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Integrated Strategic Electricity Planning
Steve Lennon
Executive Director, Strategy & Resources
ESKOM Technology Group
 

Programme

ABSTRACT

This paper summarises the Integrated Strategic Electricity Planning process in Eskom and highlights some of the key supply and demand side options. It then focusses on decision making around future capacity, discussing typical decision making factors, environmental considerations and barriers to the uptake of cleaner technology. The paper concludes with a selection of roles and measures which could facilitate the adoption of cleaner technologies in Southern Africa.

INTRODUCTION

The entire African continent accounts for a mere 3% of total world commercial energy consumption. Energy starvation is widespread, exaggerated by frequent droughts and floods, restricting availability to biomass and hydro resources. In addition power transmission and distribution grids are poorly developed and typically not integrated.

With respect to electric power, 76% of Africa’s capacity is thermal, with oil and natural gas predominant in North African and coal and oil predominant in Southern Africa (1) DOE/EIA, 1999. Access to power grids are a major challenge in Africa. Electrification rates are extremely low in many areas – particularly rural areas.

Integrated Strategic Electricity Planning is a powerful tool for business planning and environmental management. This paper describes the process and indicates a potential direction for Eskom, based upon the planning process currently underway.

INTEGRATED STRATEGIC ELECTRICITY PLANNING (ISEP) PROCESS

Integrated Electricity Planning is defined as that process which selects from a full array of demand and supply side options, that combination of actions, risks and investments which:

  • Satisfies customers electricity needs

  • Achieves optimal value for the customer

  • Is financially viable for a utility

  • Is compatible with the strategic direction of the utility.

Essentially ISEP is aimed at the optimal utilisation of resources. This is achieved by balancing the supply and demand side processes in an optimised manner.

The strategic foundation to the plan includes:

  • Reliability and reserve criteria for optimisation studies

  • Main planning criteria and assumptions

  • Main environmental management constraints

  • Supply and demand side data

  • Risks and uncertaintyOptimisation criteria.

The base case is then established which defines the current situation, taking into account existing trading contracts as well as transmission and environmental constraints. A "business as usual" demand and load forecast is prepared.

Different scenarios which aim at optimising generation capacity additions without trading limitations or transmission constraints are then developed. These scenarios are essentially different pictures of the future and typically would consider variables such as:

  • Electricity demand

  • Environmental constraints

  • Plant availability – especially as impacted by drought

  • Specific national priorities.

A discounted cost analysis is undertaken per scenario. This includes capital, fixed and variable costs (operating, maintenance and fuel costs). The different scenarios and results are analysed against least cost criteria. The best plan or plans are identified. Environmental issues, threats and opportunities are evaluated, as are the risks and uncertainties associated with the plans. Based upon this evaluation, a decision making framework is defined for consideration by all utilities.

The balance of this paper focuses on the different supply and demand side management options, the important factors utilities need to include in this decision making, with a focus on environmental considerations, constraints to the uptake of environmentally benign technologies and the role of policy makers in accelerating the uptake of such technologies (2) IEA, 1998.

SUPPLY SIDE AND DEMAND SIDE MANAGEMENT

3.1 Supply Side Management

The central and southern regions of Africa have large resources such as coal, hydro, oil, natural gas and uranium. There are vast reserves of hydro power in the central equatorial region. Any decision on supply side management options must take this into account.

Supply side management encompasses all those activities required to identify, evaluate, optimally select, implement and monitor options for the generation, transmission and distribution of electricity to meet forecast customer demand in the future. For example, various types of primary energies are evaluated, including both renewable and non-renewable energy sources.

Considering issues such as economic growth rates, the electrification programme, industrial investment and population growth, it may be assumed that the electricity demand and supply infrastructure is going to increase in future. The supply side management process addresses this issue, and makes plans for future electricity supply.

The diagram below (Figure 1) shows some of the different supply side options. The essential feature of supply side management in the area of generation, is the choice between different generation plant options and the impact of this on the environment.

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Figure 1: Supply Side Options

Supply Side Options

Existing and Committed Capacity – Extensive work has been conducted, and is ongoing, in the areas of dry cooling to reduce on water usage, the combustion of low grade coal as well as enhancing asset and product performance through combustion research, enhancing environmental performance as well as energy efficiency

Simunye (mothballed stations) – Return to Service (RTS) and Repowering Studies (Gas and Discard Coal) are in progress. The Repowering of Komati Power Station using discard coal via Fluidised Bed Combustion is a joint venture study between Eskom, Amcoal and Ingwe and was initiated by the Department of Environmental Affairs and Tourism.

