Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

2008:Power and the Economy

514 views

Published on

  • Be the first to comment

  • Be the first to like this

2008:Power and the Economy

  1. 1. POWER & THE ECONOMYKeith JefferisMarch 19, 2008
  2. 2. Structure of Presentation Consumption Trends – Short and Long-Term The Mining Sector Supply & Demand Forecasts Conclusions
  3. 3. Short & Long-Term ConsumptionTrends
  4. 4. Electricity Consumption & Economic Growth (Non-mining) 10% 16% Chart compares annual growth rates of non-mining electricity 9% 14% consumption and non-mineral GDP 8% Both are cyclical (boom & 12% recession) 7% 10% Track each other very closely – Electricity 6% electricity consumption closelyGDP 5% 8% related to growth 4% 6% 1% increase in non-mining GDP associated with 1.6% increase in 3% non-mining power consumption 4% 2% Makes electricity consumption a 1% 2% useful leading indicator of economic activity 0% 0% Sharp fall in power supplies in Q1 2008 will lead to negative GDP impact unless power consumption efficiency increased NMGDP Electricity
  5. 5. Long-term Consumption trends Monthly Consumption Very rapid growth in (MWh ‘000) power consumption300 1998: avg 134,000250 MWh/m200 2007: avg 268,000 MWh/m150 doubled in 9 years100 Average annual growth 50 1998-2007 0 Total: 7.8% a year 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Mining: 5.3%/yr Non-mining: 9.8%/yr Mines Non-mining
  6. 6. Power Intensity of GDP 200 GDP growth avg. 5.8% Power consumption has 180 grown faster than GDPIndex (1997/98 = 100) (except 2006/7) 160 Hence units of power 140 consumed per unit of GDP produced has 120 increased Increased dependence 100 upon electricity e.g. increased household 80 electrification GDP Power
  7. 7. Monthly Pattern of Power Consumption (Peak Demand, 1997-2007) 8% Regular pattern of peak power demandDeviation from average (trend) 6% Lowest in summer (Jan- 4% Mar) consumption 2% Highest in winter (Jun-Jul) System stress is most 0% intense in peak periods -2% Maintenance planned for summer period, but -4% can be caught out by -6% unexpected events (rain, cold)
  8. 8. Mining Sector
  9. 9. Mining Power Consumption Mining sector is major Mupani Gold power consumer 3% 41% of total in 2007 Tati BOTASH down from 47% in 1998 1% Nickel Orapa/ 12% Let’kane Major consumers: 28% BCL – copper/nickel smelter (Selibe-Phikwe) – 36% BCL Jwanen Debswana – 36% g Orapa/Letlhakane – 20% 28% Debswana - Jwaneng 20%
  10. 10. Mining in the Economy - GDP Soc. & Per. Trade, Mining dominates GDP Serv hotels etc. 4% 11% 42% of total in 2006/07 Govt 16% Share of power consumption in line with Mining Fin. & bus. 42% contribution of mining to Serv 11% the economy Transp.& comms Trade 4% 11% Constr. Water Manuf 4% & elec 4% 2%
  11. 11. Exports (2007) Minerals comprise 82% of exports Diamonds dominate at 63% Soda (but lower than in recent past) Nickel/co ash 1% Nickel & copper second pper 17% largest Gold 1% Gold & soda ash relatively minor mineral exports Importance of minerals in Other exports means that powerDiamonds 18% 63% supplies to mining sector are a priority
  12. 12. Major Mining Projects Major mining developments BPC Projections under way Project Current 5 years BMR Activox refinery (Tati) Tati Nickel 39 113 Tati Nickel expansion (Selkirk) Debswana – Orapa & BCL 65 65 Jwaneng expansions Orapa 44 93 Mowana copper mine (Dukwe) Jwaneng 41 77 Lerala diamond mine Mowana 7 ?? (Diamonex) AK6 diamond mine (Orapa) Lerala/AK6 ?? ?? (African Diamonds) TOTAL 216 390 Gope diamond mine (CKGR) 80% increase in power demand projected over next 5 years
  13. 13. Supply & Demand Forecasts
  14. 14. Sources of Supply 300 3 main sources: 250 Morupule 200‘000 MWh/month Eskom 150 Other imports 100 (ZESA/HCB/EDM) 50 Shares in 2007 Morupule 20% 0 Eskom 72% Morupule Imports - Eskom Imports - other Other 8%
