Presentation of the 20067 MTEF DME Strategic Plan

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Presentation of the 2006/7 MTEF DME Strategic
Plan

• Presentation to the joint sitting of the Minerals
  and Energy PPC and
• Select Committee of Economic and Foreign Affairs
  on the 16th May 2006

Adv S Nogxina
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Overview

• Hydrocarbons and Energy Planning
• Electricity and Nuclear Energy
• Electricity
• Energy Planning
• Hydrocarbons
• Nuclear Energy

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Hydrocarbons and Energy Planning

• Purpose
• Promotion of sustainable use of energy resources
  through IEP
• Promotion of petroleum products, coal, gas,
  renewable energy and energy efficiency
• Key focus areas
• IEP
• Introduction of other forms of energy phasing
  out of paraffin
• Implementation of policies security of supply
  of liquid fuels
• Strategic stock policy
• Increase in renewable energy

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Electricity and Nuclear Energy

• Purpose
• Development, monitoring and implementation of
  policies and legislation governing the
  electricity and nuclear sectors
• Key focus areas
• Security and diversity of supply
• Effective electricity distribution
• Universal access to electricity
• Implementation of radioactive waste management
• Development of nuclear energy policy

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Hydrocarbons 5 Year Plan
Hydrocarbons 5 Year Programmes
To govern the energy sector to be cleaner, safer
and healthier
Redressing Past Imbalances
To contribute to sustainable development through
energy interventions
Operational Energy Information and Petroleum
Licensing Systems
Implementation of Energy economic policies and
legislation

• INTERNATIONALLY COMPETITIVE ENERGY PRICES
  REGULATION
• Petroleum Prod Act
• Gas Act
• Petroleum Pipelines Act
• Energy Bill
• National Energy Regulator Act

Regulation and Enforcement of Certain Elements of
Security of Supply

• Low Smoke Domestic Fuels
• Vehicle Fuels
• LPG

• TRANSFORMATION
• Licensing framework
• Procurement

Alignment of SOEs to Government Policy

• Petroleum Licensing Business System

• Coal Reserves and Resources
• Security of energy supply
• Strategic Oil stocks
• Energy White Paper review
• Gas infrastructure
• Gas Trade Agreements

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White Paper on Renewable Energy (2003)

• White Paper on Renewable Energy (approved by
  Cabinet in Nov 2003) spells out Governments
  commitment to
• Creating an enabling environment for a renewable
  energy industry in SA (both on and off-grid)
• Develop a biofuels industry in SA
• Supporting the implementation of specific
  technologies
• Ensuring uptake through the adoption of a target
  for renewable energy

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Renewable Energy Target

• 10 000 GWh (0.8 Mtoe) renewable energy
  contribution to final energy consumption by 2013,
  to be produced mainly from biomass, wind, solar
  small-scale hydro. The renewable energy is to be
  utilised for power generation and non-electric
  technologies such as solar water heating and
  bio-fuels.
• This is equivalent to replacing two (2x 660 MW)
  units of Eskoms combined coal fired power
  stations.
• Or.
• 1100 million litres of diesel (14) replaced with
  biodiesel.
• This is in addition to the estimated existing
  8-9 renewable energy contribution mainly from
  fuelwood and waste. More efficient and
  sustainable use of fuelwood and conversion of the
  waste for power generation will add to the
  target.
• TO BE REVIEWED MID TERM-2008

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RE Strategy Mandate
White Paper on Renewable Energy (Nov 2003) Way
forward A Strategy on Renewable Energy will be
developed, which will translate the goals,
objectives and deliverables set out herein into a
practical implementation plan
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Anticipated Benefits of Meeting the RE Target

• A Macro-economic analysis of the RE target
  concluded that
• The target is economically viable with government
  financial support and green funding (e.g.. CDM,
  green premium)
• Achieving the target could add about 1667 MW new
  renewable energy capacity with, in comparison
  with coal-fired power stations a net impact on
  GDP as high as R1 071 million per year,
  additional government revenue of R299 million,
  additional income that would flow to low-income
  households as much as R128 million, just over 20
  000 new jobs would be created and water savings
  of 16.5 million kilolitres which translates into
  a R26.6 million saving could be realised.

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Current Status of fiscal support to RE

• Once off capital grants to commercial projects
  (all renewable energy, including biofuels)
• R14.2 million over financial years 2005/6 to
  2007/8
• Tax incentive for biodiesel
• Currently 40 concession on general fuel levy
• Accelerated depreciation on assets from 4 to 3
  years
• Environmental fiscal reform policy
• Under review by National Treasury but does not
  yet contain direct support for renewable energies
  (lost opportunity?)

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Renewable Energy Strategy Development

• Two distinct strategies have been identified as
  key to implementation of renewable energy
• Large Grid-connected Renewable Energy Strategy
• Biofuels Strategy Development

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Large Grid-connected RE Technology Uptake

• Strategy to support uptake of key grid-connected
  technologies such as
• Sugarcane bagasse cogeneration
• Small Scale hydro
• Landfill gas power production
• Solar water heating (energy efficiency)
• Strategy proposes introduction of top-up feed-in
  tariff to bridge cost gap
• Involves levy on electricity consumption (0.2
  0.3 c/kWh)
• Phased out scheme that supports critical mass
  development of technology and skills
• Strategy addresses market rules required to
  ensure free and equitable access to the national
  grid
• Pilot project underway to study potential of
  voluntary market for renewable energy

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Biofuels Strategy Development

