Download - Background of study
Electricity cost risk modelling of the Energy Conservation Scheme (ECS) for the
Gold mining industry of South Africa
Lodewyk van der Zee
16-08-2012
Background of study Load shedding from 2008 cost the South African economy
an estimated 50 billion rand. The Power Conservation Program (PCP) was developed as
a mitigation strategy.
Power Conservation
Program (PCP)
Energy Conservation Scheme (ECS):
•Voluntary or price driven Mechanisms •10% Load reduction
Energy Growth Management (EGM)
•New connection management•Network planning
Demand Side Management
(DSM)Pricing
Motivation for the study
≤ 2% : R0.99 per kWh (290%)
No penalties Summer (2011)= R0.34 per kWhWinter electricity tariff (2011)=R0.66 per kWh
>2 %≤ 10% : R3.97 per kWh (1100%)
>10%: R11.91 per kWh(3500%)
ECS procedure
1. Baseline negotiations 2. Allocation of electricity quota: reduction target 10%
3. Reallocate electricity according to ECS rules
4. Settle bill and penalties if needed
Baseline negotiations
Baseline consumption options
Reference period A :Consecutive 10/2008 -10/2009Reference Consumption A:
0.97 x sum ( Ref period A)
Reference period B :12 Consecutive 12/2002 -
10/2009Reference Consumption B:
sum ( Ref period B) up to maximum of 107.5 % of Ref
consumption A
Reference period C :12 Consecutive 10/2006-
9/2007Reference Consumption
C:sum ( Ref period C)
Total energy allocation :A = B + C + D + E
A: ECS customer total annual energy allocationB: ECS customers annual energy allocation in respect of reference loads. C: ECS customer's annual energy allocation in respect of post reference loadsD: ECS customer's new connections and/or additional loads, if applicableE: ECS Customer's Investment Allocation(s)
Allocation management
Default daily allocation : Divide total annual allocated energy by 365 and allocate to 366 days evenly.User defined: Throughout the ECS year the customer may redistribute the previously allocated energy provided that:•Not less than 14 days ahead •Not more than 126 days ahead •The maximum monthly adjustment of 0.167%
Present situation of ECS Consultation draft
by NERSA Negotiations with
40 top consumers have started
Baselines have been put in place
Voluntary partaking have started
Safety net
Cost Risk for Gold mining industry
Impact on direct mining cost Large loads are essential for production Electricity supply vital for safety Simulation assumptions 1. No transgression penalties 2. Average summer electricity tariff (2011)=
R0.34 per kWh3. Average winter electricity tariff (2011)= R0.66
per kWh
Scenario A
Default allocation – no late rephasing
Scenario B
Avoiding high winter month penalties
Mitigation strategies
Invest in optimal load prediction Install required monitoring equipment Mine personnel must be trained Invest in EE loads and DSM Avoid penalties during winter months Identify and isolate non essential loads Communicate ECS rules with mitigation
strategies
Conclusions
ECS is uncertain but remains a risk If not well managed mining group could
incur serious financial losses Investment in allocation management
will lead to additional benefits
Questions
Goals of ECS
Improved management of South Africa’s electricity system
Enhancing information exchange between
A. large industrial commercial customers
B. System Operator Sustained reduction arising from improved energy
efficiency Promotion of energy efficient growth in electricity
consumption.