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Integrated Resource Plan

May 2010

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What is it?

• “Integrated Resource Plan means a resource plan established by the national sphere of government to give effect to national policy” (legal definition in the Electricity Regulation Act No.4 of 2006)”

• “It is a planning process that seeks to identify the future energy demand and the energy mix that will meet that demand

• It takes into account all the aspects of the electricity value chain, generation, transmission and distribution”

IRP Stakeholder Engagement Process

• The DoE’s mandate is to undertake a long-term planning function to develop an integrated resource plan (IRP) to meet South Africa’s electricity requirements.

• The IRP 1 Gazetted in December 2009 paved the way for the development of IRP 2 through a consultative process.

• The Stakeholder Engagement Process will began in mid-March 2010 and continued through to early June 2010 (Public Participation process will kick-off).

• The purpose of the process is to:– Ensure effective exchange of information between critical stakeholders.– Focus the discussion of the planning issues. – Receive the benefit of early stakeholder comments that could be

incorporated into the Plan.– Build a common understanding of the task, its challenges, the

Department’s analytical approach and the design of the Plan.

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Load forecastAnnual RSA energy sent-out forecast

200,000

250,000

300,000

350,000

400,000

450,000

500,000

550,000

600,000

En

erg

y se

nt-

ou

t (G

Wh

)

High Mod Revised Low

This is a forecast for national sent-out (including imports) –

2.4%

3.6%

4%

3.6%

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ScenariosScn Name Conditions

1 Reference planLeast-cost; direct costs only; limited project options

2a Domestic emission (Emission Constraint 1)

• Hard constraint of 275Mt/a in all years• Options should include Wind to 3200MW; CSP to 10000MW;

Nuclear up to 33000MW; Discount rate

2b Regional emission (Emission Constraint 2)

• Hard constraint of 275Mt/a domestic and 40Mt/a imported in all years

• Options as per 2a

2c Delayed regional emission (Emission Constraint 3)

• No constraint before 2025, apply constraint of 275Mt/a domestic and 40Mt/a imported after 2025.

• Allow some advanced decommissioning or ramping down of existing coal options to reduce to hard target in 2025

• Other options as per 2a

2d Carbon Tax Alter input costs to include carbon tax as per the Long Term Mitigation Strategy

3a IPP alternates 1 Force in Mmamabula, Moamba, MSBLP

3b IPP alternates 2 Force in Mpanda Nkua, MTPPP2 (over and above IPP alternates 1)

Stakeholder Engagement Objectives• The Process hopes to achieve the following objectives:

– Stakeholders have the opportunity to participate to the degree that they want to, and on the areas which they had the most interest.

– Stakeholders are able to comment on topics they deemed important that might be outside the scope of the IRP planning process, for example the national energy plan.

– The workshops will enable DoE to share their planning challenges, approach, and considerations on the various Plan elements first-hand.

• Stakeholders have the opportunity to share their perspectives with the DoE and other stakeholders.

– Stakeholders are able to learn about the complexity of the IRP process as the various elements of the Plan are developed.

– Respect for stakeholders and acknowledgment of the range of stakeholder interests and priorities.

Getting Stakeholder Alignment• Several critical elements on which Stakeholder Alignment is crucial:

– Importance, role and scope of the IRP– Need to balance Security of Supply, Affordability and Emissions– Complexity of the Challenge (e.g., engaging stakeholders, technical and policy

constraints, projecting future supply, demand and supply technology issues) – Need for quality data, assumptions and analyses that inform decisions. Need

for flexibility, adaptability and contingency planning.– Need for flexibility, adaptability and contingency planning.

• Several Stakeholders have already shown that the following aspects will require some debate:– The role and feasibility of Carbon Commitments and Renewables – The role and feasibility of a Coal Phase-Out – The role of Nuclear Power

Stakeholder Buy-in of the Engagement Process

• It is critical to ensure Stakeholder buy-in to the engagement process since faith in the process will result in trust in the output

• Greater engagement at the initial stages will result in less intense interactions as the plan is developed (ie more and more agreement as the plan nears completion)

• The process success depends on:– Being transparent going forward and inclusive.– The Department taking leadership and continuing dialogue with stakeholders.

regarding issues of supply options, protection for the poor, Affordability, Distribution issues, demand scenarios, and Carbon Commitments.

– Encourage more involvement from residential, commercial, and manufacturing customers.

