria

Stakeholder input is required with

respect to each of these aspects

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HIGH-LEVEL WORKPLAN

STILL TO BE COMPLETED TIMEFRAME

Review and sign-off based on stakeholder input* April 2012

Review and formatting of technology data June 2012

Collection and formatting of demand-side data June 2012

Demand projections June 2012

Configuring of Test Cases in model and Model runs September 2012

Analysis and Evaluation of model output November 2012

Report Writing January 2013

Table Draft in Cabinet March 2013

Stakeholder Consultations on draft report 3 months

COMPLETED

Energy Model Selection

Data Requirements

List of technologies to be included in model (no attributes)

Key Indicators for Plausible Futures*

Plausible Futures (Storylines)*

Policy Analysis Framework*

Key Criteria for evaluating Policy Options*

Assumptions for Policy Base Case*

Test Cases (In progress)** * To be tabled in relevant breakaway sessions at EP Colloquium ** Will be tabled with IEP report

INTENDED OUTCOMES OF TODAY’S SESSIONS

• Facilitate discussion and debate on key issues facing the energy sector and how these should shape the IEP

• Stakeholder input which informs the Integrated Energy Plan

• Input into the Plausible Futures and the Key Indicators as well as discussions on the Key Indicators

• Key Policy Questions that the IEP should seek to answer

• Key policy options that the IEP should consider

• Framework and Key Criteria for evaluating proposed policy options

• Different Approaches and modelling

• Identify additional sources of information and data to inform the IEP fact-base

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BREAKAWAY SESSIONS

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POLICY ANALYSIS

• Plausible Futures and Key Indicators

• Policy Analysis Framework and Key Criteria

• Key Policy Questions

• Approaches to Macroeconomic Analysis

• Approaches to dealing with Externalities

• Impact of Climate Change Response Policy on the energy sector

DEMAND MODELLING

• Demand forecasting approaches for each major economic sector (Residential, Industrial, Commerce, Transport)

• Key energy services and end-use technologies to consider within each sector

• Trends and key factors affecting energy demand in each sector

• Identify additional data sources

SUPPLY OPTIONS AND TECHNOLOGIES

• Energy Resources and Reserves

• Potential for Renewable energy sources and biofuels

• Costs and characteristics and costs of different power generating technologies

• Attributes/characteristics and costs of different refining technologies

• Identify additional data sources

The second day of the colloquium will take form of three breakaway sessions

to afford presentation of current activities and afford in-depth discussions on

the different topics

QUOTE FROM THE NEW GROWTH PATH

“Successful countries do not hinge action on the resolution of every possible concern or debate. Instead, they learn by doing, with a continual feedback loop that enables rapid responses to emerging problems.”

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THANK YOU

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