INTEGRATED ENERGY PLAN COMMENTS FROM · PDF fileINTEGRATED ENERGY PLAN COMMENTS FROM WARTSILA...

INTEGRATED ENERGY PLAN

COMMENTS FROM WARTSILA OCTOBER 2013

DURBAN

Wayne Glossop

Business Development Manager

2 © Wärtsilä 05/11/2013 Wärtsilä Power Plants Presentation Template / Jaime López

Contents

• Wartsila – Introduction

• IEP Extracts of interest

• Modelling and Analysis

• Concluding Remarks


Contents






WHO WE ARE

We do:

• Net Sales: 4.7BEURO

• Employ: 18,900

We have:

• ~60GW installed of gas and liquid Power plants

We are:

• Shipping (28%)

• Services (40%)

• Power (32%)


WARTSILA IN SADC

Strong presence in Southern Africa with two

180MW gas fired power plants that we

built/building and operate


Contents






OUR REVIEW OF THE IEP

• Wartsila’s areas of interest lie within:

• Power Generation Aspects

• The Role of Gas in the future Energy Mix

• Wartsila supports the objectives behind the IEP

• Whilst the methodologies used in the calculations make sense, we feel:

• That there is insufficient complexity used in determinig the optimal

generation mix

• Some of the assumptions used have significant impacts on the results and

these sensitivities need to be understood

– Ever decreasing PV costs?

– Environmental impact of so much CSP properly understood? (Karoo,

water, etc…)

– Assumptions around gas price need more investigation (as

acknowledged by the IEP)


Key Extracts of Interest for Wartsila (1/2)

EXTRACT COMMENT

Pg 148: “The key objective of the technical analysis is

to obtain an energy system which has the least cost

to the economy, given emission limits and fresh water

constraints.”

Agreed

Water consumptions for

gx tech’s not disclosed

Pg 134: “Besides the NG options included as part of

the ministerial determinations, new NG options do not

feature prominently in the Base Case or any of the

Test Cases. New NG only features in the Test Case

where NG options are explicitly enforced.”

NG plays an almost

negligable role in the 2030

and 2050 scenarios – not

believed that role of NG

power understood

Pg 134: “A new nuclear plant is selected by the

model in the Emissions Limit Case with no explicit

exclusion of nuclear. Nuclear, together with RE tech’s

are therefore viable options in reducing emissions in

the Emissions Limit Test Cases.”

Nuclear not able to

support a grid with RE – a

supporting technology is

required to maintain a

stable supply of power


Key Extracts of Interest for Wartsila (2/2)

EXTRACT COMMENT

Pg 57: “The Reserve Margin of 19% therefore indicates the

point where the trade-off between cost and reliability is at a

minimum”

RM acknowledged

but not included

“Storage remains on of the most important challenges to

the widespread use of renewable energy. Due to the

internittent nature of renewable energy systems and the

variability in electricity load requirements, storage of the

electricity generated when demand is low is especially

critical.”

Intermittancy of RE

acknowldeged but

not included (as far

as we know) into

calculations

Pg129: “One of the recommendations from the NDP is that

while clean-coal tech’s (such as CCS) are still in the

nascent stage of development, NG should be considered

as an alternative to coal, provided that the overall

economic and environmental costs and benefits outweigh

those associated with South Africa’s dependance on coal,

or with the alternative of nuclear power. All conventional

and unconventional NG options should be considered and

these include off-shore NG, CBM and Shale gas.”

None of the

scenarios consider

NG as an alternate

to coal – role of NG

in the generation mix

not properly

modelled with

selected criteria


Contents

• Wartsila – Gas Power Ambassodors





OUR TOOLS FOR ANALYSIS

• optimisation: generation, transmission

• capacity investment planning: feasibility,

valuation, risk management

• markets: energy, balancing, ancillary

services

• integration & coordination: markets,

grid, RES, storage

• Etc…

PLEXOS® is a complex tool

used to optimise power

systems

With PLEXOS®, one can build

models, simulate, and run

scenarios on

Used by Eskom and its neighbours

4 April 2013 WÄRTSILÄ - ESKOM


LINE OF THINKING

Introduce the impact of having more gas

[Gas instead of Coal 3?]

Model the “most likely” scenario (in our opinion)

[LNG?; Petroleum?; Nuclear?; Coal 3?]

