Brilliant presentation by the CSIR showing how renewable energy is the way forward for South Africa.

1. Dr Tobias Bischof-Niemz
Chief Engineer
Electricity Scenarios for South Africa
Presentation to the Portfolio Committee on Energy
CSIR
Cape Town, 21 February 2017
Pre-submission to the PC on Energy on 14 February 2017

2. 2
CSIR delegation
Dr Rachel Chikwamba Group Executive: Strategic Alliances and Communication
Dr Tobias Bischof-Niemz Manager: Energy Centre
Crescent Mushwana Research Group Leader: Energy Systems
Jarrad Wright Principal Engineer: Energy Planning
Joanne Calitz Senior Engineer: Energy Planning
Mamahloko Senatla Researcher: Energy Planning
Tendani Tsedu Group Manager: Communications
Azeza Fredericks Parliamentary Liaison

3. 3
Agenda
Background
CSIR’s Approach and Project Team
Comments on IRP Assumptions
IRP Results and Least-cost Scenario
Summary

4. 4
World:
In 2016, 124 GW of new wind and solar PV capacity installed globally
4
4 0
46
39
7
2008
33
2000
7
0
2001
7
7
51
40
2013
73
35
2011
71
41
30
2010
9
8
1
2002
8
120
63
57
2014
91
38
2012
76
45
31
Total South African
power system
(approx. 45 GW)
2016
9
8
1
2003 2005
13
12
1
2004
0
7
2007
22
20
124
54
70
2015
27
3
2006
17
15
2
56
39
17
2009
Wind
Solar PV
Sources: GWEC; EPIA; BNEF; CSIR analysis
Global annual new capacity in GW/yr
This is all very new: Roughly 80% of the globally existing
solar PV capacity was installed during the last five years

5. 5
World:
Significant cost reductions materialised in the last 5-8 years
100%
27
7
2003
33
2007
22
20
3
12
17
15
2
9
8
2006
1
2005
1
2004
13
65%
0
120
46
70
7
Total South African
power system
(approx. 45 GW)
3156
30
2016
63
2015
51
35
91
45
76
2013
40
39 41
71
2012
38
73
57
20142009
22%
124
54
2010
39
17
20112008
4
0
2002
7
2000
7
0
7
2001
18
9
4
8
Wind
Solar PV costSolar PV
Wind cost
Sources: IEA; GWEC; EPIA; BNEF; CSIR analysis
Subsidies Cost competitive
Global annual new capacity in GW/yr

6. 6
560
1 075
1 460
210
960
965
1 474
257
1 520
2013
3 134
+520
+1 094
467
200
2015
2 040
2014
+1 053
20202019201820172016
Wind
Solar PV
CSP
Supply
Sources
Notes: RSA = Republic of South Africa. Solar PV capacity = capacity at point of common coupling. Wind includes Eskom’s Sere wind farm (100 MW)
Sources: Eskom; DoE IPP Office
South Africa:
From 2013 to 2016, 3.1 GW of wind, solar PV and CSP commissioned
Capacity
online in MW
(end of year)

7. 7
2.2
1.1
1.1
2013
0.1
3.7
4.7
2.5
2.2
2014
2.6
0.5
6.9
202020192018201720162015
0.01 0.05
Wind
Solar PV
CSP
Notes: Wind includes Eskom’s Sere wind farm (100 MW)
Sources: Eskom; DoE IPP Office
Annual energy
produced in TWh
South Africa:
In 2016, almost 7 TWh electricity produced from wind, solar PV & CSP
Supply
Sources

8. 8
2016: Wind, solar PV and CSP supplied 3% of the total RSA system load
Actuals captured in wholesale market for Jan-Dec 2016 (i.e. without self-consumption of embedded plants)
CSP
Annual
electricity
in TWh
0.5 (0.2%) 238.2
Residual Load
231.3
System Load
(domestic and
export load)
Solar PV
2.6 (1.1%)
Wind
3.7 (1.6%)
Notes: Wind includes Eskom’s Sere wind farm (100 MW)
Sources: Eskom; DoE IPP Office

9. 9
Significant reductions in actual tariffs …
Actual tariffs: new wind/solar PV 40% cheaper than new coal in RSA
Results of Department of Energy’s RE IPP Procurement Programme (REIPPPP) and Coal IPP Proc. Programme
0.62
0.87
3.65
0.620.69
0.87
1.19
1.51
0
1
2
3
4
5
-83%
-59%
Nov
2015
Aug
2014
Aug
2013
1.17
Mar
2012
2.18
Nov
2011
Wind
Solar PV
Notes: Exchange rate of 14 USD/ZAR assumed Sources: http://www.energy.gov.za/files/renewable-energy-status-report/Market-Overview-and-Current-Levels-of-Renewable-Energy-
Deployment-NERSA.pdf; http://www.saippa.org.za/Portals/24/Documents/2016/Coal%20IPP%20factsheet.pdf; http://www.ee.co.za/wp-
content/uploads/2016/10/New_Power_Generators_RSA-CSIR-14Oct2016.pdf; StatsSA on CPI; CSIR analysis
1.03
0.620.62
-40%
Baseload
Coal IPP
Wind IPPSolar PV IPP
… have made new solar PV & wind power 40%
cheaper than new coal in South Africa today
Actual average tariffs
in R/kWh (Apr-2016-R)
Actual average tariffs
in R/kWh (Apr-2016-R)

10. 12
Agenda
Background
CSIR’s Approach and Project Team
Comments on IRP Assumptions
IRP Results and Least-cost Scenario
Summary

