ENERGY PRESENTATION

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• ENERGY PRESENTATION
• Joint Portfolio Committees on Minerals and Energy

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OUTLINE

• Energy Legal Framework
• Understanding key players in the sector
• Public entities reporting to the Minister
• Other Key Players
• Energy Security Masterplan
• Status of ESMP Projects
• Challenges
• Performance over the last cycle
• The Electricity Scene
• Energy Security Policy
• Interventions
• Renewable energy
• Energy efficiency
• Socioeconomic Indicators

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ELECTRICITY VALUE CHAIN
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ENERGY LEGAL FRAMEWORK

• Petroleum Products Act 2003, No.120 of 1977
• Gas Act 2001, No. 48 of 2001
• Gas Regulator Levies Act, 2002, No. 75 of 2002
• Petroleum Pipelines Act, 2003, No.60 of 2003
• Petroleum Pipelines Levies Act, 2004, No. 28 of
  2004
• National Energy Act, 2008, No.34 of 2008
• Central Energy Fund Act, Act No.38 of 1977
• Electricity Regulation Act
• National Nuclear Regulator Act
• Nuclear Energy Act
• National Radioactive Waste Disposal Institute Act

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PUBLIC ENTITIES REPORTING TO MINISTER
CEF Group iGas, Strategic Fuel Fund (SFF), Oil
Pollution Control of South Africa, South African
National Energy Research Institute (SANERI),
African Exploration, CEF Carbon, Petroleum Agency
of South Africa (PASA), South African Supplier
Development Agency (SASDA), Energy Development
Corporation (EDC) AND Petroleum and Gas
Corporation of South Africa SANEDI (To be
Established in terms of National Energy Act of
2008 incorporating SANERI) NECSA (South African
Nuclear Energy Corporation) NNR (National
Nuclear Regulator) NERSA (National Energy
Regulator of South Africa) EDI HOLDINGS
(distribution industry restructuring)
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UNDERSTANDING THE KEY PLAYERS
Sasol Owns Two Refineries in Sasolburg and
Secunda Engen One Refinery in Durban BP
Co-owns Refinery with Shell in Durban Shell
Co-owns Refinery with BP in Durban Total
Co-owns Sasolburg Refinery with Sasol Chevron
Owns Refinery in Cape Town PetroSA Owns
Refinery in Mossel Bay All belong to association
called SAPIA (South African Petroleum Industry
Association) Eskom vertically integrated state
owned electricity monopoly
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OTHER KEY ROLEPLAYERS
Transnet Pipelines, Rail, Ports NAAMSA, Fuel
Retailers Associations Nuclear Fuels Corporation
(NUFCOR) Pebble Bed Modular Reactor Company
(PBMR) Organised Labour Key Depts DPE,
Treasury, DoT, DWAEA, DTI
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ENERGY SECURITY MASTER PLAN (ESMP) LIQUID FUELS

• The Energy Security Master Plan on liquid fuels
  was approved by Cabinet in September 2007
• The Master plan sought to allow for the making of
  well-informed choices in respect of energy
  supply, energy carriers, demand sector
  strategies, as well as energy transformation
  approaches, cognisant of the need to minimize
  negative impacts on the environment and the
  economy
• In the short-term
• the Master Plan focuses on developing supply
  chain solutions to South Africas liquid fuels
  supply challenges, management of liquid fuels
  demand and emergency response tactics.
• In the medium to long-term
• the approach is broader and begins to integrate
  supply, demand, macroeconomics, geopolitics and
  climate change

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STATUS OF ESMP PROJECTS

• Proposed refinery at Coega Feasibility stage
• Proposed Coal to Liquid plant by Sasol
  Feasibility stage
• Transnet constructing Pipeline
• Oil companies building storage capacity
• Not sufficient progress on Clean fuels
• Strategic Stocks Policy not revised

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CHALLENGES LIQUID FUELS

• Refining Capacity cannot meet demand Huge
  import bill
• Port infrastructure needs to be upgraded
  Limited room for unplanned incidents at ports
• Ability to supply inland market is challenged
• Inadequate storage infrastructure to supply
  demand e.g. Airports
• Rail infrastructure needs to play a bigger role
• Human and Financial Capacity in the Department
  must be enhanced
• Alignment of State Departments and Entities

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PERFORMANCE FROM PREVIOUS CYCLE

• Promulgation of Energy Act, 2008 No 34 of 2008
  Integrated Energy Planning, Energy Efficiency,
  Energy Research
• Ratlou Integrated Energy Centre in North West
  launched bringing the number to 6 nationally
  Kuruman, Matatiele, Mutale, Eshane
• 4387 Licence applications processed (Retail,
  Wholesale licences)
• Implementation Plan for the ESMP
• Planning for National Integrated Energy Modelling
  system started
• Planning for World Cup Fuel Supply Airports
  identified as areas requiring focus

