1. INTEGRATED ENERGY PLAN
PRESENTATION TO NCCC
27 JULY 2012
Department of Energy

2. Contents High Level Approach Objectives of the Integrated Energy Plan
Demand Modeling Approach
Optimisation Model
Key Policy Questions
High Level Work Plan

3. HIGH-LEVEL APPROACH Identify key objectives for IEP
Guided by National Objectives
Premised on objectives of Department
Informed by input made by various government departments
Described in the document outlining the Policy Analysis Framework
Identify key objectives for IEP
Understand local and global challenges
Understand key drivers of future uncertainty (Plausible Futures to deal with uncertainty)
Identify and describe implemented policies with high impact on energy sector (Will be included as Base Case or Test Cases depending on nature)
Demand Projections
Constraints and Targets for Base Case
Current and future technologies
Macroeconomic assumptions
Define Status Quo and implications for future trends
(Understand and define key local and global challenges)
Problem Statement Definition
Key Policy Questions that IEP should deal with
Define key criteria and relative importance (weightings)
Define Problem Statement and Key Policy Questions

4. HIGH-LEVEL APPROACH
Alternative options
New and proposed high-impact policies
Constraints and Targets for Test Cases
Input from various studies and reports
For each Policy Question identify alternative options
Supply optimisation based on projected future demand (for Base Case and Test Cases)
Evaluation of output from Supply Optimisation using Multi-Criteria Decision-Making Approach
Use qualitative and quantitative approaches to evaluate outcomes
Will be informed by outcomes from previous step
Make recommendations

5. HIGH-LEVEL APPROACH HIGH-LEVEL APPROACH
Energy planning is an iterative process which entails many feedback loops between the various stages
1) A mechanism of dealing with quantitative (data-driven) as well as qualitative (expert judgement) analysis
2) A parallel consideration of each of the following elements:
Existing and future energy technologies and energy carriers
Existing and proposed policies within government which have a high-impact on the energy sector
Key Indicators outside of control which characterise current and future uncertainties
Conflicting criteria upon which different options/alternatives should be evaluated
RES
(Technologies,
Energy Carriers,
Energy Services)
Demand
Projections
Supply
Optimisation
(Least cost, emissions and water)
MODELLING
SYSTEM
(ENERGY RESOURCES AND TECHNOLOGY OPTIONS)
MODEL OUTPUT
EVALUATE MODEL OUTPUT AND POLICY PROPOSALS
(Multi-Criteria Decision Analysis)
RECOMMENDATIONS
Base Case
Existing High-Impact Policies and Legislation
Test Cases
Proposed/
New
High-Impact Policies and Policy Options
Key Policy Questions
Key Indicators
Plausible Futures to deal with Key Uncertainties
Key Criteria for Evaluating Alternate Options

6. Identifying the IEP objectives
National Objectives
(MTSF)
Departmental Objectives
(Strategic Plan)
IEP
(National
Energy
Act)
These are further broken down into criteria.

7. The criteria are: Energy Security
Organising the criteria and objectives in this way facilitates scoring the options on the criteria and examining the overall results at the level of the objectives.
Energy Security
Energy Access
Security of Supply
Diversification
Emissions Reductions
Energy Efficiency
Localisation
Employment creation
Water Conservation

8. Energy systems and their context
Energy commodities and other materials constrained by availability of local natural resources and international markets
Technology costs, life spans, efficiencies, discount rate and emission factors
Demand for
Energy services
driven by socio-economic needs and desires
Coal
Crude oil
Natural gas
Wind
Solar energy
Uranium …
Heat
Energy system:
Technology value chains which convert energy commodities into useful energy services
Hot water
Light
Mechanical work
Refrigeration
Transport
Environmental constraints …
Energy systems and their context

9. IRP Energy System

10. IEP Energy carriers Electricity demand Energy Services
Resource extraction/imports
Refining
Industrial processes
Electricity Generation
Demand technologies

11. Modelling tools
There is more value derived from modelling processes than the final results as the process increases our understanding of energy systems
Energy demand models
Macro-economic drivers as input
Determine demand for energy services (heating, lighting, transport…)
Energy supply optimisation model
Use demand derived from demand models
Minimises the cost of the energy system for demand based on constraints

12. Energy Demand in South Africa
This what we collect
This what we need for the IEP

13. Hybrid Approach
Phase One: Engineering- Use existing studies on the use of energy carriers for end use services (Institute for Energy Studies 1993, Frost & Sullivan 2012, Department of Energy 2012)
Phase Two: Econometric-Project the demand for each energy carrier using historical data (DoE-Energy Balances, Eskom-Electricity Sales)

14. Industry (8 end-use services) Mechanical Thermal Lighting Electricity
Fans
Compressor
Pumps
Motors
Thermal
HVAC
Water Heating
Process Heat
Coal
Gas
Lighting

15. Total Energy Services
( TJ)
Total Energy Carriers
( TJ)

16. Overview of Demand Models (112)
Sector
Number of Demand Models
Residential (4 sub sectors)
Low Income Non-electrified
Low Income Electrified
Middle Income Electrified
High Income Electrified
22 demand models
Commercial
6 demand models
Industrial (9 sub sectors)
Iron and Steel
Basic Chemicals
Non-ferrous Metals
Rest of Basic Metals
Gold Mining
Coal Mining
Platinum Mining
Other Mining
Rest of Manufacturing
72 demand models
Agriculture
9 demand models
Transport
3 demand models

17. Hybrid Approach
Phase Two: Econometric-Project the demand for each energy carrier using historical data (DoE-Energy Balances, Eskom-Electricity Sales)