11. 13
Integrated Resource Plan (IRP) aims for optimal electricity mix for RSA
In-principle process of IRP planning and implementation
IRP Model
(PLEXOS)
(techno-economical
least-cost optimisation)
Output
• Capacity exp. plan
• After policy
adjustment: “IRP”
Planning /
simulation
world
Actuals /
real world
Procurement
(competitive tender
e.g. REIPPPP, coal IPPPP)
Inputs
• Ministerial
Determinations based
on IRP capacities
Inputs
• Demand forecast
• Technology costs
assumptions
• CO2 limits
• Etc.
Outcomes
• Preferred bidders
• MW allocation
• Technology costs
actuals (Ø Tariffs)
Sources: CSIR analysis
Installed capacity
80
100
60
40
20
0
4.8
9.2
1.2
8.4
2025202020152010
42.2
35.9
2.4
1.8
2.1
Total installed
net capacity in GW
Solar PV
2030
85.7
41.1
2.4
7.3
9.6
+1.8
Coal
Gas
Peaking
Nuclear
Hydro
Wind
CSP

12. 14
IRP process as described in the Department of Energy’s Draft IRP 2016
document: least-cost Base Case is derived from technical planning facts
Least Cost
Base Case
Scenario 2
Scenario 1
Scenario 3
Case Cost
Base Case Base
Scenario 1 Base + Rxx bn/yr
Scenario 2 Base + Ryy bn/yr
Scenario 3 Base + Rzz bn/yr
… …
Constraint:
RE limits
Constraint:
Forcing in
of nuclear,
CSP, biogas,
hydro, others
Constraint:
Advanced CO2
cap decline
1) Public consultation
on costed scenarios
2) Policy adjustment
of Base Case
3) Final IRP
Planning
Facts
Sources: based on Department of Energy’s Draft IRP 2016, page 7; http://www.energy.gov.za/IRP/2016/Draft-IRP-2016-Assumptions-Base-Case-and-Observations-Revision1.pdf

13. 15
The CSIR has embarked on power-system analyses to determine the
least-cost expansion path for the South African electricity system
The Integrated Resource Plan (IRP) is the expansion plan for the South African power system until 2050
• Starting point of the IRP Base Case: pure techno-economic analysis to determine least-cost way to supply electricity
• Later process steps: least-cost mix can be policy adjusted to cater for aspects not captured in techno-economic model
Draft IRP 2016 Base Case entails a limitation: Amount of wind and solar PV capacity that the model is allowed to build per
year is limited, which is neither technically nor economically justified/explained (no techno-economical reason provided)
The CSIR is therefore conducting a study to determine the Least Cost electricity mix in RSA until 2050
• Majority of assumptions kept exactly as per the Draft IRP 2016 Base Case
• First and most important deviation from IRP 2016: no new-build limits on renewables (wind/solar PV)
• Second (smaller) deviation: costing for solar PV and wind until 2030 aligned with latest IPP tariff results
• Scope of the CSIR study: purely techno-economical optimisation of the costs directly incurred in the power system
Two scenarios from the Draft IRP 2016 are compared with the Least Cost case
• “Draft IRP 2016 Base Case” – new coal, new nuclear
• “Draft IRP 2016 Carbon Budget” – significant new nuclear
• “Least Cost” – least-cost without constraints
An hourly capacity expansion and dispatch model (incl. unit commitment) using PLEXOS
is run for all scenarios to test for technical adequacy  same software platform as by Eskom/DoE for the IRPSources: CSIR analysis

14. 16
Co-optimisation of long-term investment & operational
decisions in hourly time resolution from today to 2050
• What mix to build?
• How to operate the mix once built?
• Objective function: least cost, subject to an
adequate (i.e. reliable) power system
Key technical limitations of power generators covered
• Maximum ramp rates (% of installed capacity/h)
• Minimum operating levels (% of installed capacity)
• Minimum up & down times (h btw start/stop)
• Start-up and shut-down profiles
CSIR uses an industry standard software package for expansion
planning of the power system – same package as used by DoE/Eskom
Costs covered in the model include
• All capacity-related costs of all power generators
‒ CAPEX of new power plants (R/kW)
‒ Fixed Operation and Maintenance (FOM)
cost (R/kW/yr)
• All energy-related costs of all power generators
‒ Variable Operation and Maintenance (VOM)
cost (R/kWh)
‒ Fuel cost (R/GJ)
• Efficiency (heat rate) losses due to more flexible
operation
• Reserves provision (included in capacity costs)
Costs not covered in the model currently used are
• Any grid-related costs (note: transmission-level
grid costs typically ~10-15% of generation costs)
• Costs related to add. system services (e.g. inertia
requirements, black-start and reactive power)
Commercial software used by DoE & CSIR … … covers all key cost drivers of a power system
Sources: CSIR analysis

15. 17
CSIR team has significant expertise from power system planning,
system operation and grid perspective
Dr Tobias Bischof-Niemz
• Head of the CSIR Energy Centre
• Member of the Ministerial Advisory Council
on Energy (MACE)
• Member of IRP2010/2013 team at Eskom,
energy planning in Europe for large utilities
Jarrad Wright
• Principal Engineer: Energy Planning
(CSIR Energy Centre)
• Commissioner: National Planning
Commission (NPC)
• Former Africa Manager of PLEXOS
Robbie van Heerden
• Senior Specialist: Energy Systems
(CSIR Energy Centre)
• Former General Manager and long-time
head of System Operations at Eskom
Crescent Mushwana
• Research Group Leader: Energy Systems
(CSIR Energy Centre)
• Former Chief Engineer at Eskom strategic
transmission grid planning
Mamahloko Senatla
• Researcher: Energy Planning
(CSIR Energy Centre)
• Previously with the Energy Research
Centre at University of Cape Town
Joanne Calitz
• Senior Engineer: Energy Planning
(CSIR Energy Centre)
• Previously with Eskom Energy Planning
• Medium-Term Outlook and IRP for RSA

16. 18
Agenda
Background
CSIR’s Approach and Project Team
Comments on IRP Assumptions
IRP Results and Least-cost Scenario
Summary

