IRP 2010 Update SCENARIOS

October 2013

Background

• IRP 2010-30 is a living Strategy

– To be revised regularly, preferably every 2 years

• Focus in 2012 on Integrated Energy Plan; critical

input into next round of IRP

• Proposal to have a review instead of a full

iteration, including new scenarios and some

changes in inputs and assumptions to assess

impact on IRP outcomes

2

The Update Process

3

Policy Adjusted

IRP

Updated

IRP

2010 Rooftop PV

Solar Park

Source: EPRI updated cost report (2012), BCG PV report (2010), EPMD calculations

PF Coal(with FGD)

FBC Coal(with FGD)

IGCC Nuclear OCGT CCGT WindCSP

(Parabolic, 9hrs)

PVcrystalline(fixed tilt)

Inflation 2,655 2,234 3,682 5,554 590 863 2,156 7,599 3,130

IRP 2010 17785 14965 24670 37205 3955 5780 14445 50910 20971

IRP Update 21572 21440 29282 46841 4357 6406 15394 61176 19250

0

10000

20000

30000

40000

50000

60000

70000

Ov

ern

igh

t cap

ital

co

sts

(R

/kW

) Step 1 – IRP 2010 Technology Cost Assumptions

240

260

280

300

320

340

360

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Net

Se

nto

ut

in S

ou

th A

fric

a (

TW

h)

System Operator High

System Operator Moderate

System Operator Low

CSIR High

CSIR Mod

CSIR Low

Actual

Step 2 – IRP 2010 Expected Energy Assumption

1500

1550

1600

1650

1700

1750

1800

1850

2007 2008 2009 2010 2011 2012

Actual GDP

Expected GDP (High)

Expected GDP (Moderate)

Expected GDP (Low)

240

250

260

270

280

290

300

310

320

2007 2008 2009 2010 2011 2012

Actual Manufacturing

Expected (Moderate)

Expected (Low)

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

180.0

2007 2008 2009 2010 2011 2012 2013 2014 2015

Actual Iron Ore Expected Iron Ore

Actual Coal Expected Coal

Actual PGM Expected PGM

Actual Gold Expected Gold

Gross value added (GDP), constant (2005) Rbn

Manufacturing gross value added, constant (2005) Rbn Mining production indices, 2005 = 100

Step 2 – IRP 2010 Economic Assumptions

0.1

0.11

0.12

0.13

0.14

0.15

0.16

0.17

0.18

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

201

9

202

0

Ele

ctr

icit

y I

nte

nsit

y (

kW

h/2

005 Z

AR

)

Expected Intensity (SO Low)

Expected Intensity (SO Moderate)

Expected Intensity (CSIR Moderate)

Actual Intensity

Step 2 – IRP 2010 Electricity Intensity Assumptions

Step 3 – IRP 2010 Fleet Availability Assumption

Source: Eskom’s interim results presentation – November 2012

IRP assumption

(86.0)

0

10

20

30

40

50

60K

om

ati

Cam

de

n

Gro

otv

lei

Arn

ot

Hend

rina

Kriel

Matla

Duvha

Tutu

ka

Leth

ab

o

Matim

ba

Ken

dal

Maju

ba

Koe

berg

Gariep

Van

der

Klo

of

Dra

ken

sberg

Palm

iet

Acacia

Port

Rex

Anke

rlig

Gou

rikw

a

Age of Eskom Generation Fleet

Step 4 – Testing the life extension of existing fleet

Step 5 – Allow the Model to Balance Demand and Supply

“Releasing Determinations” Committed in IRP 2010 Update Non IRP

Coal

(PF, FBC,

imports,

own build)

Nuclear Import

hydro

Gas –

CCGT

Peak –

OCGT1 Wind 2 CSP Solar PV Coal Other

DoE

Peaker

Other

Renew.

Co-

generation

MW MW MW MW MW MW MW MW MW MW MW MW MW

2010 0 0 0 0 0 0 0 380 260 0 0 0

2011 0 0 0 0 0 0 0 0 679 130 0 0 0

2012 0 0 0 0 0 0 0 300 303 0 0 0 0

2013 0 0 0 0 0 0 0 300 823 0 0 0 0

2014 0 0 0 0 0 800 0 300 722 0 0 25 0

2015 0 0 0 0 0 800 200 0 1444 333 1020 0 0

2016 0 0 0 0 0 0 0 0 722 999 0 0 0

2017 0 0 0 0 0 0 0 0 2168 0 0 0 0

2018 0 0 0 0 0 0 0 0 723 0 0 0 0

2019 0 0 0 0 0 0 0 0 1446 0 0 0 0

2020 0 0 0 0 0 0 0 0 723 0 0 0 0

2021 0 0 0 0 0 0 0 0 0 0 0 0 0

2022 0 0 0 0 0 0 0 0 0 0 0 0 0

2023 0 0 0 0 0 0 0 0 0 0 0 0 0

2024 0 0 0 0 0 0 0 0 0 0 0 0 0

2025 0 0 0 0 0 0 0 0 0 0 0 0 0

Update of IRP 2010 leads to more CSP, PV, and less

need for nuclear installed capacity by 2030 Comparison of IRP 2010 with Updated IRP

