Transcript Green Economy Summit Presentation Template rev2b CHOWN

Creating jobs, increasing GDP &
de-risking the South African
Economy
Davin Chown, Managing Director
Mainstream Renewable Power South Africa
Presentation Outline
• Introduction
• Key success areas/ lessons
• Threats, challenges and opportunities
for action
• 5 Key thematic questions/issues
• Policy and governance requirements
• Concluding remarks
• Recommendations for Green Economy
Plan
Introduction
• The SA economy is bearing huge levels of risk given
our fuel mix and energy use patterns
– Coal, oil, gas, nuclear : commodity price risk, fossil fuel
risk
– Emissions profile: 12th highest globally
– Unsustainable carbon intensive energy mix
– Motorised transport patterns, fuel consumption &
health costs
– Water usage for power
– Health burden
– Energy poverty
• High Risk = Lower GDP – someone pays the price
Awerbuch et al
Introduction & Context
• We need clean energy for sustainable economic and
social development – we don’t have enough
• In SA, coal fired power stations located mostly in
Mpumalanga - power is transported to every load
centre in South Africa
• Considerable (10%-12%) electrical losses in the
system
• Energy poverty
– Cost of illegal connections
– Health, safety costs (informal settlement fires, gas, paraffin)
– Rural economic development & agriculture (dairy, fruit
farmers)
– Basic needs in poor communities
Key success areas/ lessons
• De-coupling the energy/growth trajectory
(Denmark)
– Industrial energy efficiency
– Domestic, commercial sectors follow
• Brazil
– Bio-fuels as a transition mechanism: investment
– Target: no energy from coal by 2020
• China – renewables growth
• SA – PV manufacture & export to Germany,
Europe
Threats, Challenges and
Opportunities for action
• Threats
– Climate change
– Energy security, non-diversification as a bad
investment strategy (all eggs in one basket)
– Economic risk: we pay the long term price for wrong
investment strategy
– Resource depletion
• A 1,000MW coal fired power station uses 8,935,000
cubic meters (m3) of water per annum
• Will deny 124 000 households basic water
• Agriculture vs coal fired power plants
Threats, Challenges and
Opportunities for action
Argentina’s Upsala Glacier. Receding 200m each year.
Threats, Challenges and
Opportunities for action
• China, India, Brazil attracting bulk of carbon
financing – lost opportunity for SA
• Manufacturing opportunities to service
African continental EE and RE uptake lost to
other markets (R550m-70bn pa)
• Failure to act on LTMS
– clean tech investment lost
– cost of mitigation increases (e.g shift in farming,
fisheries etc)
Threats, Challenges and
Opportunities for action
• System losses – a real opportunity
– A 150MW wind-farm in Eastern Cape = saving of more
than 11 million kilowatt hours annually
– Sufficient to power up to 8,000 residential households for
one year
– Saving on transmission losses could supply homes in areas
deficient in electricity = contribute to supplying the Free
Basic Electricity commitments in SA
• Solar, wind, biomass , bio-energy
– Local resource that can be harvested
– Waste-to-energy????
Threats, Challenges and Opportunities for action
•
Breakdown of Wind Farm costs
–
–
•
1.32%
1.35%
1.37%
Of the 70% wind turbine element,
the domestic market could produce:
–
–
–
–
–
–
–
•
•
•
•
•
•
•
70% wind turbine contract (see pie chart)
30% site costs (civil, electrical etc)
Towers 26.3%
Blades 22.2%
Transformer 3.59%
Main Frame 2.8%
Nacelle Housing 1.35%
Bolts 1.04%
Cables 0.96%
58.24% of the turbine costs can be localised
Equates to EUR 1.83 Bn Local Manufacturing
All site costs are local (Civils, Electricals)
Equates to EUR 2.7 Bn Local Site Costs
Total Domestic Benefit = EUR 4.5 Bn (57 Bn Rand)
This excludes export potential and new services industries
Significant to boost to the national economy/ASGISA goals
Tower
1.25% 1.04%
0.96%
1.22%
Blades
Gearbox
1.91%
Control System
2.66%
Installation
2.80%
26.30%
Power Converter
Transformer
3.44%
Generator
3.59%
Main Frame
Pich System
5.01%
Main Shaft
Rotor Hub
5.00%
Nacelle Housing
Brake System
5.67%
22.20%
Yaw System
Rotor Bearings
12.91%
Bolts
Cables
Threats, Challenges and
Opportunities for action
• CSP and Solar – large scale industrialisation
– 4 x 125MW units: 5000 construction & 500
operational
– 16 x 125MW plants: 20 000 construction & 2000
operational
– 80 x 125MW units (400km sq land): 100k
construction & 10 000 operational
• Steel, concrete, glass industries to gear up for
local production
Threats, Challenges and
Opportunities for action
Threats, Challenges and
Opportunities for action
Threats, Challenges and
Opportunities for action
• Solar Water Heaters and job creation
– technology : easy to replicate
– Installers : training
– manufacturing facilities
– Skills for artisans, boiler-makers, financial
management, entrepreneurs, managers
• Support for governments 1 million SWH
campaign
• Provincial markets not yet developed
5 Key thematic questions/issues
• How do we……
– introduce a portfolio based approach to energy
planning?
– diversify the energy mix and diversify country
risk?
– secure our share of the global investment into
clean technology, energy?
– ensure we localise supply chains &
manufacturing of the full value chain in SA
Policy and governance
requirements
• Strengthen LTMS and linkages to other policy
mechanisms e.g. IRP2, IPAP
• Enforce energy efficiency & savings targets
• Incentivise switch to cleaner technology
– Behaviour change through fiscal interventions e.g.
tax policy, measures
• Set aggressive long term targets to stimulate
industrialisation, set-up of local manufacturing
Concluding remarks
• SA energy system is a risk – all the citizens
carry the ‘risk premium’ (carbon fines, water
shortages, health problems, financial
burdens)
• Energy efficiency must be mandatory – fines
used to fund REFIT, clean tech financing
• Efficiency, industrial & domestic, used to
spur on new employment intensive
industries such as solar, biomass, wind
Recommendations
• Short term (immediate – 18 months)
– Develop long term energy vision & plan: 25% renewables
by 2025
– Adopt LTMS as guiding document, actions for low carbon
economy
– Stimulate energy efficiency incentives & scale up local
manufacturing opportunities e.g. SWH, heat pumps
– Allow IPP’s to anchor next wave of power plant
investments. No capex requirement from government
– IPAP to drive manufacturing of wind turbines and solar
components in automotive, construction sectors
– Rural mini-grids to be expanded
– Unblock bureaucratic processes that limit economic
development opportunities
Recommendations
• Medium term (18-36 months)
– Invest in additional electricity infrastructure:
employment intensive grid expansion for HVDC
– Re-tool auto sector for CSP and PV manufacturing long
term
– Ensure carbon taxes, incentives reward correct
behaviour e.g. rebates for investments in clean tech
– Stimulate clean transport technology, mobility
solutions e.g. deployment of Joule, low carbon
transport options such as BRT
– Develop infrastructure for new mobility :opportunities
in developing service infrastructure
Recommendations
• Long term (36 months onward)
– Extend Smart Grids to all connected areas of South
Africa
– All energy inefficient buildings to be retrofitted
– Transport fleet: mix of mass transit (rail, road)
implemented; high taxation of polluting vehicles
– City redesign and configuration to accommodate new
modes of transport and energy use
– SA as a manufacturing & generation hub for clean
energy
– SA exports clean energy via Southern Eastern and
Western power pools
THANK YOU