17. 19
Agenda
Background
CSIR’s Approach and Project Team
Comments on IRP Assumptions
• Cost inputs for solar PV and wind
• Limitations on build-out rates for solar PV and wind
IRP Results and Least-cost Scenario
Summary

18. 22
IRP 2010 forecasted steep cost decline for solar PV from 2010 to 2030
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
2010 2015 2020 2025 2030 2035 2040 2045 2050
Tariff in R/kWh
(Apr-2016-Rand)
Year
Assumptions: IRP 2010 - low
Assumptions: IRP 2010 - high
Notes: REIPPPP = Renewable Energy Independant Power Producer Programme; BW = Bid Window; bid submissions for the different BWs: BW1 = Nov 2011; BW2 = Mar 2012; BW 3 = Aug 2013;
BW 4 = Aug 2014; BW 4 (Expedited) = Nov 2015 Sources: StatsSA for CPI; IRP 2010; South African Department of Energy (DoE); DoE IPP Office; CSIR analysis

19. 23
Actual solar PV tariffs quickly moved below IRP 2010 cost assumptions
0.62
3.65
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
2010 2015 2020 2025 2030 2035 2040 2045 2050
Tariff in R/kWh
(Apr-2016-Rand)
Year
0.91
1.17
2.18
Actuals: REIPPPP (BW1-4Exp)
Assumptions: IRP 2010 - low
Assumptions: IRP 2010 - high
Notes: REIPPPP = Renewable Energy Independant Power Producer Programme; BW = Bid Window; bid submissions for the different BWs: BW1 = Nov 2011; BW2 = Mar 2012; BW 3 = Aug 2013;
BW 4 = Aug 2014; BW 4 (Expedited) = Nov 2015 Sources: StatsSA for CPI; IRP 2010; South African Department of Energy (DoE); DoE IPP Office; CSIR analysis
∑ = 2.8 GW
BW1  BW 4 (Expedited)

20. 24
IRP 2016 increases cost assumptions for solar PV compared to IRP 2010
0.62
3.65
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
2010 2015 2020 2025 2030 2035 2040 2045 2050
Tariff in R/kWh
(Apr-2016-Rand)
Year
0.91
1.17
2.18
Actuals: REIPPPP (BW1-4Exp)
Assumptions: IRP 2016 - low
Assumptions: IRP 2016 - high
Assumptions: IRP 2010 - low
Assumptions: IRP 2010 - high
Notes: REIPPPP = Renewable Energy Independant Power Producer Programme; BW = Bid Window; bid submissions for the different BWs: BW1 = Nov 2011; BW2 = Mar 2012; BW 3 = Aug 2013;
BW 4 = Aug 2014; BW 4 (Expedited) = Nov 2015 Sources: StatsSA for CPI; IRP 2010; South African Department of Energy (DoE); DoE IPP Office; CSIR analysis
∑ = 2.8 GW
BW1  BW 4 (Expedited)

21. 25
IRP 2010 forecasted small cost decline for wind from 2010 to 2030
0.00
0.25
0.50
0.75
1.00
1.25
1.50
1.75
2010 2015 2020 2025 2030 2035 2040 2045 2050
Tariff in R/kWh
(Apr-2016-Rand)
Year
Assumptions: IRP 2010
Notes: REIPPPP = Renewable Energy Independant Power Producer Programme; BW = Bid Window; bid submissions for the different BWs: BW1 = Nov 2011; BW2 = Mar 2012; BW 3 = Aug 2013;
BW 4 = Aug 2014; BW 4 (Expedited) = Nov 2015 Sources: StatsSA for CPI; IRP 2010; South African Department of Energy (DoE); DoE IPP Office; CSIR analysis

22. 26
Actual wind tariffs quickly moved below IRP 2010 assumptions
0.62
0.69
1.19
1.52
0.00
0.25
0.50
0.75
1.00
1.25
1.50
1.75
2010 2015 2020 2025 2030 2035 2040 2045 2050
Tariff in R/kWh
(Apr-2016-Rand)
Year
0.87
Assumptions: IRP 2010
Actuals: REIPPPP (BW1-4Exp)
∑ = 4.0 GW
Notes: REIPPPP = Renewable Energy Independant Power Producer Programme; BW = Bid Window; bid submissions for the different BWs: BW1 = Nov 2011; BW2 = Mar 2012; BW 3 = Aug 2013;
BW 4 = Aug 2014; BW 4 (Expedited) = Nov 2015 Sources: StatsSA for CPI; IRP 2010; South African Department of Energy (DoE); DoE IPP Office; CSIR analysis
BW1  BW 4 (Expedited)

23. 27
IRP 2016 increases cost assumptions for wind compared to IRP 2010
0.62
0.69
1.19
1.52
0.00
0.25
0.50
0.75
1.00
1.25
1.50
1.75
2010 2015 2020 2025 2030 2035 2040 2045 2050
Tariff in R/kWh
(Apr-2016-Rand)
Year
0.87
Assumptions: IRP 2010
Actuals: REIPPPP (BW1-4Exp)
Assumptions: IRP 2016 - low
Assumptions: IRP 2016 - high
∑ = 4.0 GW
Notes: REIPPPP = Renewable Energy Independant Power Producer Programme; BW = Bid Window; bid submissions for the different BWs: BW1 = Nov 2011; BW2 = Mar 2012; BW 3 = Aug 2013;
BW 4 = Aug 2014; BW 4 (Expedited) = Nov 2015 Sources: StatsSA for CPI; IRP 2010; South African Department of Energy (DoE); DoE IPP Office; CSIR analysis
BW1  BW 4 (Expedited)

24. 29
Agenda
Background
CSIR’s Approach and Project Team
Comments on IRP Assumptions
• Cost inputs for solar PV and wind
• Limitations on build-out rates for solar PV and wind
IRP Results and Least-cost Scenario
Summary