4.3

CSP

Nuclear

Exist. Coal

PV

3.7

9.8

Gas

PumpSt

3.3

2.9

0.7

37.7

Base Case of

IRP 2010 review

Peaking

6.0

84.4

6.7

6.9

IRP 2010

93.0

8.4

9.2

11.4

34.8

0.9 4.8

1.2 2.4

2.9

10.8

Wind

48.2

1.9

36.9

0.6 2.2

Status quo

5.0 Hydro 6.3

2.5 New Coal 1.6

2013 2030

Installed capacity

in GW

Note: “Peaking” includes today’s Diesel-fired OCGTs, future gas-fired OCGTs and Demand-side Management (DSM);

“Existing Coal” includes Medupi and Kusile as well as life-extension of existing coal-fired power stations

By 2030, 17 GW of capacity will retire – on top of

already committed new-build programmes, 40 GW

additional new-build is required

4.3 2.9

6.9

6.0 3.3

9.8

Net new build

until 2030

39.7

9.1

4.8 1.5

4.3 3.5

4.7 3.0

8.8

Committed new-

build until 2030

13.6

8.6 1.3

1.0

1.3 1.1

Decommissioning

until 2030

-17.2

14.4

2.7

2030

48.2

1.6 5.0

0.0

2013

84.4

40.2

6.7 3.7

0.0

Coal

Nuclear

Hydro

Gas

PumpSt

Peaking

Wind

CSP

PV

Other

Updated IRP 2010

13

Cost Implications

13

Key Assumptions

System Snapshot Year 2050

Category Assumption

Demand

CSIR “Green Shoots”

forecast: ~400 TWh in 2030

and ~525 TWh in 2050

CO2 Limited to 275 million tonnes

per year from 2025

Renewables Annual new-build capacity for

wind & PV limited to 1 GW/yr

Nuclear “base cost” assumption of 56-

57 mR/MW (i.e. R 90 bn/unit)

0.50.50.60.60.70.80.9

290

280

270

0

Absolute in

million tonnes

50 45 40 35 30 25 20 13

1.0

50

30

10

80

30

10

50

20

40

60

0

40

90

70

20

Peaking

25

17

11

16

25

4 10

7 3

11

10

37

PV

GW EoY

Nuclear

Exist. Coal

New Coal

Hydro

CSP

7 3

Gas

4 5

4 2

7

PumpSt

7 Wind

Capacity & Energy Mix

600

500

400

300

200

100

0

TWh

2050

527

2040

483

2030

412

2020

316

2013

263

O&M Fuel

PV 498 Wind 576

Nuclear 858

Coal 5 216

Hydro 243 Gas 267 CSP

CAPEX

287 Peaking 173

2 455

656

1.040.960.890.860.71

50 40 30 20 13

Ø tariff

in R/kWh

60

80

40

20

0

20

40

177

2 447

7 428

6 900

5 829 3 640 646

1 008

2 000

Installed capacity in GW

Full-load hours

per year

Share

CO2-free2

In the base case, 28% of energy in 2050 will come

from renewables; 30% of total bill is coal-fuel costs

dis

patc

hable

not

dis

p.

CO2 Emissions

Total area

= 527 TWh

CO2 intensity (t/MWh)

CO2 cap

CO2 actuals

Total cash outlay until 2050: R 8 100 bn

28%

44%

5%

10%

7%

12%

19%

31%

26%

43%

Share RE1

1. Energy share of RE (renewables) = PV, wind, CSP, hydro 2. Energy share of CO2-neutral sources = RE + nuclear

Note: “Peaking” includes today’s Diesel-fired OCGTs, future gas-fired OCGTs and Demand-side Management (DSM)

Coal Gas PumpSt Peaking Nuclear Hydro CSP Wind PV

Peak Load

Scenarios (1) – Electricity demand

14

0

100

200

300

400

500

600

700

20052007200920112013201520172019202120232025202720292031203320352037203920412043204520472049

An

nu

al e

lect

rici

ty n

et

sen

t-o

ut

(TW

h)

SO IRP 2010 Moderate (Original)

SO IRP 2010 Low (Original)

SO IRP 2010 (Update) Moderate

CSIR - Green Shoots

SO IRP 2010 (Update) Low

CSIR - Weathering the Storm

2,8% 4,5%

Economic

Growth

(CAGR)

