Transcript Importance of water to Eskom Recommendations

Draft National Water Resource
Strategy 2 (NWRS 2):
Eskom submission to the
Portfolio Committee on Water
and Environmental Affairs
23 - 26 October 2012
Section 1
Importance of water to Eskom
Section 2
Initial comments on the NWRS 2
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Importance of water to Eskom
Eskom’s Strategic Imperatives
1
Leading and partnering to
keep the lights on
2
Becoming a high
performance organisation
8 Strategic Imperatives
3
Reducing our
environmental footprint
and pursuing low-carbon
growth opportunities
4
Setting ourselves up for
success
5
Pursuing private sector
participation
6
Securing our future
resource requirements
mandate and the required
enabling environment
7
Implementing coal
haulage and the road to
rail migration plan
8
Ensuring our financial
sustainability
3
Importance of water to Eskom
Water use and water risks
• Water volume
requirements peak in
2021 at 380Mm3 /a
• By 2030, water
requirements reduce
to 275Mm3/a
Future locality for new
power stations:
• Coal-fired: Waterberg
Soutpansberg, Free
State, Mpumalanga
• CSP/Solar – N.Cape
• Nuclear, Wind, OCGT
/ CCGT – Coast
Strategic importance
of water:
Current heavy reliance
on relatively water
intensive, wet cooled
power stations
• Produce 78% of MWh
• Consume 98% water
Strategic importance
of electricity:
Economic & social
development requires
reliable and affordable
electricity
Build program R340Bn
employ 50% locals
Water risks
Water use
Eskom water use:
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Importance of water to Eskom
Eskom’s involvement in the formulation of the National Water
Resources Strategy 2 (NWRS 2)
The Department of Water Affairs (DWA) drafted a new National Water Resources Strategy (NWRS 2). Eskom provided
submissions for forming the basis of the Energy Chapter within the NWRS 2.
Eskom’s first submission to DWA was made in November 2011 in a report which covered:
• The importance of electricity to the socio-economic growth of South Africa and therefore the importance of power
generation retaining its “Strategic Water User” status .
• The future water requirements for South African power generation based on the current capacity and the future capacity
plans (IRP 2010).
• Eskom’s water resource management activities.
• Recommendations for consideration in NWRS 2.
DWA published the Draft NWRS 2 in September 2012 for public comment and participation.
Eskom’s second submission to DWA is scheduled for December 2012 and will be based upon a gap analysis and detailed
review of the Draft NWRS 2 and be taken into account during the DWA Public Consultation phase.
This presentation highlights certain Eskom concerns in the Draft NWRS 2, and does not address Eskom’s detail
recommendations to DWA for aligning the NWRS 2 with energy and other policies, strategies or plans.
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Importance of water to Eskom
First submission to DWA - 16 recommendations
Eskom’s recommendations on NWRS 2 (November 2011)
1.
Planning
2.
Policy
3.
Operational
a
Improve alignment between water and energy planning processes
b
Encourage “trade-off discussions across relevant Government departments
c
Engage with stakeholders beyond Eskom
d
Broaden the forum for SADC and wider water / energy discussions
e
Understand impact of climate change on the security of water supply to Eskom and power producers
a
Develop a formal policy for desalination attached to coastal power stations
b
Refine the current pricing strategy and tariff principles
c
Implement a national dry-cooling policy
d
Develop a standardised cross industry framework for measuring and reporting water footprint
e
Encourage DWA stakeholders to expand energy demand management and WC/WDM practices
f
Define the responsibilities of a Strategic Water User
a
Rapidly implement the Waste Discharge Charge System
b
Encourage water users to subscribe to the principles of the UN Global Compact CEO Water Mandate
c
Address gaps in the current water sector governance framework
d
Encourage improved and faster service provision
e
Where possible, limit dependence of power stations on one water source
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Importance of water to Eskom
Recommendations to enhance the strategy
Focus Areas
Recommendations
•
Develop a more structured framework
which clearly links strategic goals to
activities and enabling actions
•
Additional work to go into defining policies /
procedures prior to final document approval
Unclear and un-prioritised implementation approach
•
Improved mapping of timeline
•
Structured framework / timeline not present which links all the different strategies
(although timelines per strategy have been defined)
•
Highlighting interdependencies and
implications of not meeting certain goals
•
Interdependencies between strategies have not been identified
•
Prioritisation of all strategies / actions
•
Strategies have not been prioritised
•
Bottom up analysis of all water use and
water quality by catchment / river system
•
Projected water use based on sector input
and water resource quality
Unclear strategic framework
•
The link between “Strategic Goals”, “Water Management Strategies” and “Enabling
Strategies” is unclear
•
The content in each of the strategies is overlapping and sometimes inconsistent
Few strategies are automatically implementable
•
Only some strategies are defined clearly enough to enable them to be implemented by
relevant parties
•
In many cases, the objective has been provided but no approach or solution is defined
No detailed quantitative and qualitative water assessment
•
The strategy doesn’t provide a detailed quantitative assessment of water usage and
water quality for South Africa and SA’s different catchments - nor the plans by sector
in the future (e.g. The future water demands by sector across South Africa)
Eskom priority issues