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THE ELECTRICITY SCENE

• blackouts and brownouts continue
• Used to be municipalities mainly, now also Eskom
  (January 2008)
• Recovery plan in place for short-medium term,
  with NERT in place as per Cabinet decision
• Intensified energy efficiency
• Cogeneration and renewable energy IPPs
• Eskom financing model being developed
• Nersa will make tariff determination soon and
  pricing rising to long run marginal cost
• Additional support to Eskom being considrered by
  National Treasury
• Improved regulatory environment
• Electricity Regulation Act operational from
  October 2006
• New proposed regulations integrated resource
  planning, new generation capacity, energy
  efficiency and demand side management

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THE ELECTRICITY SCENE

• Demand projections (assumption of 2.5 sales
  growth) indicate a need for power as indicated
  below
• South Africa remains in the the top 7 of
  greenhouse gas emitters in the world
• Nuclear will play a central role on the supply
  side from 2015 (LTMS)
• Considering nuclear plant lead times, earliest
  can only be 2018
• Decisions are urgently required
• Only 76 of households have access to
  electricity
• Free Basic Energy rollout does not provide the
  intended poverty relief

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ENERGY SECURITY POLICY

• Energy White Paper position provides for
  diversification of energy mix, including coal,
  nuclear, gas and renewable energy
• Recall that Cabinet decision requires
• Eskom to do 70 of new generation, and
• Independent Power Producers (IPP) will do 30
• By 2013, the RE share of generation capacity must
  be 10 000GWh
• Nuclear energy policy approved by Cabinet
• Framework for prospecting, mining, milling and
  use of nuclear materials for energy use
• Radioactive waste management policy and strategy
  approved
• Establishes radioactive waste governance
  framework
• Establishment of a Cabinet Committee to oversee
  implementation

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ENERGY SECURITY POLICY

• Cabinet adopted Long term mitigation scenarios
  (LTMS)
• Growth without constraints
• Peak, Plateau and Decline (from 2035) in respect
  of GHG emissions
• Start now scenario 27 nuclear by 2030
• Scale up scenario 50 nuclear by 2050
• By 2013, the RE share of generation capacity must
  be 10 000GWh
• These scenarios must guide our mitigation plans
• Even on scale up scenario, this would be
  inconsistent with the decrease in GHG emissions
  required by Science
• This will likely put pressure on the RSA position
  post Copenhagen 2009

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INTERVENTIONS

• Eskom build program (nuclear decision
  finalization?)
• Independent Power Producers (IPPs)
• Renewable energy IPPs ( feed-in tariff)
• Energy efficiency and demand side management
• National Electricity Response Plan

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RENEWABLE ENERGY

• 100MW of wind farms planned across the country
• REFSO project support is limited to projects
  under R100 million. subsidy rate is now R1million
  per MW. To date projects with total installed
  capacity of 24 MW have been subsidised to date at
  a total cost of R15m
• Initiative to install over 500 000 solar water
  heaters
• The Solar Water Heating programme has an enegy
  diversity and demand side management capability.
  At present, about 1000 systems have been
  implemented and plans and over 1.75 m planned for
  the next MTEF period
• The financing framework for Biofuels has been
  established. Research into 2nd generation
  biofuels programme is currently underway
• NERSA has approved REFIT for Wind , Small Hydro
  Schemes, Landfill and Solar Concentrated Power.

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ENERGY EFFICIENCY

• Energy Efficient Lighting programme has been
  implemented in government buildings and
  households in select municipalities
• Involves exchange of incandescent lighting with
  compact fluorescent lighting (CFLs)
• To date over 20 million CFLs have been replaced
• Power Conservation Program to start in 2010
• Facilitates trading in energy savings
• Pilot Projects
• 2010 Host Cities, involving CFLs and traffic
  lights

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ENERGY EFFICIENCY

• Designated National Authority (DNA)
• Responsible for registering Clean Development
  Mechanism (CDM) projects
• CDM is an intiative under the UN Framework
  Convention on Climate Change (mitigates against
  climate change)
• 15 projects registered and over 120 in the
  pipeline
• Tradeable Renewable Energy Certificate (TRECs)
  implementation framework is being finalised, to
  enable benefits to be derived from climate change
  benefits associated with renewable energy
  sources.

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SOCIO-ECONOMIC INTERVENTIONS

• Challenges
• Universal access to energy (electricity and
  thermal energy)
• Funding to align with universal access target of
  2014 for human settlements
• Skills capacity related to accelerated program
  for 2014
• Also opportunity for job creation Expanded
  Public Works
• Structuring of poverty tariff to cushion the
  poor as prices rise
• Increased access to Free Basic Energy (including
  alternative non-grid carriers)

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BACKLOG AS AT 2007
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• Thank You.