Integrated Resource Planning: Integrated Resource Planning:

An overviewAn overview

Mark Howells & Bruno MervenMark Howells & Bruno Merven Energy Research CentreEnergy Research CentreUniversity of Cape TownUniversity of Cape Town

OutlineOutline

IntroductionIntroduction

Aims of resource planningAims of resource planning

The National Integrated Resource PlanThe National Integrated Resource Plan

NIRP outputsNIRP outputs

NIRP methodologyNIRP methodology

Future planningFuture planning

IntroductionIntroductionWhy electricity as a source of energy?Why electricity as a source of energy?

Electricity - a driver of our economyElectricity - a driver of our economy

The Electricity Supply Industry (ESI) is The Electricity Supply Industry (ESI) is very capital intensive – economies of scalevery capital intensive – economies of scale

Electricity is hard to storeElectricity is hard to store

Aims of Resource PlanningAims of Resource Planning

Meet electricity demand reliably at the Meet electricity demand reliably at the cheapest cost cheapest cost

Be consistent with environmental, social Be consistent with environmental, social and economic policiesand economic policies

Meeting increasing demand:Meeting increasing demand: Expanding generating capacityExpanding generating capacity Reducing load via demand side managementReducing load via demand side management

The NIRPThe NIRP

National Energy Regulator initiative the National Energy Regulator initiative the driven by the Energy Policy White driven by the Energy Policy White Paper for SAPaper for SANIRP 1 in March 2002NIRP 1 in March 2002NIRP 2 in September 2004NIRP 2 in September 2004 Advisory board: NER, DME, ESKOM, Advisory board: NER, DME, ESKOM,

ERC, IPP, …ERC, IPP, … Project team: NER, ESKOM, ERCProject team: NER, ESKOM, ERC

NIRP 2 outputs:NIRP 2 outputs:1. Capacity Plans1. Capacity Plans

Capacity PlansCapacity Plans

NIRP 2 Outputs:NIRP 2 Outputs:2. Sensitivity to possible scenarios2. Sensitivity to possible scenarios

Cost and ReliabilityCost and Reliability

MethodologyMethodology

1.1. Demand and projectionsDemand and projections

2.2. Current generation capacityCurrent generation capacity

3.3. New generation capacity optionsNew generation capacity options

4.4. Demand Side Management optionsDemand Side Management options

5.5. Identify constraints – define scenariosIdentify constraints – define scenarios

6.6. Include all this into the computer modelInclude all this into the computer model

7.7. Run optimizationRun optimization

Primary energye.g. Coal

Electricity generation

GridDemand process

e.g. Electric HeaterFinal Energy

e.g. Heat

The Energy System

1. Establish current demand and 1. Establish current demand and projectionsprojections

2. Establish current generation capacity2. Establish current generation capacity3. Identify suitable new generation capacity options3. Identify suitable new generation capacity options

Be technologically feasibleBe economically viableBe socially, politically and environmentally acceptableHave suitable production pattern Have site availability – close to demandUnder some level of suitable control

3. Identify Demand Side 3. Identify Demand Side Management optionsManagement options

4. Program the Computer Model4. Program the Computer Model

Coal

Existing Capacity

Nuclear PP

Wind PP

Transmission and

Distribution

New Capacity Options

Coal PP

NormalDemand

Technology

EfficientDemand

Technology

Useful energyper sector

HeatLight…

CoalGas

Nuclear… Gas PP

Primary Energy

Specified:Specified:• Capital costs per MWCapital costs per MW• Fuel costs (as specified by mining/importing)Fuel costs (as specified by mining/importing)• Operation costs per MWhOperation costs per MWh• Lifetime (years)Lifetime (years)

• Operating conditions: Peaking, base loadOperating conditions: Peaking, base load• Constraints: Technical e.g. Capacity, Constraints: Technical e.g. Capacity, availabilityavailability• Constraints: Policy e.g. share of Constraints: Policy e.g. share of renewables, renewables, Emissions Emissions

Model outputs after optimizationModel outputs after optimization

Capacity and activity of selected Capacity and activity of selected processes (including timing + choice of processes (including timing + choice of investments) i.e. The Planinvestments) i.e. The Plan

Total CostsTotal Costs

Marginal cost of electricityMarginal cost of electricity

Total emissionsTotal emissions

Weaknesses of this approachWeaknesses of this approach

Deterministic approach, uncertainty: Deterministic approach, uncertainty: handled in reserve marginhandled in reserve margin discount rates and scenario based constraintsdiscount rates and scenario based constraints

Suitable for finding a robust plan but not Suitable for finding a robust plan but not necessarily a flexible plannecessarily a flexible planTechnology diversity must be forced onto the Technology diversity must be forced onto the system as a constraintsystem as a constraintBottom up approaches tend to be bulkyBottom up approaches tend to be bulkyDifficult to asses impact of plan on overall Difficult to asses impact of plan on overall economyeconomy

Possible alleys to be explored in Possible alleys to be explored in the futurethe future

To account for flexibility:To account for flexibility: Decision analysis type approachesDecision analysis type approaches Stochastic programmingStochastic programming

Link to general equilibrium modelsLink to general equilibrium models