Understanding the Integrated Resource Plan (IRP 2010 Rev 2)

Purpose Review what is meant by IRP Examine some aspects of IRP 2010 Rev 2 Present key aspects in plain language Raise issues of interest or potential concern  Identify issues with biggest relevant impact and focus on these  There are looooooots of technical details… we will try not to chase red-herrings

Some basics: electricity demand and energy supply mix Electricity demand and energy mix Choosing an energy mix – Least financial-cost model – Constraints such as GHG emissions – Policy adjustment Integrated Resource Plan – The Negawatt: efficiency and DSM as a resource – Economy, environment, society

World 1World 2

World 3?

Electricity demand and energy mix Source: Draft IRP 2010 pg 5

Electricity demand and electricity mix Source: Draft IRP 2010 pg 8

Electricity demand and electricity mix Source: Draft IRP 2010 pg 9

What is an IRP ? … compared with traditional planning The text on the following slides is summarised and cut and pasted from Best Practices Guide: Integrated Resource Planning For Electricity Implemented by: The Energy Group Institute of International Education Washington, DC  There is a LARGE BODY of work and experience published on IRP

Traditional electricity planning Traditional methods of electric resource planning focused on supply-side projects only – construction of generation, transmission, and distribution facilities Demand-side options were not considered – EEDSM can increase the productivity with which electricity is used by consumers and improve the energy and cost-effectiveness of the whole system

Traditional electricity planning Also, even the assessment of supply-side options was limited to a few major technologies – E.g. biomass cogen, distributed generation not considered or not properly considered Cost-benefit analysis of the alternatives was rudimentary

Traditional electricity planning Planning done by utility without stakeholder engagement In South Africa, was effectively a secret process run by Eskom

What IS IRP ? IRP makes planning more open to relevant governmental agencies, consumer groups, and others IRP considers the needs and ideas of all parties with a stake in the future of the electric system

What IS IRP ? IRP considers a full range of feasible supply- side and demand-side options and assesses them against a common set of planning objectives and criteria – There are very good reasons for doing this, not least of which is provision of information to the planning process on truly least-cost solutions, however, there are other reasons that are as important and potentially more so, such as integrating broad economic, social and environmental objectives into the planning process from the beginning

What IS IRP ? IRP is a transparent and participatory planning process – This is of necessity: the trade-offs that need to be made demand active participation of a range of stakeholder, from the first step of setting objectives onwards IRP contrasts with traditional planning that is typically top-down, with public consultation occurring only as a last step, when plans are virtually complete

Integrated resource plan In a nutshell – Technical Incorporating society Incorporating economy Incorporating environment Treating all energy resources equally Includes all significant electricity system components Treating energy efficiency and DSM equally to supply – Process Attaining a balance on technical issues can only be covered in consistently transparent public process Environment Society Economy

Making choices How much electricity do we need? The DEMAND What do we want this electricity for? GROWTH sectors How can we use electricity more efficiently and wisely? EE and DSM What other national public development priorities should inform our decision? HEALTH, POLLUTION, JOBS, CLIMATE CHANGE, UNIVERSAL ACCESS TO ELECTRICITY

Typical broad IRP objectives Conform to national, regional, and local development objectives Ensure that all households and businesses have access to electricity services Maintain reliability of supply Minimize the short term or long term economic cost of delivering electricity services or their equivalent Minimize environmental impacts of electricity supply and use Enhance energy security by minimizing the use of external resources Provide local economic benefits Minimize foreign exchange costs

Steps in the IRP process establish objectives survey energy use patterns and develop demand forecasts investigate electricity supply options investigate demand-side management measures prepare and evaluate supply plans prepare and evaluate demand-side management plans integrate supply- and demand-side plans into candidate integrated resource plans select the preferred plan and during implementation of the plan, monitor, evaluate, and iterate

IRP in South Africa Is a requirement of recent legislation and regulations – Electricity Regulations Act (No. 4 of 2006) – Electricity regulations on new generation capacity (Aug 2009) (Revision to be announced ‘within days’)

Key Issues

“Revised Balanced Scenario”

Making choices How much electricity do we need? The DEMAND What do we want this electricity for? GROWTH sectors How can we use electricity more efficiently and wisely? EE and DSM What other national public development priorities should inform our decision? HEALTH, POLLUTION, JOBS, CLIMATE CHANGE, UNIVERSAL ACCESS TO ELECTRICITY

Demand forecast Source: Draft IRP 2010 pg 31 SO estimate CSIR estimate

Demand forecast (Even) in the enhanced DSM scenario we are proposing to go from a 260,000 GWh system to a 454,000 Gwh system – a 70% increase in installed capacity in one of the most energy intensive economies in the world EE can’t reasonably be consigned to decrease in intensity owing to price increase – This decrease happened in any case from when real price was decreasing – EE (per IRP) is the result of EEDSM plans

Making choices How much electricity do we need? The DEMAND What do we want this electricity for? GROWTH sectors How can we use electricity more efficiently and wisely? EE and DSM What other national public development priorities should inform our decision? HEALTH, POLLUTION, JOBS, CLIMATE CHANGE, UNIVERSAL ACCESS TO ELECTRICITY

Electricity demand forecast Big metros Mining Industry

Industrial demand forecast

Allocation of risk for investments Risk in a BIG smelter project Lead time Public sector role Smelter project Private sector Public sector