25. 30
Draft IRP 2016 limits the annual build-out rates for solar PV and wind
The imposed new-build limits for solar PV and wind mean that the IRP model is not allowed in any given
year to add more solar PV and wind capacity to the system than these limits
No such limits are applied for any other technology. No techno-economical reason/justification is provided
for these limits. No explanation given why the limits are constant until 2050 while the power system grows
Year System Peak
Load in MW (as
per Draft IRP)
New-build limit
Solar PV in MW/yr
(as per Draft IRP)
Relative new-build
limit Solar PV
(derived from IRP)
New-build limit Wind
in MW/yr
(as per Draft IRP)
Relative new-build
limit Wind
(derived from IRP)
2020 44 916 1 000 2.2% 1 600 3.6%
2025 51 015 1 000 2.0% 1 600 3.1%
2030 57 274 1 000 1.7% 1 600 2.8%
2035 64 169 1 000 1.6% 1 600 2.5%
2040 70 777 1 000 1.4% 1 600 2.3%
2045 78 263 1 000 1.3% 1 600 2.0%
2050 85 804 1 000 1.2% 1 600 1.9%
Note: Relative new-build limit = New-build limit / system peak load
Sources: IRP 2016 Draft; CSIR analysis

26. 31
Today: Both leading and follower countries are installing more new
solar PV capacity per year than South Africa’s IRP limits for 2030/2050
2%
3%
4%
10%
9%9%
5%
2%
4%
2%
4%
1% 1%
1%
3%
7%
4%
1%
0%
6%
3%
3%
3%
2%
1%
0%0%
7%
6%
4%
1%
1%
1%0%0%
2%
2%2%
1%
0%
0%0%0%
1%
1%
1%
0%
0%0%0% 0%
2%
2007
3%
0%
2014
0%
3%
0%
2008
0%
1%
0%
2013
2%
0%
2012
2%
1%
2011
1%
17%
3%
2010
0%
1%
2009
2050 (1.2%)
2030 (1.7%)
2015
India
South Africa
China
Japan
Australia
UK
Italy
Spain
GermanyAnnual new solar PV
capacity relative to
system peak load
RSA’s IRP relative
new-build limit
decreases
over time
Leader
Follower
Follower
2nd wave
Sources: SolarPowerEurope; CIGRE; websites of System Operators; IRP 2016 Draft; CSIR analysis
RSA new-build limits
in 2030 and 2050

27. 32
Today: Both leading and follower countries are installing more new
wind capacity per year than South Africa’s IRP limits for 2030/2050
7%
6%
4%
3%
2%
2%
2%
2%2%
3%
6%
8%
3%3%
6%
3%
4%
5%5%
7%
3%
4%
6%
5%
5%
8%
4%
4%
3%
3%
4%
3%
3%
2%
2%
2%
1%
2%2%
2%
2%
5%
4%
2%
2%
1%
1%0%
0%0%
0%
3%
1%
2%
20092008
2%
0%
2014
1%
2011
1%
0%
2012
1%
0%
2013 2016
2050 (1.9%)
2030 (2.8%)
2015
1%
2%
2010
1%
2007
1%
1%
2006
0%
0%
2%
Brazil
South Africa
India
China
Ireland
Spain
Germany
RSA’s IRP relative
new-build limit
decreases
over time
Leader
RSA new-build limits
in 2030 and 2050
Sources: GWEC; CIGRE; websites of System Operators; IRP 2016 Draft; CSIR analysis
Follower
Annual new wind
capacity relative to
system peak load

28. 33
Solar PV penetration in leading countries today is 2.5 times that of
South Africa’s Draft IRP 2016 Base Case for the year 2050
0%
10%
20%
30%
40%
50%
60%
70%
2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
TotalsolarPVcapacity
relativetosystempeakload
Year
Spain
UK
Italy
Japan
Germany
Australia
China
South Africa
India
South Africa IRP 2016 Base Case
Sources: SolarPowerEurope; CIGRE; websites of System Operators; IRP 2016 Draft; CSIR analysis
Leader
Follower
Follower
2nd wave

29. 34
Wind penetration in leading countries today is 1.7-1.8 times that of
South Africa’s Draft IRP 2016 Base Case for the year 2050
0%
10%
20%
30%
40%
50%
60%
70%
2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
Totalwindcapacity
relativetosystempeakload
Year
Spain
Germany
Ireland
Brazil
India
China
South Africa IRP 2016 Base Case
South Africa
Sources: GWEC; CIGRE; websites of System Operators; IRP 2016 Draft; CSIR analysis
Leader
Follower

30. 35
Agenda
Background
CSIR’s Approach and Project Team
Comments on IRP Assumptions
IRP Results and Least-cost Scenario
Summary

31. 36
Agenda
Background
CSIR’s Approach and Project Team
Comments on IRP Assumptions
IRP Results and Least-cost Scenario
• Input Assumptions
• Results
Summary

32. 37
550
500
450
400
350
300
250
200
150
100
50
0
2020 2030 2040 2050
Electricity
in TWh/yr
2016
522
428
344
280
244
Input as per IRP 2016: Demand is forecasted to double by 2050
Forecasted demand for the South African electricity system from 2016 to 2050
Sources: DoE (IRP 2016); Eskom MTSAO 2016-2021; StatsSA; World Bank; CSIR analysis
Note: by 2050 the electricity
demand per capita would still be
less than that of Australia today
Demand

33. 38
550
500
0
200
150
100
50
400
300
250
350
450
2016 2040
82
2030
174
259
Electricity
in TWh/yr
20502020
Input as per IRP 2016: Decommissioning schedule for existing plants
Decommissioning schedule for the South African electricity system from 2016 to 2050
Solar PV
CSP
Wind
Other
Peaking
Gas (CCGT)
Hydro+PS
Nuclear
Coal
Decommissioning of
Eskom’s coal fleet
All power plants considered for
“existing fleet” that are either:
1) Existing in 2016
2) Under construction
3) Procured (preferred bidder)
Demand
Sources: DoE (IRP 2016); Eskom MTSAO 2016-2021; StatsSA; World Bank; CSIR analysis
Existing supply

