AfDB and World Bank Workshop – CSP Scale up program for Middle East and North

Africa Region

CSP in South Africa

Tunisia June 2012

Vikesh Rajpaul Programme Manager – Concentrating Solar Power

Renewables Business Unit, Eskom

E-mail vikesh.rajpaul@eskom.co.za Website www.eskom.co.za

Outline

•2

Strategic Drivers

Why develop Concentrating Solar Power in

South Africa

Projects under development

Challenges in CSP project development

Opportunities from CSP project development

Lessons Learnt

•3

Strategic Drivers

South Africa 1994 - 2008 growth

Real GDP

64%

Power capacity

(~5 000 MW)

14% •How do we

keep the

lights on and

move to a

cleaner

future?

•4

Strategic Drivers

South Africa’s renewable energy strategy driven by low-carbon objectives and priorities outlined in:

•South Africa’s Long-Term Mitigation Scenarios (LTMS),

•Renewable Energy White Paper of 2003,

•National Energy Efficiency Strategy of 2009,

•Government’s National Climate Change Response green paper of 2010,

•The New Growth Path Framework (2010),

• The Integrated Resources Plan (IRP) 2010.

•5

Strategic Drivers

Total additional new capacity

(without committed) until 2030 in GW

5

20

15

10

0

Wind

CSP

Solar PV

1,0

Peak -

OCGT

Coal

3,9

8,4

9,6

6,3

8,4

17,8

Renew-ables Nuclear Gas -

CCGT

2,4 2,6

Hydro

25

15% 23% 6% 6% 9% 42%

Share

of total

new GW

65% 20% 5% 1% < 0,1% 9%

90% 5% 5% 0% < 0,1% 0% Energy

share

in 2010

in 2030

= 260 TWh

= 454 TWh

Policy-Adjusted IRP (Capacity)

Source IRP 2010

•6

Why develop Concentrating Solar Power in South Africa

•7

Strategic Drivers - CSP with Storage

24000

26000

28000

30000

32000

34000

36000

38000

0

200

400

600

800

1000

1200

0:30 3:30 6:30 9:30 12:30 15:30 18:30 21:30

typical Summer day DNI typical Summer day demand

24000

26000

28000

30000

32000

34000

36000

38000

0

200

400

600

800

1000

1200

0:30 3:30 6:30 9:30 12:30 15:30 18:30 21:30

typical Winter day DNI typical Winter day demand

•Power available from conversion technologies does not align with the needs of the system operator to meet demand.

•DN

I W

h /

m2

•DN

I W

h /

m2

•Dem

an

d M

W

•De

ma

nd

MW

•8

Projects under development

9

•9

Eskom CSP plant

• Central Receiver with Molten Salt as the heat transfer

and storage medium.

• 100 MWe with a capacity factor in excess of 60 %.

• The plant will be dry cooled or hybrid cooled

designed to optimise water usage.

• All auxiliary power will be sourced from the National

grid and backup will be sourced from diesel

generators.

• Life of plant will be a minimum of 25 years.

• The plant will displace about 9m tons over its

lifetime.

• It can provide electricity to 400 000 standard homes

per annum if 200kW per month is assumed.

• 1000 – 1500 jobs can be created during construction

and approx. 70 during operation

Gemasolar

Solar 2

10

Eskom CSP plant status

• EIA complete – ROD obtained – Revision in progress

• Land Procured.

• Funding obtained from World Bank, African

Development Bank (AfDB), Kredit Anstalt fur

Weideafbau (KfW), European Investment Bank (EIB),

French Development Agency (AFD), Clean

Technology Fund (CTF).

• Five years of Solar data – site and satellite.

• Water Supply – 300 ML / annum secured.

• Owner’s Engineer appointed.

• Construction scheduled to start in 2014 for

completion at the end of 2016.

Analysis of MW allocation and remaining MW

Technology

MW allocation

in accordance

with the

Determination

MW capacity

allocated in

the First Bid

Submission

Phase

MW capacity

allocated in

the Second

Bid

Submission

Phase

MW capacity

for allocation

in future Bid

Submission

Phases

Onshore wind 1 850.0 MW 634.0 MW 562.5 MW 653.5 MW

Solar photovoltaic 1 450.0 MW 631.5 MW 417.1 MW 401.1 MW

Concentrating

solar power 200.0 MW 150.0 MW 50.0 MW 0.0 MW

Small hydro (≤ 10MW) 75.0 MW 0.0 MW 14.3 MW 60.7 MW

Landfill gas 25.0 MW 0.0 MW 0.0 MW 25.0 MW

Biomass 12.5 MW 0.0 MW 0.0 MW 12.5 MW

Biogas 12.5 MW 0.0 MW 0.0 MW 12.5 MW

Total 3 625.0 MW 1 415.5 MW 1 043.9 MW 1 165.6 MW

Source : Dept of Energy

Preferred Bidders Salient Terms CSP

Source : DoE •13

Bid Window 2 Bid Window 1

Price: Fully Indexed (Ave Rand per

MWh) R 2 512 R 2 686

MW allocation 50 MW 150 MW

Total Project Cost (R’million) R 4 483 R 11 365

Local Content Value (R’million) R 1 638 R 2 391

Local Content % 36.5% 21.7%

Job Creation : Construction (People) 662 1 165

Job Creation : Operations (People) 50 70

•14

Challenges in CSP project development

Challenge – Current Cost of CSP in relation to PV

Challenge - Worldwide PV market more than sextupled since 2007

•16

•Source : Boston Consulting Group

Challenge – difficulty in obtaining finance for technically most suitable technology

•17

Site location – Upington

Assumed same financing structure for both technologies.