Electricity

Demand

Growth

(CAGR)

2,8% 5,4%

Net

sent-out

(TWh)

454

425

1,8% 2,9% 348

2,7% 5,4% 409

2,4% 5,4% 622

1,9% 3,7% 522

1,3% 2,3% 414

New SO Moderate

New SO Low

Weathering the Storm (New)

Green Shoots (New IRP Base)

IRP 2010 Moderate

0.00

0.02

0.04

0.06

0.08

0.10

0.12

0.14

0.16

0.18

0.2019

80

19

82

19

84

19

86

19

88

19

90

19

92

19

94

19

96

19

98

20

00

20

02

20

04

20

06

20

08

20

10

20

12

20

14

20

16

20

18

20

20

20

22

20

24

20

26

20

28

20

30

20

32

20

34

20

36

20

38

20

40

20

42

20

44

20

46

20

48

20

50

Ele

ctr

icit

y I

nte

nsit

y (

kW

h/2

005 Z

AR

)

Weathering the Storm

Green Shoots

SO Moderate

Scenarios (2): Electricity intensity

SO Moderate

Weathering the Storm

Green Shoots

(Base Case)

Scenarios (3): Carbon mitigation

0

50

100

150

200

250

300

35020

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

20

20

20

21

20

22

20

23

20

24

20

25

20

26

20

27

20

28

20

29

20

30

20

31

20

32

20

33

20

34

20

35

20

36

20

37

20

38

20

39

20

40

20

41

20

42

20

43

20

44

20

45

20

46

20

47

20

48

20

49

20

50

An

nu

al

CO

2 e

mis

sio

ns

(M

T/a

)

Constant Emissions

Moderate Decline

Advanced Decline

Scenarios (4)

17

Scenario Assumption

Updated IRP • New EPRI costs

• CSIR Green Shoots Forecast

• New 80:10:10 outage plans for existing fleet

• Life extension and FGD retrofitting of existing fleet included as options

• Only Renewables IPP Programme Round 1 & 2, DOE Peaker are forced; all

other determinations including Nuclear are relaxed

• All other assumptions similar to IRP 2010

SO Moderate As with Updated IRP, but using the SO Moderate forecast

SO Low As with Updated IRP, but using the SO Low forecast

Weathering the

Storm

As with Updated IRP, but using the CSIR Weathering the Storm forecast

Constant emissions Same as Updated IRP (275 MT/a carbon emissions limit throughout the period)

Moderate decline As with Updated IRP, but allowing moderate decline in annual emission limits to 201

MT/a in 2050

Advanced decline As with Updated IRP, but allowing advanced decline in annual emission limits to 140

MT/a in 2050

Carbon Tax Removing all carbon emissions limits, apply carbon tax (starting at R40/ton in 2015

(at 2012 Rands), escalating to R117/ton in 2025 (at 2012 Rands))

Scenarios (5)

18

Scenario Assumption

Regional Hydro As with Updated IRP, forcing in 2500 MW from Inga in 2022 and 1200 MW from

Kobong (pumped storage) in 2023

Big Gas As with Moderate Decline, but allowing for shale gas (unlimited) and at a declining

price (from R92/GJ in 2025 to R50/GJ in 2035 as scale exploitation occurs), and an

additional development of regional gas in the Sofala field (an additional 800 MW at

R70/GJ).

Fuel price sensitivity As with Moderate Decline, but coal for new coal-fired generation at R25/GJ.

Learning rates

sensitivity

As with Moderate Decline, but with the learning on technologies occurs in a more

restrained manner

Nuclear Cost

sensitivity

As with Moderate Decline, but with the a higher nuclear capital cost at $7000/kW

Rooftop PV As with Moderate Decline, but force in an assumed amount of PV installation from

households acting independently up to 29 000 MW in 2050

Solar Park As with Moderate Decline, but force in 5000 MW of CSP (1000 MW per year from

2018 to 2022)

19

Scenarios (6): Overview

CO2 Emission Cap (cap in 2050 in million tonnes per year)

140 201 none

Lo

ad

Fo

recast

(de

ma

nd

in

20

50

in

TW

h/y

r)

525

625

444

415

Carbon

Tax

Adv.

Decline

SO Mo-

derate

Weathe-

ring the

Storm

SO Low

275

Regional

Hydro

Rooftop

PV

Solar

Park

Base

Case

Big Gas

Coal

Price

RE

Learning Nuc Cost

Mod.

Decline

Way forward

• Stakeholders’ comments on:

– Input assumptions

– Scenarios

20

Thank you.

Questions?

21

Nuclear cost range: Capital Costs

22

In IRP 2010 Update the $5300/kW (2010 US$) is

escalated to $5800/kW (2012 US$)