• Cabinet approved in December 2005 the
  establishment of a task team to develop biofuels
  strategy
• Task team convened by Minister of Minerals and
  Energy
• Representation from key departments involved in
  biofuels
• Working Groups established to provide key input
  to strategy development led by relevant
  department
• CEF (Pty) Ltd and IDC tasked to investigate
  investment in commercial projects that support
  strategy development
• Strategy focuses on two major aspects
• Job creation in the second economy
• Development of an immediate market for biofuels
  in the formal economy
• Timelines
• Compilation of relevant literature and pricing
  model development June 2006
• Presentation to Cabinet Lekgotla in July 2006
• Submission to Cabinet in October 2006

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Objects of the National Energy Bill

• Draft Energy Bill (2006) makes provision for
• the establishment of the National Energy Advisory
  Committee
• the establishment of the National Energy Data
  Base and Information System
• integrated energy planning function
• renewable energy and energy efficiency matters
• energy safety, health and environmental matters
• energy access by households
• international energy obligations
• energy research

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Energy Bill status

• Draft Bill was circulated as per Cabinet request
  to key stakeholders for comment in 2004.
• Substantive comments received
• Bill Revised accordingly
• Resubmit Bill to Cabinet in June/July 2006
• Request approval to go out on public comment

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Nuclear Framework Issues

• Continue Training of personnel
• Internship Programme at DME and associated
  Institutions
• Monitor Enrolment in Universities
• Host Training Programmes by IAEA including WITS
  RP Course for the African Region

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Nuclear Policy Issues

• Development of a Nuclear Energy Policy
• Address position on Nuclear Fuel Cycle
• Conduct Feasibility Studies on potential Uranium
  beneficiation projects
• Address Issues on future Nuclear Build
• Review the Governance Framework

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International Cooperation

• Key for any Development of Nuclear Infrastructure
  and Security of Nuclear Supply Agreements Under
  Negotiation
• Argentina
• Turkey
• United States
• South Korea
• Peoples Republic of China

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PBMR

• Governance of the PBMR is through the Department
  of Public Enterprises
• Success of the PBMR is key to ensuring security
  of Nuclear Energy Supply
• The NNR is Awaiting the Safety Analysis Report
  which is due in January 2007
• The PBMR Company still confident of Construction
  in 2007

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Nuclear Non Proliferation

• Strengthening of the Nuclear Non Proliferation
  Regime
• Regulatory Framework is adequate
• Improve Enforcement
• Enhance Coordination with other Stakeholders
  Law Enforcement Agencies and the Customs and
  Border Control Commodity Identification
  Training to be provided
• Acquire New Analytical Tools

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Skills Development

• A number of Initiatives are Underway
• WITS-IAEA Radiation Protection Course currently
  running Feb to July
• MSc Programmes in Nuclear Engineering and Nuclear
  Technology at NorthWest University
• About 60 Students enrolled for Nuclear Sector
  pipeline in Universities

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THE ELECTRICITY SCENE

• blackouts and brownouts continue
• Used to be municipalities mainly
• Now also Eskom transmission (Western Cape)
• Recovery plan in place for Western Cape winter
  2006
• Koeberg contingency plan in place
• Rotor being installed and should be on-load
  within 2 weeks (Eskom)
• Other Eskom initiatives involve LP Gas
  distribution to shift load
• Improved regulatory environment
• Electricity Regulation Act operational from July
  2006
• New licensing framework
• Quality of supply norms and standards
• Penalty provisions in the event of breach of
  licence conditions

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THE ELECTRICITY SCENE

• Legislation still outstanding
• EDI R Bill still has to go to Cabinet for
  approval
• Will provide a framework for RED formation
• Still a voluntary process Constitution
• Dual regulation in terms of the Electricity
  Regulation Second Amendment Bill, dealing with
  Section 75 issues
• Completes the regulatory and structural form of
  the distribution industry

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REDS FORMATION PROCESS

• Considers two options relating to formation of
  National RED as per Cabinet decision of September
  2006
• Option 1 anchor using Eskom Distribution in 3
  phased approach
• Option 2 new entity which is then populated by
  business transfers Considers pros and cons of
  each approach
• Factors in comments from stakeholders
• Keeps restructuring objectives in check
• Provides for Cabinet Memo with recommendations
• Resolution of policy/parking lot issues
• Mandate for implementation

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REDS FORMATION PROCESS

• Information dissemination
• After Cabinet decision is finalized
• Provincial energy forums
• NEDLAC
• Directly with municipalities as requested
• Communication strategy

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ELECTRIFICATION

• Challenges
• Universal access
• Funding need extra R1 billion per annum
• Skills capacity related to accelerated program
  for 2012
• Also opportunity for job creation Expanded
  Public Works

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NEW GENERATION CAPACITY

• Recall that Cabinet decision requires
• Eskom to do 70 of new generation
• Independent Power Producers (IPP) will do 30
• Progress Regarding IPP project
• Five companies pre-qualified to bid
• Tender issued in March 2006
• Tender closes September 2006
• Commissioning expected before winter 2009
• New generation to be rolled out on basis of
  investment plan below
• Between Eskom and IPPs

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Installed Capacity Plan
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NEW GENERATION CAPACITY
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Thank you

• Contact Details
• N Magubane
• DDG Energy
• Department of Minerals and Energy
• Private Bag X59, Pretoria
• 001
• Tel. [phone]
• Email nelisiwe.magubane_at_dme.gov.za