34. 39
Demand grows, existing fleet phases out – gap needs to be filled
Forecasted supply and demand balance for the South African electricity system from 2016 to 2050
350
450
200
250
300
400
500
550
0
50
100
150
428
254
522
2040
439
2030
Electricity
in TWh/yr
344
2016
84
2020 2050
Other
Coal
Peaking
Gas (CCGT)
Hydro+PS
Nuclear
CSP
Solar PV
Wind
Supply gap
Decommissioning of
Eskom’s coal fleet
The IRP model fills the supply
gap in the least-cost manner,
subject to any constraints
imposed on the model
Demand
Note: All power plants considered for “existing fleet” that are either Existing in 2016, Under construction, or Procured (preferred bidder)
Sources: DoE (IRP 2016); Eskom MTSAO 2016-2021; StatsSA; World Bank; CSIR analysis

35. 41
0.620.62
Gas (OCGT)
3.69
Diesel (OCGT)
2.89
Mid-merit CoalGas (CCGT)
1.41
Nuclear
1.41
1.09
Baseload
Coal (PF)
1.00
WindSolar PV
Variable
(Fuel)
Fixed
(Capital,
O&M)
Inputs as per IRP 2016:
Key resulting LCOE from cost assumptions for new supply technologies
50%90% 50% 10%Assumed capacity factor2  10%
Lifetime cost
per energy unit1
(LCOE) in R/kWh
(Apr-2016-R)
1 Lifetime cost per energy unit is only presented for brevity. The model inherently includes the specific cost structures of each technology i.e. capex, Fixed O&M, variable O&M, fuel costs etc.
2 Changing full-load hours for new-build options drastically changes the fixed cost components per kWh (lower full-load hours  higher capital costs and fixed O&M costs per kWh);
Assumptions: Average efficiency for CCGT = 55%, OCGT = 35%; nuclear = 33%; IRP costs from Jan-2012 escalated to May-2016 with CPI; assumed EPC CAPEX inflated by 10% to convert EPC/LCOE
into tariff; Sources: IRP 2013 Update; Doe IPP Office; StatsSA for CPI; Eskom financial reports for coal/diesel fuel cost; EE Publishers for Medupi/Kusile; Rosatom for nuclear capex; CSIR analysis
82%
Same assumptions used
as per IRP 2016
0 0 1 000 0 1 000400 600 600
CO2 in kg/MWh

36. 43
IRP 2016 increases cost assumptions for solar PV compared to IRP 2010
0.62
3.65
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
2010 2015 2020 2025 2030 2035 2040 2045 2050
Tariff in R/kWh
(Apr-2016-Rand)
Year
0.91
1.17
2.18
Actuals: REIPPPP (BW1-4Exp)
Assumptions: IRP 2016 - low
Assumptions: IRP 2016 - high
Assumptions: IRP2010 - low
Assumptions: IRP2010 - high
Notes: REIPPPP = Renewable Energy Independant Power Producer Programme; BW = Bid Window; bid submissions for the different BWs: BW1 = Nov 2011; BW2 = Mar 2012; BW 3 = Aug 2013;
BW 4 = Aug 2014; BW 4 (Expedited) = Nov 2015 Sources: StatsSA for CPI; IRP 2010; South African Department of Energy (DoE); DoE IPP Office; CSIR analysis
∑ = 2.8 GW
BW1  BW 4 (Expedited)

37. 44
CSIR study cost input assumptions for solar PV:
Future cost assumptions for solar PV aligned with IRP 2010
0.490.520.62
3.65
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
2010 2015 2020 2025 2030 2035 2040 2045 2050
0.91
2.18
1.17
Tariff in R/kWh
(Apr-2016-Rand)
Year
0.56
Assumptions: IRP 2016 - high
Assumptions: IRP 2016 - low
Assumptions: IRP2010 - low
Actuals: REIPPPP (BW1-4Exp)
Assumptions: IRP2010 - high
Assumptions for this study
Notes: REIPPPP = Renewable Energy Independant Power Producer Programme; BW = Bid Window; bid submissions for the different BWs: BW1 = Nov 2011; BW2 = Mar 2012; BW 3 = Aug 2013;
BW 4 = Aug 2014; BW 4 (Expedited) = Nov 2015 Sources: StatsSA for CPI; IRP 2010; South African Department of Energy (DoE); DoE IPP Office; CSIR analysis
∑ = 2.8 GW
BW1  BW 4 (Expedited)

38. 45
IRP 2016 increases cost assumptions for wind compared to IRP 2010
0.62
0.69
1.19
1.52
0.00
0.25
0.50
0.75
1.00
1.25
1.50
1.75
2010 2015 2020 2025 2030 2035 2040 2045 2050
Tariff in R/kWh
(Apr-2016-Rand)
Year
0.87
Assumptions: IRP2010
Actuals: REIPPPP (BW1-4Exp)
Assumptions: IRP 2016 - low
Assumptions: IRP 2016 - high
∑ = 4.0 GW
Notes: REIPPPP = Renewable Energy Independant Power Producer Programme; BW = Bid Window; bid submissions for the different BWs: BW1 = Nov 2011; BW2 = Mar 2012; BW 3 = Aug 2013;
BW 4 = Aug 2014; BW 4 (Expedited) = Nov 2015 Sources: StatsSA for CPI; IRP 2010; South African Department of Energy (DoE); DoE IPP Office; CSIR analysis
BW1  BW 4 (Expedited)