New Coal Fired – High level cost studies are being carried out on future conventional pulverised fuel plants investigating wet or dry cooling, with or without flue gas desulphurisation and supercritical boilers for higher efficiencies. Clean Coal Technology studies including Fluidised Bed Combustion and Integrated Gasification Combined Cycle are also underway.

New Gas Fired – Studies in this area include investigations into simple gas turbines, combined cycle gas turbines and advanced gas turbines

New Hydro-Electric – This option investigates importing hydro-electric power from neighboring countries and the generation of electricity via pump storage schemes including high head underground pump storage.

New Nuclear – The Pebble Bed Modular Reactor is a promising new technology development that has major safety advantages over more conventional nuclear plants. A detailed feasibility study is currently underway and includes an Environmental Impact Assessment and licencing application.

Renewables – Eskom has also initiated the SABRE-Gen project to address renewable energy options in Southern Africa. SABRE-Gen, South African Bulk Renewable Energy Generation, was initiated to provide a more visible forum for the investigations into renewable energies for bulk energy generation by Eskom Research. Renewable technologies currently under investigation include:

  • Solar Thermal Electric Technologies – The SABRE-Gen Solar Thermal Electric (STE) project aims to investigate STE technologies for possible implementation in South Africa and Africa. Current STE technologies also offer different sized options. The study aims to identify the technologies that will be most suited to African conditions.

  • Wind Energy – The Wind Energy project aims at the investigation and evaluation of the current wind energy technologies for possible implementation in southern Africa. Current technologies offer electricity generation from a few kilowatt (stand alone) to several hundred megawatt (Large grid connected plant). Initial studies are supported by DANCED (Danish Council for the Environment and Development). The project aims to implement wind energy systems, where economically and environmentally feasible, to ensure a sustainable source of electricity supply. A wind energy resource assessment is being undertaken and a 10 MW test site is being investigated.

  • Biomass and Wave/Tidal Generation – These projects are still in the early stages of project development.

3.2 Demand side management

The overall electricity demand in SA varies during the day. The maximum or peak demands are usually in the mornings and evenings when households use most of their electricity. Managing the maximum demand will allow the utility to plan more efficiently.

Demand side management (DSM) is the process by which electric utilities achieve predictable changes in customer demand which can be considered as alternatives to the provision of additional plant. The main objective of DSM from a utility point of view is to improve efficiency by reducing the average costs of generating electricity and better utilisation of resources, but also in lower-risk demand-side alternatives, as opposed to system expansion through the construction of new power stations.

Demand side management options

The virtual power station - The virtual power station, is the culmination of Eskom’s efforts to provide sustainable energy solution for the future through the production of "negawatts". A "negawatt" refers to an electric megawatt that is saved by the utility through energy efficient and load shifting interventions. The two main projects are COMRICON and FLEXICON which refer to municipal ripple control systems and residential time of use systems respectively. Both of these are load shifting initiatives, which aim to reduce power demand during peak periods, enabling power producers to be more efficient.

Efficient Lighting Initiative (ELI) - Eskom’s Residential Demand Side Management (RDSM) programme is committed to the conservation and preservation of the environment through its Efficient Lighting Initiative (ELI). ELI is a programme that will benefit the whole of South Africa through the promotion of energy efficient lighting. With coal-fired power stations accounting for 90% of South Africa’s generation capacity, any reduction in electricity demand due to demand-side measures benefits the environment by reducing associated emissions and water use. The environmental benefit of the ELI programme is borne out by the fact that the international Global Environment Facility (GEF) has already provided South Africa with US$225 000 in funding, to assist with feasibility work. The objective of the ELI programme is to penetrate the South African market with 18 million Compact Fluorescent Lamps (CFLs) over the next decade and a half. The goal is to reduce the residential load by 820MW over a period of 20 years.

Sustainable Homes Initiative - The objective of this project is to use the opportunity to build energy efficiency into the future consumption of consumers at a construction stage such as Eskom’s All Africa Games Village project. It also improves the financial sustainability of low income customers through improving their ability to pay for end-use needs and increases customer benefits such as more comfortable and healthier homes.

Amazing Amanzi - An appliance has been developed that uses a novel method of using paraffin for water heating and cooking. It has been tested and developed in the laboratory and is now entering the market, and is being adopted enthusiastically. It is estimated that it can yield 300MW of savings over the next 5 years.

Deep Mines HVAC System - Computerised systems are being developed that would optimise the load management strategy for the heating, ventilation and air-conditioning used for deep mining.