Costs are reported in January 2012 South African Rand.

EPRI April 2012 Technical update report for IRP of South Africa confirm Central Receiver plant has lower capital costs and lower LCOE when compared to Parabolic Trough plants

•18

Challenge – Level of Maturity of Central Receiver / Power Tower

•Molten Salt

•Proven in demonstration projects, and recently completed. construction of first commercial plant (Gemasolar) – 19.9 MWe.

• Under Construction – Solar Reserve – Tonopah – 565 MW thermal with storage. Planned completion 2015.

•Molten Salt

•Proven in demonstration projects, and recently completed. construction of first commercial plant (Gemasolar) – 19.9 MWe.

• Under Construction – Solar Reserve – Tonopah – 565 MW thermal with storage. Planned completion 2015.

•Direct Steam Generator

• PS 10 (2007) and PS 20 (2009) – saturated steam.

• Siera Sun 5 MW – 2009 -saturated

• Under Construction – Ivanpah – 1-3 with 1 x 123 MWe/ 2 x 133 MWe planned to be in operation by 2013 – superheated steam.

•

•Direct Steam Generator

• PS 10 (2007) and PS 20 (2009) – saturated steam.

• Siera Sun 5 MW – 2009 -saturated

• Under Construction – Ivanpah – 1-3 with 1 x 123 MWe/ 2 x 133 MWe planned to be in operation by 2013 – superheated steam.

•

•PS-20 built by Abengoa

•(Source: RENAC, 2010)

•Gemasolar built by Torresol

CSP Challenges - Summary

•19

CSP Tower technology is in early stages

of development life cycle.

Lacks long term commercial and technical

operating experience.

Achieving balance between cost, risk and

affordability is a challenge.

Local industry involvement non-negotiable.

Local Currency funding limited and foreign

exchange risk a challenge.

Difficulty in financing

projects without

concessional financing

Cost of technology is a barrier to entry.

Often compared to

Wind and PV but should

be compared to gas in

South Africa

Skills constraints for

first projects.

Increased cost of capital

•20

Opportunities from CSP project development

•21

•Source : EA SAC 2011

•Impact of the quality of the solar resource (DNI) on the relative LEC

•EA SAC projected LEC reduction with CSP Growth

Opportunity – Potential for reduction in cost of CSP

•Barrier to entry: Current cost of CSP.

•European Academies Science Advisory Council - Nov 2011 - predicts grid price parity with Fossil between 2020 and 2030 in Europe, and sooner in places with higher DNI.

•Barrier to entry: Current cost of CSP.

•European Academies Science Advisory Council - Nov 2011 - predicts grid price parity with Fossil between 2020 and 2030 in Europe, and sooner in places with higher DNI.

•Eskom anticipates CSP cost reduction through:

• Capacity expansion,

• Research and Development,

• Localisation.

•Eskom anticipates CSP cost reduction through:

• Capacity expansion,

• Research and Development,

• Localisation.

22

Summary of opportunities for CSP in South Africa

Source: Eskom, BCG analysis

Cata

lyst

for

ch

an

ge in

So

uth

Afr

ica

6

Economic growth engine

1

Job creation and skills

development

2

Positive Impact on local

communities

Positive Environmental footprint

4

Enabler of S.A. Development

through electricity for all initiative

5

3

•23

Lessons Learnt

• Government support is imperative in embarking on Sustainable projects.

• Effective diversification not possible without concessional funding.

• Benefits to Local industry must be demonstrated to harness support:

– Job creation

– Poverty alleviation

• Thorough Environmental Impact Assessment with no fatal flaws is key to obtaining local

support.

• Site selection - Should be close to established infrastructure like:

– Water supply, National roads, Transmission connection, Airport etc.

• Since local expertise is limited, consultants may be required initially but with emphasis

on training and development.

• In procuring the plant, emphasis should be placed on local supply, T&D, and technology

transfer.

•24

THANK YOU

Vikesh Rajpaul Programme Manager – Concentrating Solar Power

Renewables Business Unit

Eskom

Tel (ZA) +27 11 516 7414 | Fax +27 086 667 6958 | Mobile +27 73 799 9893

Eskom Holdings SOC Limited (Reg No: 2002/015527/06)

E-mail vikesh.rajpaul@eskom.co.za Website www.eskom.co.za