39. 46
CSIR study cost input assumptions for wind:
Future cost assumptions for wind aligned with results of Bid Window 4
0.62
0.62
0.620.62
0.69
1.19
1.52
0.00
0.25
0.50
0.75
1.00
1.25
1.50
1.75
2010 2015 2020 2025 2030 2035 2040 2045 2050
Tariff in R/kWh
(Apr-2016-Rand)
Year
0.87
Assumptions: IRP2010
Actuals: REIPPPP (BW1-4Exp)
Assumptions for this study
Assumptions: IRP 2016 - low
Assumptions: IRP 2016 - high
∑ = 4.0 GW
Notes: REIPPPP = Renewable Energy Independant Power Producer Programme; BW = Bid Window; bid submissions for the different BWs: BW1 = Nov 2011; BW2 = Mar 2012; BW 3 = Aug 2013;
BW 4 = Aug 2014; BW 4 (Expedited) = Nov 2015 Sources: StatsSA for CPI; IRP 2010; South African Department of Energy (DoE); DoE IPP Office; CSIR analysis
BW1  BW 4 (Expedited)

40. 47
CSIR study cost input assumptions for CSP:
Today’s latest tariff as starting point, same cost decline as per IRP 2010
1.201.201.20
3.55
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
2010 2015 2020 2025 2030 2035 2040 2045 2050
Tariff in R/kWh
(Apr-2016-Rand)
Year
2.02
2.90
3.11
3.32
Assumptions: IRP2010 - high
Actuals: REIPPPP (BW1-4Exp)
Assumptions: IRP2010 - low
Assumptions for this study
Assumptions: IRP2016 - high
Assumptions: IRP2016 - low
For bid window 3, 3.5 and 4 Exp,
weighted average tariff of base
and peak tariff calculated on the
assumption of 64%/36%
base/peak tariff utilisation ratio
Notes: REIPPPP = Renewable Energy Independant Power Producer Programme; BW = Bid Window; bid submissions for the different BWs: BW1 = Nov 2011; BW2 = Mar 2012; BW 3 = Aug 2013;
BW 4 = Aug 2014; BW 4 (Expedited) = Nov 2015 Sources: StatsSA for CPI; IRP 2010; South African Department of Energy (DoE); DoE IPP Office; CSIR analysis
BW1  BW 4 (Expedited)

41. 48
200
250
0
50
100
150
200
250
300
2010 2015 2020 2025 2030 2035 2040 2045 2050
CO2 Emissions Cap
(electricity sector)
[Mt/yr]
275275
CO2 emissions constrained by RSA’s Peak-Plateau-Decline objective
PPD that constrains CO2 emission from electricity sector
PPD = Peak Plateau Decline
Sources: DoE (IRP 2010-2030 Update); StatsSA; CSIR analysis

42. 49
Agenda
Background
CSIR’s Approach and Project Team
Comments on IRP Assumptions
IRP Results and Least-cost Scenario
• Input Assumptions
• Results
Summary

43. 50
Draft IRP 2016
Base Case
Overview of scenarios available for comparison
Scenario
Difference to
Draft IRP 2016 Base CaseSource
Draft IRP 2016
Carbon Budget
Draft IRP 2016
“Unconstrained
Base Case”
Least Cost
Department of Energy
Draft IRP 2016 as of November 2016
Department of Energy
Draft IRP 2016 as of November 2016
Department of Energy
Scenario run by DoE/Eskom as per
request of the Ministerial Advisory
Council on Energy (MACE)
CSIR
Draft Least Cost as of February 2017
N/A
Tighter carbon reduction targets
No constraints on solar PV and wind
• No constraints on solar PV/wind
• Solar PV, wind and CSP costing
aligned with latest IPP results
• Demand response by 2050 in
residential warm water provision

44. 51
Common reporting layout applied to all scenarios by DoE and by CSIR
Determine total operational capacity per year
• Add existing fleet & its decommissioning schedule
• Decommission new power plants at the end of
their economic life (wind = 20, solar PV = 25 years)
Determine energy balances with typical load factors for
different technologies and calibrate with IRP numbers
… are analysed with respect to total installed
capacity (GW) and energy balance (TWh/yr)
Scenarios of the Draft IRP 2016 show the annual
new installed capacity per year per technology
Sources: Draft IRP 2016, http://www.energy.gov.za/IRP/irp-presentaions/IRP-Update-Presentation-22-Nov-2016.pdf; CSIR analysis
0
300
550
500
450
400
350
250
200
150
100
50
22
2030
344
235
2050
23
36
13
2016
248
13
207
15
17
523
159
(30%)
165
(32%)
33
(6%)
39
(7%)
93
(18%)
28
(5%)
2040
33
431
229
35
34
66
Total electricity
produced in TWh/yr
Coal
Nuclear
Hydro+PS
Gas (CCGT)
Peaking
Wind
CSP
Solar PV
IRP scenarios as published by the DoE …

45. 52
Draft IRP 2016 Base Case is a mix of roughly 1/3 coal, nuclear, RE each
Draft IRP 2016 Base Case
50
150
250
0
300
200
500
350
400
450
550
100
33
(6%)
165
(32%)
2040
39
(7%)
28
(5%)
93
(18%)
523
15
Total electricity
produced in TWh/yr
431
229
35
159
(30%)
34
33
66
20502030
344
235
13
23
22
13
2016
248
207
17
36
Wind
Peaking
Gas (CCGT)
Hydro+PS
Nuclear
CoalCSP
Solar PV
Sources: DoE Draft IRP 2016; CSIR analysis
As per Draft IRP 2016
More stringent
carbon limits