– Facilitate participation by organisations that may have limited time or resources.– Continue stakeholder dialogue in order to gain “consensus” and to “educate” the

public about the vision for sustainable electricity in South Africa.

WHO

STAGE

WHEN

HOW

WHY

Planning ParametersUpdated

SO IRP

DoE IRP

Government IRP

RSA IRP

Stage Steps

Planning parametersreviewed, Assessed &Agreed

Modelling,Assessments &Scenarios Run

Conclusions Plan Complete

Electricity Country Planning Process (IRP)

SO DoE ID TT PublicDoENERSA

RegulatedExpertCold EyeReview

MinisterialAlignment &Conflict Resolution

Regulated Regulated

??2009

Oct2009

Apr2010

Jun2010

Sept2010

Internal Concept Plan by Eskom SO

DoE IRP TT ID TTRequest forComment

Gazetted

Technical Governance

GovernanceTechnical

WHO

STAGE

WHEN

HOW

WHY

Input Parameters& Constraints

Models and Conclusions

DraftIRP

Government IRP

RSA IRP

Stage Steps

Planning parametersreviewed, Assessed &Agreed

Modelling,Assessments &Scenarios Run

Conclusions Plan Complete

IRP Stakeholder Engagement Process

Identified Stakeholders

Identified Stakeholders

ID TT PublicIdentified Stakeholders

Regulated ExternalPerspectives

MinisterialAlignment &Conflict Resolution

Regulated Regulated

March2010

April2010

May2010

Jun2010

Sept2010

Written Input and Facilitated Sessions

Written Input &Q&A Sessions

ID TT Request forComment

Gazetted

The critical consultation sheetsParameter Owner Key Outcome

Discount rate NT Price coneDemand Forecast DOE Security of supplyEnergy Intensity (Long) DTI Security of supplyEnergy Intensity (Short) DOE Security of supplyEconomic multipliers NPlanning Key OutcomeRate of Exchange NT Price coneInflation NT Price coneGDP NT Price coneCost of energy not served DOE Security of supplyPrice Elasticity NT Price coneDSM DOE Security of supplyEE DOE Security of supplyDMP SO Security of supplyConservation DOE/NERSA Security of supplyGx Mix Parameter DOE Price coneCogeneration DOE Price coneNuclear DOE CarbonFunding / Financing NT Price cone

Parameter Owner Key OutcomeGx Lifecycle Costs DOE Price coneReserve Margin DOE Security of supplyOwn Generation DOE Price coneImports SAPP Security of supplyPrice cone DOE Key Outcome Renewables DOE CarbonWater DWAF ExternalityIRP 2010 Approach & Methodology Overview DOE GovernanceIRP Consultation Plan DOE GovernanceCarbon & Climate Change DEAT CarbonCarbon taxes DEAT CarbonDistribution DOE ExternalityBase Scenarios DOE/NERSA Key OutcomeGx Location DOE Externality

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The critical consultation sheets

Identified Stakeholders

Key IRP 2010 milestones updated 17 May 2010

1. IRP 2010 input consultation sheets available on the WEB for public input (DOE)

2. IMC progress review of consultation process

3. Closing date for 1st round of public input (DOE)

4. 1st Public hearings on IRP 2010 input sheets (DG DOE)

5. Complete modelling of scenarios and 1st draft IRP 2010 (ISO Planning)

6. IMC approve 1st draft IRP 2010 for public hearing (DG DOE)

7. 2nd Public hearing on 1st draft IRP(DOE)

8. IMC approve daft IRP 2010 for cabinet to review (IMC)

9. Cabinet approve IRP 2010 to gazette for public participation (IMC)

10. IRP 2010 gazetted for public participation (Minister DOE)

11. Public participation process closes

12. IMC approve Final IRP 2010 to be promulgated (IMC)

13. Cabinet approve Final IRP 2010 for promulgation (IMC)

14. Promulgate IRP 2010

SeptJuly AugMay June

30

11

15

7

26

7

23

17

13

24

Consultation on IRP key planning input parameters process

Public Participation in IRP to Promulgation Process

To be confirmedTo be confirmed

Conclusion

• The building of new power stations is critical to ensure we keep the lights on

• Stakeholder engagement is critical to ensure South Africans have their say in our energy mix for the future

• We have a website www.doe-irp.co.za which will be a portal for engagement