•
•
•
•
Water stewardship
National water infrastructure management
Water pricing strategy and investment framework
Climate change
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•
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Alignment between water and energy planning
Water sector service provision
Water quality
Assurance of supply to “strategic water users”
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Section 1
Importance of water to Eskom
Section 2
Initial comments on the NWRS 2
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Draft NWRS 2 strategic framework
Eskom supports the core strategies and makes recommendations in
following areas
#1 Encouraging water
stewardship
throughout value
chain
#2 Misalignment
between water and
energy planning
processes
#8 Assurance of
supply to “strategic
water users”
#7 Climate Change
#3 Improve national
water resources
infrastructure
management
#4 Improve water
sector service
provision
#6 Declining water
quality adversely
affects Eskom
operations
#5 Review current
water pricing strategy
and investment
framework
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#1 Encouraging water stewardship throughout value chain
Requirements of a standard cross-industry framework for water footprinting
Need to “implement an accounting framework for WC/WDM”, but NWRS 2 is not specific
• Does not address alignment with energy demand management, nor focus on specific sectors
• Highlights potential funding requirements, but not the source
• Opportunities for a funding model for WC/WDM initiatives should be assessed
Need to improve public awareness (e.g. UN Global Compact – CEO Water Mandate), but NWRS 2 does not specifically
target businesses which play a significant role in South Africa’s water usage
Recommendations:
 Define, implement, monitor and enforce a water accounting
policy for both strategic and non-strategic users
 Implement processes and systems to be more effective in –
• Compliance monitoring and enforcement
• Eradicating illegal water use and water losses
 Eskom provided a water footprint for power generation
based on IRP 2010; NWRS 2 needs to show how water
sector will support the development
 Encourage DWA to enforce principles of the UN Global
Compact – CEO Water Mandate
• Encourage other large water users to lead and
mobilise managing water risk effectively at
catchment, supply chain and company level
CEO Water Mandate
Key areas include –
• Direct operations
• Supply Chain
• Watershed management
• Collective action
• Public policy
• Community engagement
• Transparency
• Ensure that other role players in energy and power
generation sectors are consulted
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#2 Misalignment between water and energy planning
processes
Require alignment to address Water-Energy-Food nexus
Draft NWRS 2 takes a broader view and puts water at the centre of national planning decisions; however –
• Nothing specific mentioned regarding –
• Infrastructure and water resources plan to support the IRP 2010 and related developments
• Striving for consolidated Water Resource Studies and EIA’s, SEA’s, IWUL’s, EMPR’s
• Increasing speed at which locations are selected for power generation build
• No ‘trade-off’ discussions across relevant Government departments (DWA, DOE, DEA, DMR, etc.)
• Certain strategic goals might have to be compromised to help meet other related goals (e.g. reduces emissions but
increases water usage)
Recommendations:
 Develop infrastructure and water
resources plan to support the IRP
2010 and related developments
 Development of cohesive and
balanced environmental / water /
climate change policy for power
generation
 Require single environmental
approval process
 Development of new SADC and
African forums where energy and
water (and potentially food)
stakeholders discuss planning and
policy issues
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#3 Improve national water resources infrastructure
management
Address gaps in national water resources infrastructure management
 Recognised the importance of separating roles and also build skills
 Indicated that economic regulation is being explored and decision around institutional design will be taken by end of
2014
 Emphasised the need to improve asset management, reduce backlog in infrastructure maintenance
 Recognised capacity gaps both at national level and at regional institution level (e.g. CMA, RWIs, WMAs)
Key Strategic Objectives of Draft NWRS 2 include:
 Establishing an effective regulatory function
 Strengthening role of DWA as regulator and other regulatory institutions – includes enhancing DWA capacity,
establishing Regulatory Branch and fast tracking establishment of CMAs
 Promoting Regulator’s accountability to improve public confidence
Recommendations:
 Management of national water resources infrastructure remains a primary concern:
• Ownership, financing, development, management and operations of national water resources
infrastructure will be strengthened by ring fencing Water Trading Entity into Government Component
separate from Policy and Regulation
• Not clear if governance structure will separate roles and responsibilities of DWA as regulator, policy
maker and implementer of national water infrastructure
 DWA to initiate immediate steps to improve performance of national water resources infrastructure
management function and related financial management aspects
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#4 Improve water sector service provision
Address gaps in water service provision
Current water services that have an adverse impact
on industry performance, including –
“Water Sector Institutional Arrangement” strategy
includes key changes to enable –
 Water Use Licensing backlog: Licensing process is
complex, onerous and slow
 Clearing water use licensing backlog by 2016
 Reserve determinations are done based on water use