46. 53
Draft IRP 2016 Carbon Budget case: 40% nuclear energy share by 2050
Draft IRP 2016 Base Case Draft IRP 2016 Carbon Budget
50
150
250
0
300
200
500
350
400
450
550
100
33
(6%)
165
(32%)
2040
39
(7%)
28
(5%)
93
(18%)
523
15
Total electricity
produced in TWh/yr
431
229
35
159
(30%)
34
33
66
20502030
344
235
13
23
22
13
2016
248
207
17
36
Wind
Peaking
Gas (CCGT)
Hydro+PS
Nuclear
CoalCSP
Solar PV
300
450
500
550
50
0
100
400
250
200
150
350
345
161
433
2030
103
44
(8%)
85
2040
33
134
109
(21%)
17
39
29
Total electricity
produced in TWh/yr
2050
15
35
(7%)
206
(39%)
63
(12%)
525
207
23
248
2016
23
63
57
63
(12%)
As per Draft IRP 2016
More stringent
carbon limits
Sources: DoE Draft IRP 2016; CSIR analysis
No RE limits, reduced wind/solar PV costing, warm water demand flexibility

47. 54
Least Cost case is largely based on wind and solar PV
Draft IRP 2016 Base Case Least CostDraft IRP 2016 Carbon Budget
50
150
250
0
300
200
500
350
400
450
550
100
33
(6%)
165
(32%)
2040
39
(7%)
28
(5%)
93
(18%)
523
15
Total electricity
produced in TWh/yr
431
229
35
159
(30%)
34
33
66
20502030
344
235
13
23
22
13
2016
248
207
17
36
Wind
Peaking
Gas (CCGT)
Hydro+PS
Nuclear
CoalCSP
Solar PV
300
450
500
550
50
0
100
400
250
200
150
350
345
161
433
2030
103
44
(8%)
85
2040
33
134
109
(21%)
17
39
29
Total electricity
produced in TWh/yr
2050
15
35
(7%)
206
(39%)
63
(12%)
525
207
23
248
2016
23
63
57
63
(12%)
350
200
0
50
250
400
550
500
450
100
150
300
15
83
433
2040
130
(25%)
22
87
189
9
16
282
(54%)
44
(8%)
2050
49
22
15
527
15
Total electricity
produced in TWh/yr
20
(4%)
36
(7%)
346
2030
17
207
248
2016
35
212
As per Draft IRP 2016
More stringent
carbon limits
No RE limits, reduced wind/solar PV costing, warm water demand flexibility
Sources: DoE Draft IRP 2016; CSIR analysis

48. 55
Least Cost means no new coal and no new nuclear until 2050,
instead 90 GW of wind and 70 GW of solar PV plus flexible capacities
Draft IRP 2016 Base Case Least CostDraft IRP 2016 Carbon Budget
250
200
150
100
50
0
2050
135
25
20
8
22
13
30
16
2040
111
33
5 8
17
12
21
12
2030
85
39
2 6
8
11
7
2016
51
37
5 3
Total installed
net capacity in GW
Coal
Nuclear
Hydro+PS
Gas (CCGT)
Peaking
Wind
CSP
Solar PV
250
0
200
150
100
50
Total installed
net capacity in GW
2050
149
10
26
8
33
10
36
25
2040
129
19
17
8
19
8
34
22
2030
98
34
7
8
10
20
13
2016
51
37
5 3
100
0
50
250
150
200
60
52
2030
100
31
34
2050
5
10
18
237
2016
Total installed
net capacity in GW
7
2040
178
19
25
73
5
37
2
19
22
93
51
5
37
16
3
As per Draft IRP 2016
More stringent
carbon limits
Plus 25 GW demand
response from residential
warm water provision
Note: REDZ = Renewable Energy Development Zones
Current REDZ cover 7% of South Africa‘s land mass
Sources: DoE Draft IRP 2016; CSIR analysis
No RE limits, reduced wind/solar PV costing, warm water demand flexibility
535 GW
1 782 GW
Technical
potential
in REDZ
only

49. 56
On request by the Ministerial Advisory Council on Energy (MACE) the
DoE re-ran the IRP 2016 Base Case without constraining solar PV/wind
Source: MACE’s presentation during the IRP public consultations on 7 December 2016 in Johannesburg
Sources: http://www.energy.gov.za/IRP/irp-presentaions/Comments-on-IRP-2016-Draft-KabiSolar.pdf

50. 57
The DoE’s “Unconstrained Base Case” is similar to the CSIR’s Least Cost
Source: MACE’s presentation during the IRP public consultations on 7 December 2016 in Johannesburg
Sources: http://www.energy.gov.za/IRP/irp-presentaions/Comments-on-IRP-2016-Draft-KabiSolar.pdf

51. 58
Demand and
Supply in GW
110
120
90
60
70
80
30
40
50
100
0
10
20
Draft IRP 2016 Base Case:
Nuclear and coal dominate the supply mix in 2050
Monday Tuesday Wednesday Thursday Friday Saturday Sunday
Sources: CSIR analysis, based on DoE‘s Draft IRP 2016
DemandNuclear
Coal
Gas (CCGT)
Hydro
Peaking
Wind
Solar PV
Exemplary Week under Draft IRP 2016 Base Case (2050)

52. 59
Demand and
Supply in GW
60
50
40
30
20
10
0
120
110
100
90
80
70
Draft IRP 2016 Carbon Budget:
Nuclear dominates the supply mix in 2050, gas required for balancing
Monday Tuesday Wednesday Thursday Friday Saturday Sunday
DemandNuclear
Coal
Gas (CCGT)
Hydro
Peaking
Wind
Solar PV
Exemplary Week under Draft IRP 2016 Carbon Budget (2050)
Sources: CSIR analysis, based on DoE‘s Draft IRP 2016

53. 60
Demand and
Supply in GW
10
50
60
80
90
70
120
110
100
30
20
0
40
Least Cost:
Solar PV and wind dominate supply mix in 2050, with excess at times
Monday Tuesday Wednesday Thursday Friday Saturday Sunday
Sources: CSIR analysis
DemandWindCurtailed solar PV and wind
Solar PV Peaking
Hydro
Gas (CCGT)
Coal
Nuclear
Exemplary Week under Least Cost (2050)

54. 61
Total cost of power generation: Draft IRP 2016 Base Case R86 bn/year
more expensive by 2050 than Least Cost (without cost of CO2)
522
398
286
132
518
413
300
436
359
262
2010 2020 2030 2040 2050
200
0
50
250
300
350
400
150
550
450
100
500
Total cost of power
generation in bR/yr
(constant 2016 Rand)
+86
(+20%)
Draft IRP 2016 Carbon Budget
Draft IRP 2016 Base Case
Least Cost
Sources: CSIR analysis
2016
Note: Medium-term from 2016 to 2030 not in the main focus of a long-term IRP study
and therefore only indicative. Will be investigated in more detail in a separate sub-study.

