CSP Grid Value of Energy Storage and LCOE Implications 26 August 2013

Overview Background Presentation based on a study done for Eskom’s Solar 1 CSP plant to be constructed near Upington Study focused on the economic value of CSP Storage to the system Considers capacity and energy value to supply demand and reserves Detailed enough to analyse hourly profiles Content Methodology Assumptions Study Results 2018/11/07

Methodology

Conversion of Solar Data By System Advisor Model (SAM) of NREL SAM Receiver Thermal Energy Output (to Plexos) 2018/11/07

Modelling of CSP Generator In Plexos, include CSP Generator as part of Supply System Receiver Thermal Energy Output (from SAM) Spill(a) representing “de-focusing” of Heliostat Field when Solar Energy > (Generation Capability and Storage is full) Storage Spill(b) representing storage heat losses = f(storage) Energy to Generating Plant (normal Plexos modelling) 2018/11/07

System Modelling (Transmission not included) “Demand side” “Boundary conditions” Emission Constraints Adequacy Criteria Ensure match of supply and demand in-stantaneously Policy Objectives Jobs Localisation Local industry … Demand Forecast TWh 400 Mt CO2 600 Scenarios Scenarios Demand-side interventions (DSM) 200 400 200 2010 2020 2030 Iterative 2010 2015 2020 2025 2030 Energy & Capacity Shortfalls Least-cost optimisation model One result per scenario Plans as decision basis for DoE TWh GW 600 80 f 60 400 40 200 20 2010 2020 2030 2010 2020 2030 “Supply side” Committed New Builds & Decommissioning Capacity Options CAPEX OPEX Fuel costs Load factor Oper. regime … Coal Nuclear Wind PV CSP x 80 GW 60 Scenarios 40 20

Analysis Economic Analysis CSP amount of Storage Incrementally increase hours of storage (StoreHoursi, i = 1 to n) Determine total system cost for each increment (Plexos) [With CSP costs = 0] (SystemCostsi, i = 1 to n) Determine total CSP cost for each increment (SAM) [CSP Cost = Capital Cost + O&M Cost + Running Cost (water)] (CSPCostsi, i = 1 to n) Determine: Valuei+1 = SystemCostsi - SystemCostsi +1 Costsi+1 = CSPCostsi+1 - CSPCostsi If Valuei+1 > Costsi+1 Increase in storage is economic System Costs include capital, fixed and variable operating and maintenance and fuel costs incurred in meeting demand and reserves. Environmental costs are not internalised. A cap is placed on the annual amount of CO2. 2018/11/07

Assumptions

Input Data As per IRP2010 (updated where required) Demand Forecast Eskom and CSIR Reserves Requirements Eskom System Operator New build options EPRI CSP plant (Solar 1) Owner’s Engineer, SAM and EPRI Station commercial from 2022 Existing Plant Eskom DSM Eskom IDM 2018/11/07

Integrated Resource Plan 2010 (IRP 2010) centrally defines the generation mix until 2030 Installed capacity Energy mix Total installed Capacity in GW Electricity supplied in TWh per year Re- newable TWh's in 2030 (14%) 90 86 436 PV PV Carbon free TWh's in 2030 (34%) 80 CSP CSP Wind 70 Wind Hydro Hydro 60 Nuclear Nuclear 255 OCGT (Diesel) 50 OCGT (Diesel) 42 CCGT (Gas) 40 CCGT (Gas) 30 Coal 20 Coal 10 2010 2015 2020 2025 2030 Share re-newables 2010 2015 2020 2025 2030 5% 14% ~ 95% ??% CO2 intensity 912 g/kWh 600 g/kWh -34% Notes: Pumped storage capacity of 1,4 GW in 2010 and 2,7 GW in 2030 is not included since it is a net energy user Source: Integrated Resource Plan 2010, as promulgated in 2011; Eskom EPMD

Study

Models Models: SAM and Plexos SAM Convert solar irradiation to thermal energy available from Receiver (on an hourly basis) Plexos System optimisation by minimising total cost subject to constraints. Hourly chronological modeling. Monte Carlo approach for uncertainties. 2018/11/07

Options CSP parameters Solar Multiple (SM) – 1,0 to 3,5 CSP Storage – 1 to 12 hours System Parameters IRP2010 Policy Adjusted Plan Most significant impact for this analysis will be system adequacy Excess supply will decrease optimal CSP storage Supply shortage will increase optimal CSP storage Only IRP2010 Plan studied = adequate system 2018/11/07

Results

Load Factor (Capacity Factor) CSP : Load Factor vs. Storage Load Factor = Energy Sent-out in period (year) / (Sent-out Capacity x Hours in period (year)) Sent-out means as measured on the HV-side of the generator transformer (entry into the HV substation) 2018/11/07

Incremental Value and Cost Incremental Value or Incremental Cost vs. Incremental Storage 2018/11/07

Total System Cost Total System Cost vs. Storage 2018/11/07

Levelised Cost of Energy (LCOE) LCOE calculated from: Plant CAPEX, O&M and Running costs used in the study Optimal storage, with associated annual generation, as determined in the study 2018/11/07

Hourly Profiles Summer (four days) 2018/11/07

Hourly Profiles Winter (four days) 2018/11/07

Optimal Storage (hours) Conclusions A CSP Load Factor of > 60% can only be reached at Solar Multiples > 3,0 and storage in excess of 8 hours. CSP’s optimum storage capability, when using as value the benefit gained from forming part of the South African system, has been determined as: Based on the system analysis of SM up to 3,5 and number of Storage hours up to 12 the system optimal is reached at SM between 2,5 and 3,0 and Storage of between 9 and 12 hours. The CSP LCOE can be reduced to 65% of the LCOE at a base of SM = 1, when developed and operated at the system optimal point. The increased daily summer solar energy (compared to winter) dovetails well with the higher load factor requirement in summer due to the flatter system demand profile in summer. SM 1,0 1,5 2,0 2,5 3,0 3,5 Optimal Storage (hours) 3 5 7,5 11 >12 2018/11/07

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