  15. 15. Power Supply Issues Emerging Supply Deficit Peak demand increasing at 800 around 11% p.a. 2008-2011 700 Non-mining 9.8% 600 Mining as per BPC ests.Peak demand (MW) 500 Over 750MW in 2011 400 Eskom firm supply reducing 300 from 2008-2011 200 2008,9: 350MW 100 2010: 250MW 0 2011: 150MW 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Eskom can cut up to 10% if Morupule Eskom Deficit load shedding in SA
  16. 16. Power Supply Deficit 800 60% Anticipated shortfall 700 50% on existing trends:Peak Demand (MW) % of peak demand 600 2008: 0 MW 40% 500 2009: 70MW 400 30% 2010: 239MW 300 20% 2011: 412MW 200 Remember: 10% 100 peak demand is in 0 0% winter! 2008 2009 2010 2011 Eskom may be unable to supply contracted Eskom/BPC HCB/ZESA amounts Deficit % of demand
  17. 17. Supply Options Short-term Medium-term Mozambique (via Zimbabwe) Diesel HCB – 60MW contracted in 2008 Available, flexible – but 2009 - ? expensive EDM - ? Coal-bed methane SA (Eskom), Malawi, Tanzania Not yet exploited chasing the same power Needs substantial investment in Zimbabwe (ZESA) extraction Send Botswana coal to Bulawayo Solar (PV/steam) and share power 50-50 (45MW) Resources plentiful (sunlight) Large-scale generation still experimental internationally With current technology, not competitive with coal for grid power Competitive for remote/off-grid settlements Technology changing fast
  18. 18. Supply Options BPC tender for 240MW from Medium/Long-term IPP by 2009 Morupule B (expansion, BPC) At tender review stage: 600MW Coal-bed methane (1) Tender award stage Diesel (3 proposals) BPC timelines appear highly optimistic Mmamabula (CIC/IP) 2100-2400MW, 2013? BPC entitled to 25% offtake Bogged down in tariff negotiations with Eskom Morupule C A further 600MW - 2015? Aviva, others
  19. 19. Price Impact Current BPC retail tariff Cost per kWh of different 40t/kWh options (new capacity, US c) Approx 6 USc/kWh Hydro Average Eskom tariff 2–4c Approx. 18 c/kWh (2.5 US Coal c/kWh) 6–8c Steep price rises Small-scale Diesel programmed, to fund new 25 – 35 c investment Solar Will still be cheap by 15c? international standards Major tariff increases inevitable Short-term capacity (diesel/gas) likely to need large government subsidies
  20. 20. Conclusions
  21. 21. Concluding Points 2008 supplies should (just) balance Solutions: demand, assuming no major Eskom Supply Side Enhancement problems, but winter (June-July) will Expedite Morupule B (“national be tight emergency!”) 2009 – 2011 supply/demand Businesses - invest in expensive standby generators balance worsens sharply, both in Botswana and in SA Actively encourage IPPs Short-term solutions (Diesel generators) Supply to diamond mines must be Demand Side Management (DSM) fully maintained Defer major projects? Power cuts have major negative Mothball BCL smelter (Selebi-Phikwe)? impact on: Rationing of industrial/ productivity commercial/residential consumers business confidence Time-based metering/tariffs Energy-saving awareness investment climate & new investment economic growth Significant price increases inevitable: funding expensive new capacity, both long-term and short-term encourage more efficient consumption
  22. 22. Long-term Prospects Much more positive outlook BUT for Botswana & region Global warming/ climate Mmamabula change issues may impact on Other major coal-fired coal-fired generation generation projects Obligatory carbon pricing / Botswana and SA have major sequestration would add to unexploited coal reserves costs of coal-fired power Rehabilitation of capacity in Would make hydro, solar (& Zimbabwe, Zambia, DRC nuclear) much more attractive Grand Inga hydro (DRC)/ Economics of power Westcor (30 000+MW) generation in flux! In ten years could have surplus of cheap power again – unexploited hydro and coal resources
  23. 23. Thank You

×