IMPORTANT FACTORS IN CAPACITY CHOICE

The choice of technology for future capacity is guided by numerous decision making factors. These are listed below:

  • Capital and operating cost

  • Plant reliability and availability

  • Access to indigenous, low cost fuel

  • Lead timesOperational flexibility (base load versus peaking etc)

  • Water availability

  • Environmental considerations

  • Security of fuel supply

  • Local capacity to sustain technology (skill, infrastructure etc)

  • Funding availability

  • Political considerations

ENVIRONMENTAL CONSIDERATIONS IN CAPACITY CHOICE

Environmental consideration play an extremely important role in expansion planning, however in Eskom this role is at a far more operational level than for developed nations. In this regard the focus is on local and regional environmental impacts and benefits, with lower priority being given to global impact. For example, the introduction of low-smoke coals to reduce urban air pollution will in effect increase CO2 emissions due to the energy required in the devolatilisation process as well as the lower energy content of the product.

The primary environmental issues are presented with a South and Southern African perspective below.(3) Lennon and DuToit, 1995 It should however be noted that the attention given to environmental matters varies considerably from country to country in the region.

These issues clearly receive varying attention as components of environmental impact assessments on a project by project basis:

Water Quality & Availability

The availability of water is one of the critical environmental issues in Southern Africa. Water supplies are highly variable, both in terms of quality and quantity. Technology choices are often strongly influenced by the amount of water used as well as the impact on water quality.

Land Management / Ecological Impacts

Whilst land is generally readily available, the ecological impacts of a particular technology require assessment, especially in areas where eco-tourism is an important consideration. The inundation of land by hydro projects is an issue which requires particular attention.

Air Quality

Power plant emissions receive varying degrees of attention. In general a holistic approach is adopted with respect to Air Quality. In South Africa air quality is assured via the use of a ‘best practicable means’ approach. This implies primary attention is paid to particulate removal, and then the impacts of SOx and NOx are managed via ambient air quality requirements. The Department of Environmental Affairs and Tourism are currently investigating this management process. Acceptable air quality levels are maintained via the combustion of low sulphur coals and tall stacks.

It should be noted that extensive research into Air Quality has been undertaken in the main South African Power Generation region, Mpumalanga, over a 15 year period. This research has clearly demonstrated the efficacy of the current Air Quality management processes in containing local and regional air and rain qualities to acceptable levels. In this regard air quality in this area has improved by an average of 4% pa for the last 10 years, greatly allaying concerns related to exceedance of local and regional air pollution standards. WHO levels for ambient air quality are rarely exceeded

Waste Management

The production of waste, especially large quantities of fly ash from the combustion of high ash coal requires careful management. Ash disposal, utilisation and rehabilitation of disposal sites is an important component of technology assessment. In addition the water used in waste transport and disposal is an important consideration in technology choice.

Socio-Economic Impacts

Socio-economic development is the highest priority in the region. As such the choice of a supply side option and the attendant environmental controls, is strongly dependant on its impact on society as a whole. For example, if it is a matter of choice between utilising resources for an electrification programme versus fitting additional pollution control equipment, where such equipment is an environmental luxury, then the former has precedent. The term "environmental luxury" implies a "nice to have" which is not justified on scientific or economic grounds. This example is well illustrated in South Africa where, due to the combustion of low sulphur coal, coupled with tall stack dispersion, air and rain quality levels in the region of power generation are maintained at acceptable levels. As such the motive to install additional environmental controls eg desulphurisation, is limited, especially when one considers the alternative application of resources. In particular it has been shown that, in the long term, electrification of urban areas results in a significant improvement in currently unacceptable pollution levels due to the domestic combustion of coal. In this regard electrification may be regarded as a Clean Coal Technologies.

It should be noted that a significant percentage of people (69%) are unlikely to get rid of their coal stoves in the short to medium term - even after electrification. Therefore, in the interim (medium-term) an integrated approach of continued electrification, fuel optimisation (low-smoke fuel and combustion appliance improvement) and housing energy efficiency (insulation) is encouraged to reduce the unacceptable urban residential air pollution levels.

Servitudes

The routing of transmission lines through ecologically sensitive areas is the subject of comprehensive Environmental Impact Assessments in most countries in the region. Some projects to increase the capacity of other countries to undertake such studies are currently underway. Soil erosion initiated by poor servitude management can be a particular problem as can the impact of structures and lines on the local ecology, especially wildlife such as birds.

Global Impacts

As developing nations, the issue of CO2 emissions from generating plant receives relatively limited attention. The approach typically adopted is one of striving to improve plant efficiency, reliability and availability, with attendant CO2 emission reduction benefits. There is little motivation to select a technology which produces less CO2 merely for the sake of it or at a cost premium.