Re-model the ‘Base Case’ to establish a reference point


SOURCES OF INFORMATION USED

• Integrated Energy Plan 2012 (horizon of the study is

2050)

– Capacity mix; Fuel prices; Carbon tax

• Integrated Resource Plan 2010

– Technical data for power plants

– Reserve requirement

– Annual peak demand, annual energy

• ESKOM

– Typical winter/summer load profile

– Weekly peak load for 2010

– Various other parameters

• Wind&Solar

– Wind profile from South Africa

– Solar profile from Australia (combined PV and CSP)

• Energy Security Master Plan


PRECURSORY NOTES (1/2) – CARBON TAX IMPACT

• South Africa has intention to introduce carbon tax with following

increase rate

• In 2030 carbon tax is planned to be 250 rands per ton (25USD/ton)

which leads to extra cost of ~25 USD/MWh for coal plants. (37,5 eff%)

• This would push coal out of mid-merit order if gas is available with price

expected in IEP base gas.

• In this study we have done a sensitivity analysis with carbon tax levels

0, 10, 15, 20 and 25 USD/ton.


PRECURSORY NOTES (2/2) - WHAT ABOUT RESERVES?

Name plate

capacity

~72 GW

Predicted

annual

peak load

~60 GW

20 %

reserve

margin

-13 %

reserve

margin

Thermal

Wind&Solar

13,5 GW

~59 GW

Availability

20%

Availability

85%

Thermal

~3 GW

~50 GW

Wind&Solar

Daily peak is in the

evening when solar

production is shading out

Total available

capacity in

the system

Total capacity

in the system

Total capacity

in the system

19 % reserve

margin

requirement

72GW of firm capacity is

needed to meet the

reserve margin

requirement of 19% all

the time 20GW of

new capacity is needed

for RSA power system

~72 GW

~20 GW


OUR DEFINED SCENARIOS

• Year’s 2030 base case was

selected as its more predictable

for our needs

• Capacity given in IEP cannot

match the load and additional

capacity is needed

– Enough added to satify

demand (reserve

requirements not included)

• No nuclear completed in time by

2030

• The objective of achieving

<275Mt CO2 pa still required

(and achieved)

• No ‘Petroleum’ based power – all

converted to gas for economic

reasons

• Gas generation made up of a

combination of engine and

turbine technology in a 64/36

ratio

• ‘Moderate’ gas price used in IEP

Capacity added 5,25GW


BASE CASE – WEEKLY WINTER PROFILE


BASE CASE – DAILY GENERATION PROFILE

Pump storages are loaded

here. Production is above

grid load

tCO2pa Tariff (USD/MWh)

257 59.3

-% -%


DIESEL TO GAS


217 56.3

-15% -5%

Indirect costs of unsatisfied

load significant! Not seen to

be acceptable


EXTRA CAPACITY WITH COAL 3


227 55.9

-% -%


NOW REPLACE COAL 3 WITH GAS


206 55.8

-10% 0%


NOW BACK TO COAL 3 BUT ADD CO2 TAX @ 15$/t


221 74

-% -%


NOW REPLACE COAL 3 WITH GAS WITH CO2 TAX


198 71.8

-10% -3%


SO WHAT IS GASSES ROLE IN THE POWER SYSTEM?


Wind chasing in Colorado, USA

Coal power plants

Load

Wind generation

Gas generation

Plains End 1 & 2 power plants

Flexible generation

In systems with high wind penetration, thermal power plants face

• Lower average load & more part load operation

• Faster ramp up’s and down’s

• More starts and stops

Grid operator data from:

Colorado Dispatch Center, Xcel Energy, USA


IN ADDITION...

• Gas based engine technology consumes virtually no water

• Gas power plants create more permanent jobs than larger coal and

nuclear stations


Contents






SO LETS RECAP THE IEP OBJECTIVES

Security of Energy Supply

Minimise Cost of Energy

Increase Access to

Energy

Diversify Supply

sources and primary energy

carriers

Minimise Emissions

Improve Energy

Efficiency

Promote Localisation, tech transfer

and job creation

Water Conservation


FINAL COMMENTS AND CONCERNS

• The criteria used in the

evaluation are good but exclude

critical elements which should be

included to define a reliable and

efficient power system

• Insufficient details made

available to make proper

evaluations on calculations

• Carbon tax has a huge impact on

tariff and pricing but less impact

on actual CO2 reductions

• Are the downstream benefits of

gas networks fully understood by

the model?

• Role of this document with IRP

and future generation mix?

• The impact of the grid stability is

not taken into consideration - A

fundamental requirement for

‘Power Security’

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