RSA 20–year Electricity Generation Policy. “Focus on Nuclear Power Generation” 19 September 2013

Table of Contents Introduction: Context Context of RSA Electricity Generation Mix Plan. Long term planning. Resolving current and future capacity constraints. Integrated Resource Plan: Process Overview Demand drive inputs. Supply Driven inputs. Overview of the Nuclear Input Assumptions. Electric Power Research Institute (EPRI). Public inputs. Nuclear’s role in the final IRP2010 Conclusion 2 2

Context The Integrated Resource Plan (IRP) in the South African context is not the Energy Plan – it is a National Electricity Plan. It is a subset of the Integrated Energy Plan (IEP). The IRP is also not a short or medium-term operational plan but a plan that directs the expansion of the electricity supply over the given period. 3 3

Context The Long-term Electricity Planning goal is to ensure sustainable development considering: Technical constraints Economic constraints Social constraints Externalities What is its purpose? In theory, identification of the requisite investments in the electricity sector that maximize the national interest. In practice - identification of the investments in the electricity sector that allows the country to meet the forecasted demand with the minimum cost to the country. 4 4

Context – Why a long-term plan Electricity Availability is directly correlated with the economic growth (GDP) and social welfare of a nation (especially for developing countries) Industry, services, communications, airports Education, health, safety, food.. Anticipation is Essential Anticipation of the needs: future demand of the customers must be projected. Anticipation of the supply: facilities must be prepared to supply at the right time with the right amount of energy at the right quality of service and at the right price. Electricity cannot be effectively stored Electricity demand must be met instantaneously Requirement of several years for new supply commissioning Linked to other infrastructure development 5 5

Resolving Capacity constraints Long Term – IRP 2010 Medium Term – National Emergency Response and Business Continuity Plan The need to replace the old fleet Restoring the requisite reserve margin National Emergency Response and Business Continuity Plan No reserve margin period of high risk power cuts Country Electricity Plan (IRP2010) Including Renewable, Gas and Nuclear Power Data source Eskom 6

The IRP also needs to answer the following questions What are the linkages and dependencies on other resources such as water, primary energy sources, skills, sorbents, transmission infrastructure and land? What will it cost to meet these needs and how will it be funded? What will be the impact on future electricity prices and will they remain competitive? 7 7

The IRP needs to answer the following questions What will it cost to meet these needs and how will it be funded? What will be the impact on future electricity prices and will they remain competitive? What is required to implement this plan, what is the level of confidence in achieving this, what are the commitments required and who are these required of? 8 8

IRP 2010 - Balancing Competing Objectives Low Cost Low Carbon Security of Supply Low Water GABON KENYA BURUNDI ZAMBIA MOZAMBIQUE MALAWI TANZANIA ANGOLA BOTSWANA DR CONGO NAMIBIA ZIMBABWE SOUTH AFRICA LESOTHO SWAZILAND

IRP Key Required Outcomes (Per Scenario) Policy, Facts, Information IRP Process Inputs 1. Price Cone 2. Security of Supply 4. Diversity of Gx mix 5. Economic benefits 1.1 Gx Price Cone 1.2 RSA ave Price Cone 2.1 Un-served energy 2.2 Reserve margin 4.1 Technology 4.3 Ownership 3. Carbon IRP Modelling 4.2 Share 3.1 Emission targets 3.2 LTMS IRP Key Required Outcomes (Per Scenario) Policy, Facts, Information Method SECRET

The Models require the following Minimum Inputs for each scenario Externalities Cost of carbon General Inputs Discount rate Cost of unserved energy Reliability criteria Demand Inputs Demand forecast Supply Inputs Lifecycle costs of technologies Load factors for technologies

Generic Inputs In developing an IRP there are many variables which need to be exogenously determined (inputs). Most important ones are: Fuel prices projections Crude oil barrel, ton of Coal, m3 of Natural gas, Nuclear costs,, Description of the existing generation mix Capacity, fuel, efficiency, decommissioning date, C02 emissions, fixed cost and variable cost, required reliability, etc Investment criteria : Discount rate Demand projection (s) Annual peak load in MW & Energy in GWh 12 12

Supply Inputs Potential technologies Coal, Nuclear, Gas (CCGT and OCGT), Renewable technologies (Wind, Solar, Biomass and Geothermal), Hydro and Pumped Storage etc Plant Costs (Exchange Rate required) Investment (Total overnight costs, Expense schedule, Lead-times) Refurbishment Decommissioning Fuel Cost in each year for economic life of plant or price at reference date plus expected escalation during economic life of plant Fuel energy content (where applicable) and availability (water) Operation and Maintenance (O&M) Need to break link between coal and pumped storage – needs to be looked at in conjunction with Renewables