55. 62
Average tariff (without cost of CO2):
Draft IRP Base Case tariff 17 cents/kWh higher than Least Cost by 2050
1.13
1.22
1.291.25
1.17
1.13
1.06
1.13
0.83
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
1.1
1.2
1.3
2010 2020 2030 2040 2050
+0.17
(+15%)
Average tariff in R/kWh
(constant 2016 Rand)
Draft IRP 2016 Carbon Budget
Least Cost
Draft IRP 2016 Base Case
Note: Average tariff projections include 0.30 R/kWh for transmission, distribution and customer service (today‘s average cost for these items) Sources: Eskom on Tx, Dx cost; CSIR analysis
Note: Medium-term from 2016 to 2030 not in the main focus of a long-term IRP study
and therefore only indicative. Will be investigated in more detail in a separate sub-study.
2016

56. 63
Average tariff (with cost of CO2):
Draft IRP Base Case tariff 20 cents/kWh higher than Least Cost by 2050
1.34
1.14
0.95
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
1.1
1.2
1.3
1.4
2010 2020 2030 2040 2050
+0.20
(+17%)
Average tariff in R/kWh
(constant 2016 Rand)
Least Cost
Draft IRP 2016 Carbon Budget
Draft IRP 2016 Base Case
Note: Average tariff projections include 0.30 R/kWh for transmission, distribution and customer service (today‘s average cost for these items) Sources: Eskom on Tx, Dx cost; CSIR analysis
2016
Note: Medium-term from 2016 to 2030 not in the main focus of a long-term IRP study
and therefore only indicative. Will be investigated in more detail in a separate sub-study.

57. 64
Least Cost without renewables limits is R82-86 billion/yr cheaper by
2050 than IRP 2016 Base Case and IRP 2016 Carbon Budget case
Draft IRP 2016 Base Case Least CostDraft IRP 2016 Carbon Budget
R518 billion/yr
Ø tariff = 1.29 R/kWh
R436 billion/yr
Ø tariff = 1.13 R/kWh
100 Mt/yr 70 Mt/yr
16 bn l/yr 9 bn l/yr
R522 billion/yr
Ø tariff = 1.29 R/kWh
200 Mt/yr
38 bn l/yr
Note: Average tariff projections include 0.30 R/kWh for transmission, distribution and customer service (today‘s average cost for these items) Sources: Eskom on Tx, Dx cost; CSIR analysis
As per Draft IRP 2016
18%
32%
7%
1%
30%
5%
6%
21%
1%
12%
7%
39%
12%
8% 7%
2%
4%
1%
25% 8%
54%
~525 TWh/yr ~525 TWh/yr ~525 TWh/yr
Nuclear Hydro + Pumped Storage WindGas (CCGT) OtherCoal CSP Solar PVPeaking

58. 65
200
220
20
0
-20
-40
160
180
140
120
100
80
60
40
Annual cost delta of
Draft IRP – Least Cost
by 2050 in bR/yr
86
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
1.1
0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 1.1
Today (2016)
Study assumptions (2020-2050)
Relative
RE/nuclear cost
(Today:
RE = 0.62 R/kWh,
Nuclear = 1.09 R/kWh
 0.57)
Relative
RE/coal cost
(Today:
RE = 0.62 R/kWh,
Coal = 1.00 R/kWh
 0.62)
Sensitivity on cost difference: Even if RE were 50% more expensive
than assumed, Least Cost is still cheaper than Draft IRP 2016 Base Case
Sources: CSIR analysis

59. 66
Agenda
Background
CSIR’s Approach and Project Team
Comments on IRP Assumptions
IRP Results and Least-cost Scenario
Summary

60. 67
Summary:
A mix of solar PV, wind and flexible power generators is least cost
Solar PV, wind & flexible power generators (e.g. gas, CSP, hydro, biogas, demand res.) is the cheapest new-
build mix for the RSA power system. It is cost-optimal to aim for >70% renewable energy share by 2050
This “Least Cost” mix is > R80 billion per year cheaper by 2050 than the current Draft IRP 2016 Base Case
Additionally, Least Cost mix reduces CO2 emissions by 65% (-130 Mt/yr) over the Draft IRP 2016 Base Case
Therefore: Avoiding CO2 emissions and least-cost is not a trade-off anymore – South Africa can de-
carbonise its electricity sector at negative carbon-avoidance cost
The IRP and this analysis factor in all first-order cost drivers within the boundaries of the electricity system,
but not external costs and benefits of certain electricity mixes that occur outside of the electricity system
Deviations from the Least Cost electricity mix can be quantified to inform policy adjustments
(e.g. forcing in of certain technologies not selected by the least-cost mix like
coal, nuclear, hydro, CSP, biogas, biomass, etc.)
Note: Wind and solar PV would have to be 50% more expensive than assumed before the IRP Base Case and the Least Cost case break even
Sources: CSIR analysis

61. 68
Thank you
Re a leboga
Siyathokoza
Enkosi
Siyabonga
Re a leboha
Ro livhuha
Ha Khensa
Dankie
Note: „Thank you“ in all official languages of the Republic of South Africa