licenses – WUL backlog results in poor data
 Delegating water use licensing to CMAs
 Limited / no compliance monitoring and enforcement
 Intensifying compliance monitoring and enforcement
 WC/WDM only applied in certain sectors
 Driving and intensifying WC/WDM across all sectors
 No independent or effective economic regulator
 Establishing effective economic regulator
 Poor billing and revenue collection (WTA deficit)
 Improving billing and revenue collection
 Poor and/or late delivery of projects
 Aligning prioritisation and delivery of projects
Recommendations:
1. Prioritise handling and issuing of Strategic Water Users’ Water Use Licensing at central government level
2. Expedite institutional reform, e.g. setup CMAs, implement economic regulator and WRIA
3. Improved asset management and maintenance of existing water supply infrastructure
4. New infrastructure development to provide for new energy capacity
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#5 Review current water pricing strategy and investment
framework
Water pricing strategy to affect Eskom investments, operations and tariffs
Eskom supports the following Strategic Actions in the Draft NWRS 2:
 Developing appropriate funding models for development of water infrastructure
 Aligning prioritisation and delivery of projects across the water value chain
 Aligning development of project proposals, identify and rectify gaps in planning and implementation schedules
 Providing appropriate funding for new agencies and ensuring necessary state funding is available
 Review and revise current pricing strategy to address price capping and exclusions
 Investigate new ownership models for infrastructure - consider options for financing, designing, building, constructing
and maintaining
Integrated infrastructure investment approaches followed in the past have not succeeded in addressing all challenges
and improved financing methods are required to meet socio-economic goals
Recommendations:
 Eskom, DPE and DoE need to participate in National Pricing Policy and
investment framework review
• Enable DWA to plan for, and develop long term water
infrastructure more effectively
• Ensure quicker approval and investment in water infrastructure
• Enable WC/WDM across all sectors
• Access climate change and green funds
 DWA needs to ensure pricing policy protects local communities and
disadvantaged
 DWA should consider options for a “Blended Tariff” structure across
South Africa
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#6 Declining water quality adversely affects Eskom
operations
Need to improve water quality and enforcement of regulations
• Eskom is being impacted by deteriorating water quality
• Draft NWRS 2 identifies reason for continued poor water quality as “can be attributed to weak governance, lack of
regulation and poor compliance and enforcement”
• Although the need to enforce compliance to regulation (e.g. Waste Discharge Charge System), measures and the
tools to do that are not yet defined
Recommendations:
• Limited capacity exists in Regional Offices to enforce compliance
 Rapidly implement Waste Discharge Charge System
 Enforce “polluter pays principle”
 Implement Compliance Monitoring & Enforcement function required for those users causing a negative
impact
 Transformation of Water Management Institutions required to support such a goal
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#7 Climate Change
Climate Change and water security
Climate change
• Eskom requests DWA to quantify risks from Climate Change on current and future water supply through research
and monitoring of hydrological flows and trends
• Requires early warning and forecasting for disaster risk reduction
Water security
• Limit dependence of power stations on one water source
Recommendations:
 Climate change research should be one component of the broader research to be conducted by DWA and
included in the National R&D Strategy
• Both the Climate Change Adoption Strategy and the R&D Strategy will enable a better understanding
of Climate Change on South Africa’s water resources
• R&D Strategy should support funding of water related research
 Potential impacts of Climate Change on security of water supply in key catchment areas need to be shared
with Eskom to ensure water security
 To mitigate water security risks, DWA should ensure each water supply system is backed up by multiple
resources or power stations are located next to available water resources
• Draft NWRS 2 does not make any reference to mitigating this risk
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#8 Assurance of supply to “strategic water users”
Definition and responsibilities of a “strategic water user”
Limited fresh (surface) water available for strategic and other use, and it is proposed that all surplus fresh water be
placed under direct control of the Minister
Not clear if / how Water Allocation Reform may impact Eskom , e.g.
• Eskom future status as strategic water user not defined
• Allocation priorities or assurance of supply to strategic water users not defined
Definition or responsibilities of a “strategic water user” not included in any NWRS 2 strategy
• Priority 4 of Water Allocation Priorities specifically deals with the allocation of water for uses that are strategically
important to the national economy, and then other uses
• Specific development and security challenges include electricity, food security, and mining, as well as associated job
creation
Recommendations:
 Urgent need to define “strategic water user” within priority outcomes
of Cabinet, the National Development Plan, the New Growth Path and
spatial development plans
 Need to define responsibilities of “strategic water user”
 Power generation to remain “strategic water user” to support
economic growth
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Discussion
Thank you
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