The Energy Integration in Southern Africa

1. The Energy Integration in Southern Africa Jean-Pierre Favennec IFP Professor – Consultant Johannesburg – December 2, 2010

2. Summary • Energy in the world • Energy in Africa • Energy in Southern Africa

3. Energy in the World Recent changes : Reduction of CO2 emissions Limitations of oil production New gas situation Coal Renewables

4. Dated Brent price ($/b) – January 1996 – July 2010 $/b 150 140 Weekly averages Annual averages 130 120 110 100 97.6 90 80 72.5 65.1 70 60 61.1 54.5 50 40 28.8 28.4 38.1 20.7 30 19.1 17.7 24.5 24.9 20 10 12.7 0 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 Source : Platt’s S 404*17 – July 2010

6. Emissions (Gt CO2) 60 Reference Scenario 50 40 30 20 Scenario with reduction of emissions 10 0 2010 2070 1990 2050 1970 2030 2090 CO2 emissions Natural carbone sequestration Captured carbon Fuel switch Wind, Solar, nuclear Biofuels Energy efficiency Source : Commission Européenne

9. Energy in Africa

10. World electricity generation 2006 • World total = 18 921 TWh North America 1658 3531 CIS 5134 1786 Europe 682 2904 Asia OECD Middle East 588 China 959 Africa 1679 South and central America Asia non OECD Source : AIE EL 101*1 – April 2009

11. Energy consumption in Africa Mtoe Electricity (primary) Coal Natural gas Oil Source : BP Statistical Review AF004 – October 2009

12. 7% 3% The energy divides • DividebetweenAfrica and the rest of the world (15% of world population for 3% of world energyconsumption) • DividebetweenNorthAfrica-South Africa and the rest of Africa • Dividebetweenurban and rural areas: Urban areas look likeenergy spots North and South Africa: two specific areas 41% 12% 37% Region energy consumption proportionEnergy barriers

13. Hydroelectricity in Africa Potential

14. Energy Integration in Southern Africa Existing situation Needs in electricity The Integrated Resource Plan What about renewables? Integration : benefits and existing pools

15. Southern Africa’s power Industry and Interconnections • An existing electrical integration mostly between Mozambique and South Africa H H H W Wind Power T W T T T Thermal Power Plant T T T Hydro Power Plant H Remarque : 1 circle = 3 power plants at least except nuclear power plant for which 1 circle = 1 power plant N T Nuclear Power Plant Main power transmission line N Source : African Energy

16. Southern African Power Pool • South Africa represents 81% of SAPP in 2010 and will remain at 77% of SAPP in 2025

17. The Integrated Resource Plan : Context and Description • Obligation after National Energy Act of 2008 • Long term electricity capacity plan to develop a sustainable electricity investment strategy for generation capacity and transmission infrastructure for South Africa over the next 25 years. • Demand-side management (DSM) • Pricing • Capacity provided by all generators (Eskom and independant power producers) • Environment

18. The Integrated Resource Plan : Hypothesis • GDP growth on average 4,6 % per year over the next 20 years • It requires from 30 439 MW to 52 724 MW of new capacity depending on scenarios for 454 357GWh produced in 2030. • It assumes at least 3420 MW of demand side management programmes

19. 5 models studied to establish the balanced revised scenario • A base case which minimise directs costs • 3 emissions limits based scenarios • EM 1.0 : imposes an annual emission limit of 275 MT • EM 2.0 : imposes an emission limit of 275 MT of carbon dioxide by 2025 but allows emissions to go to higher levels prior to 2025 • EM 3.0 : imposes a tighter emission limit of 220MT of carbon dioxide from 2020 • A Carbon Tax based scenario (CT 0.0) : imposes carbon taxes escalated to 2010 Rands an contained in the LTMS documents • 2 others model were studied : a regional developement model and an enhanced DSM model Sources : DOE

20. The Integrated Resource Plan

21. The Integrated Resource Plan : Challenges • A huge amount of renewables capacity • Wind : 4 500 MW in the Balanced scenario up to 2019 • Solar : 400 MW • Wind + Solar : 7 200 MW between 2019 and 2030 • Questions raised : • Is it possible to build such capacities : resources, technical problems • Problem of cost and economic rentability? • Ability for quick construction and maintenance? • Problem of grid stability?

22. The Integrated Resource Plan : Challenges (2) • Decentralised electricity not adressed • Importance of transmission lines

23. Integration benefits • Benefits : foster the development of the economy. • Keys actions : • Develop infrastructures • Most important partners : • Mozambique. There is already an important hydro production (Caora Bassa) and new capacities will be built. Mozambique is also supplying natural gas to RSA (Sasol) • Zambia (hydro potential) • Zimbabwe •  Limited cooperation : • RDC. RSA is interested in electricity of Inga. But the Chinese presence (exchange of raw materials against investments) makes difficult this cooperation. • Angola • Key issue : transmission

24. Euratom (1957) • Euratom (European Atomic Energy Community) • Success : • Legal framework, safety standard uniformisation • Progressive enlargement of the cooperation • Broad development on innovative technology • Decrease in energy dependance • Efficient information centralisation about nuclear stocks and flows, and investment • Fight against nuclear proliferation • Lacks : • Some legislative contents (about normalisation for example) • Decision process

25. ECSC (1951) • European Coal and Steel Community • Success : • Long term vision and comon process • Peace, stability, prosperity, solidarity • Efficient response during crisis • Autonomous legal framework • Uniform social protection and labour law • Lacks : • Emergence of great enterprises • Difficulty for struggling on price non-accordance and for assuring transparancy • No equalization in salary

26. Benefits of integration • In West Africa cost of kwh supposed to be reduced by 50 % if good interconnections between the different countries of WAPP (West African Power Pool)

27. Thank you for your attention!