18. Bottom Up Approach Sector/Sub Sector Activity Variable Residential
Total number of households
Commercial
Commercial floor space
Agriculture
Tons of agricultural output
Iron and Steel
Tons of iron and steel
Chemical
Tons of chemical
Non-ferrous Metals
Tons of non-ferrous metals
Rest of Basic Metals
Tons of output for the remaining metals
Gold Mining
Tons of gold
Platinum Mining
Tons of platinum
Other Mining
Tons of other mining output
Rest of Manufacturing
Tons of production for total manufacturing

19. Total Projected Energy Consumption in Residential

20. Residential Sector

21. Residential Sector-Demand Energy Services

22. Components of the modelling system
User interfaces/template
Optimisation model data and demands
Data capture and management
Model execution
Results analysis
Automated spread sheets for reporting
Linear program
(OSeMOSYS)
Demand models
Results tables
Demand model data
Linear program solver
(GLPK)
Database
Model data tables
Manual processes
Automated processes
Data collection (CSIR-Promethium Carbon, Eskom, DOE)
Third party software
OSeMOSYS enhancements (CSIR)
Data tools and
integration (DOE)
Demand models
(DOE, Eskom)

23. Typical results from modelling
31 December

24. Typical results from modelling

25. Typical results from modelling

26. Typical results from modelling

27. Overall modelling process
Base case
Forecast based on trends
Implemented policy
Reference Energy System
Optimised energy system 0
Achieves desired outcomes for base case
Optimised energy system 3
Optimised energy system 2
Optimised energy system 1
Achieves desired outcomes for test case 1
Test case 3
Test case 2
Test case 1
Plausible future
Policy
options
Reference Energy System with modified parameters
Modelling system
Plausible future
Plausible futures
Recommendations
The test case which produces the least cost energy system while achieving the desired outcomes
suggests the most effective policies

28. DEFINITIONS
POLICY OPTION(S) is a feasible or reasonable line of action that government can take to steer the South African energy system in the desired direction.
BASE CASE is made up of the existing policies, legislation and regulations which are in place at the beginning of the analysis period which for the current IEP2012 process.
TEST CASE is a deviation from the base case which can come from the following changes: (a) such that either policies which are not in the base policy case, (b) macroeconomic parameters which are a deviation from the status quo e.g. high GDP growth.  (c) environmental or emission limits which are different from the base case.

29. Main Policy Question
Given current policies and legislation, what is the most optimal energy mix that will ensure South Africa achieves security of energy supply at the minimum cost to the economy, while minimising emissions and accounting for water usage?
Base Case: Optimisation of supply to meet demand without policy constraints
Only the committed capacity from Policy-Adjusted IRP explicitly ‘forced’
Uncommitted capacity excluded
DEFINITION: A BASE CASE is made up of the existing policies, legislation and regulations which are in place at the beginning of the analysis period which for the current IEP2012 process.

30. Policy Question
What is the impact of including the entire IRP as “blue print”?
Test Case : Optimisation of supply to meet demand with “Entire IRP as blueprint” constraint
Committed and uncommitted capacity from Policy-Adjusted IRP explicitly ‘forced’
DEFINITION: A TEST CASE is a deviation from the base case which can come from the following changes: (a) policies which are not in the base policy case, (b) macroeconomic parameters which are a deviation from the status quo e.g. high GDP growth.  (c) environmental or emission limits which are different from the base case.

31. Policy Question
What is the impact of excluding nuclear as recommended in the NDP
What are the possible impacts ( in terms of choice of energy carriers, technology options and costs) of the proposed Carbon Tax by National Treasury on the energy sector?
Test Case : Optimisation of supply to meet demand excluding new nuclear build
Only the committed capacity from Policy-Adjusted IRP explicitly (except nuclear) ‘forced’
Test Case : Impact of carbon taxes on the choice of energy technologies and demand sectors

32. Policy options not necessarily informed by outputs from energy models
Non-Quantitative Analysis of
Policy Options
How can energy security and supply be achieved at community level? What are the Key elements of establishing Energy-Smart Communities?
What are the possible strategies and interventions to increase localisation and local content within energy sector?
What are the viable options for investing in foreign/regional equity oil and gas?
Energy sector policy objective: Securing supply through diversity
Energy sector policy objective: Economic growth
Policy options not necessarily informed by outputs from energy models
(Specific modelling requirements may be considered for future iterations of IEP)

33. HIGH-LEVEL WORKPLAN STILL TO BE COMPLETED Technology data collection
(Collection , review and formatting of critical technology data (More than 10% contribution towards total energy supply/consumption))
Collection and formatting of demand-side data
Key Macroeconomic assumptions for future demand
Demand projections for energy services
Stakeholder Workshops
Delivery of the final dataset and data sign-off
Configuring of Test Cases in model and Model runs
Analysis and Evaluation of model output
Report Writing
Table Draft in Cabinet
Stakeholder Consultations on draft report

34. HIGH-LEVEL WORKPLAN TO BE TABLED AT STAKEHOLDER WORKSHOP*
Key Assumptions
- Assumptions on Key Driving Forces (as measured by values of Key Indicators) for Plausible Futures
-Assumptions on Key Macroeconomic Indicators (not included in Plausible Futures)
Assumptions underpinning Demand Projections
Approach to modelling of Plausible Futures within Osemosys
Approach to modelling demand for energy services within all demand sectors
Key Policy Questions and Alternative Options for each
- Test Cases to be considered in the model
- Other Policy Options to be considered
Key Criteria for evaluating model output (Outcome of Test Cases/Policy Options testing)

35. THANK YOU