Supply Inputs Operation and Maintenance (O&M) Plant Availability Data Cost in each year for economic life of plant or price at reference date plus expected escalation during economic life of plant Plant Availability Data Maintenance (or Planned Outage), Unplanned Outages Plant Technical Parameters Plant Economic life, Efficiencies and/or Heat Rate(s), Plant Load factor Plant Water Usage The water usage per unit of energy output for each Plant Technology Type Plant Sorbent Usage Need to break link between coal and pumped storage – needs to be looked at in conjunction with Renewables

Supply Inputs Plant Emissions The costs of pollution control equipment, waste management and any required health and environmental protection measures Pollution Control Technologies included in, and the impact thereof on Plant cost, Plant availability and Plant technical parameters

Nuclear Specific Inputs Electric Power Research Institute (EPRI) Report. The EPRI costs and capacity values were used in the IRP model. (including lead times of ten years) Overnight Capital Cost estimate of R26 575/kW. The EPRI costs do not include decommissioning and waste management costs for the nuclear plant. The capital costs for nuclear were increased by 40% to accommodate inputs from numerous sources that the EPRI costs under-estimated the capital costs for recent nuclear build experience. This adjustment also allowed some accounting for decommissioning and waste management elements. The EPRI report includes the costs for the six unit option which equates to the nuclear fleet.

Scenarios generated These are not plans, they are glimpses of extreme futures used to evaluate trade-offs between competing objectives. Scenarios Balanced Scenario Risk Adjusted Plan Policy Adjusted Plan Reducing Uncertainty

Key IRP Outcomes Price Cone Carbon Impacts and effects RSA Ave Price Cone Gx Price Cone Carbon Impacts and effects Emission Constrained Cost of Carbon Security of Supply Adequacy Cost of Unserved Energy (used to estimate the economic impact on customers of planned and unplanned outages) Generation Mix Technology

Key Policy Areas Nuclear Policy Renewable Energy Policy Climate Change and Emissions Policy Imports (Regional Development) Policy Diversity of energy sources (Mix) Energy Efficiency Policy/Strategy Adequacy (Reliability) criteria for generation Industrial Development Policy

IRP 2010 Scenarios Baseline / Reference case Carbon - emission constrained Carbon – carbon taxed Generation diversity Policy, Risk & Constraint adjusted (IRP 2010 recommended) This scenario includes sufficient detail on issues for immediate policy implementation such as: Non Eskom generation Critical decision milestones Critical actions for the ministries Inputs to national planning

Policy Adjusted IRP – Plans for South Africa’s generation mix Current Integrated Resource Plan (IRP2010) Policy Adjusted IRP – Plans for South Africa’s generation mix Planned New Generation Mix 2030(1) Time Schedule New Power Generation Building RTS Capacity Medupi Kusile Ingula DOE OCGT IPP Cogeneration, Own Build Wind CSP Landfill, Hydro Sere Decommissioning Coal (PF, FBC, Imports, own build) Gas CCGT Peak-OCGT Import Hydro Solar PV Nuclear Fleet Total New and Committed Build MW 2010 380 260 640 2011 679 130 200 1,009 2012 303 100 300 1,003 2013 101 722 333 1,020 25 2,801 2014 999 500 400 3,021 2015 1,444 (180) 2,564 2016 (90) 1,432 2017 1,446 2,968 2018 723 1,523 2019 250 237 2,733 2020 2,010 2021 (75) 1,212 2022 (1,870) 805 1,143 1,128 2023 (2,280) 1,183 1,600 2,358 2024 (909) 283 800 2,424 2025 (1,520) 1,000 3,835 2026 3,500 2027 2,350 2028 (2,850) 474 690 1,414 2029 (1,128) 2,764 2030 948 2,948 1,463 4,332 4,338 1,332 390 700 125 (10,902) 6,250 2,370 3,910 2,609 8,400 9,600 45,637 New Build Options Firm commitment necessary now Firm commitment in IRP 2012

RSA Energy Source Geographic Distribution. Solar Wind Gas Nuclear Coal

Conclusion Closing Remarks. Formulation of the Integrate Resource Plan is based on an Input Modelling  Policy Adjustment Output approach. The starting point is not to exclude any electricity generation technology but rather to assess energy needs of the country and determine how best they can be met. RSA could position itself as Africa’s nuclear electricity generation technology provider if the localization aspects are fully implemented.

Conclusion Current Policy Position (on new additional capacity) Closing Remarks: Current Policy Position (on new additional capacity) Renewable Energy 42 % Nuclear 23 % Coal 15 % Gas 11 % Import 6 %

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