Whilst policies are still being formulated, it is considered that, if full incremental costs are covered by developed nations, CO2 emission technologies could be viewed with more favour.

SOME POTENTIAL DEVELOPMENTS IN SOUTHERN AFRICA TO 2015

  • Industry restructuring will play an important role for the next five years – especially in South Africa

  • Environmental pressures, regulation and requirements will increase

  • The Southern African Power Pool will play an important role in balancing supply and demand

  • Natural gas may be used for power generation

  • Coal and hydro will continue to be the main sources of primary energy for power generation

  • Clean Coal Technologies will only be introduced once increased capacity is required and if they meet cost and reliability criteria.

BARRIERS TO THE INTRODUCTION OF ADVANCED POWER GENERATING TECHNOLOGIES

Clearly the most significant barrier to the uptake of advanced, environmentally benign power technologies in Southern Africa is the current excess of generating capacity in the region, coupled with generally energy intensive economies and a significant potential for financially viable demand side measures. It should however be noted that projections for economic growth in the region are highly variable with ‘aspiration figures’ as high as 6% being quoted. Given the fact that economic growth and electricity demand growth are still directly correlated, a 6% growth rate would create the need for major capacity expansion (up to 2300MW pa) from the year 2004. This clearly offers immense opportunities for economically competitive cleaner technologies.

If one assumes such opportunities then consideration must be given to other potential barriers to introduction. These include:

  • Perceptions of unreliability and high operating costs of advanced technologies

  • Limited local skills to adapt to new technologies

  • Limited support infrastructure to cater for new technologies

  • Competition from other technologies and fuels such as hydro, gas and possibly nuclear

  • Need to assess performance in a Southern African environment, eg combustion of local low grade coal etc.

  • The relative efficiency of current plant (34,4% average for 1999).

It is considered unlikely that new technologies will displace existing plant, especially given current plant efficiencies.

The relatively young age of current operational coal fired power stations in South Africa (11-15 years) precludes their upgrading to Clean Coal Technologies (CCT) without efficiency or water consumption penalties. It is therefore necessary for CCT to replace this plant upon decommissioning or to penetrate the growth market. CCT could also replace current older plant in mothballs.

It should further be noted that the current South African practice of burning low-grade (high ash, low sulphur) coals for Power Generation, results in extremely low primary energy costs. This makes it difficult for competing technologies utilising other fuels to penetrate the Power Generation market - as they are 2-3 times more expensive on life cycle costing. Clearly CCT combusting low-grade coal, with more favorable capital costs and efficiencies, will receive serious consideration for replacement plant.

Clearly the major energy resources in Southern Africa are coal and hydro. As such the focus in the region outside of South Africa will be on hydro development. Individual national priorities and non-optimal commercial attitudes can however act as obstacles to this development.

Political issues are considered to present a minor to non-resistant barrier to the introduction of cleaner technologies. Resources, especially funding, are often major constraints in any supply side option in Sub-Saharan Africa. In this regard innovative funding options/aid packages are required.

ROLE AND MEASURES TO ACCELERATE THE ADOPTION OF CLEANER TECHNOLOGIES

In assessing the options open to both Governments and Industry in facilitating the rapid uptake of cleaner technologies it is assumed that the need for additional, or replacement, capacity exists. This is clearly not the case in Southern Africa given the current excess capacity, potential for DSM. Nevertheless some ideas from the perspective of a developing nation are presented below:

Catalyse Economic Growth

In a Southern African context it is obvious that economic growth is an important driver in increased electricity demand which is an obvious precursor for the uptake of cleaner technologies, once excess capacity is exhausted. In this regard international trade protocols and the need to avoid discriminatory trade practices, especially on environmental grounds, is critical.

It should however be stressed that Governments and Industry catalysing economic growth in developing nations is no guarantee that cleaner technologies will be adopted to meet electricity demand. There are numerous selection criteria (as detailed in previous sections of this study) which will be applied. Some of the measures which follow are proposed to enhance cleaner technologies in the selection procedures.

Application of the United Nations Framework Convention on Climate Change

Two of the most important criteria for power generation technology selection are cost and reliability. In this regard developing nations feel that the UNFCCC should be far more rigorously applied by the Governments of developed nations in meeting the full incremental costs of cleaner technologies over current conventional technologies. If this involves additional costs of redundancy to ensure reliability levels equivalent to current plant, then such costs should also be covered.

It is not considered appropriate or equitable for the Governments of developing nations to fund the "premium" costs of cleaner technologies aimed solely at meeting UNFCCC objectives.

In addition the current negotiations around the Kyoto mechanisms should include an assessment of the potential for cleaner technologies to be used as future CDM projects.

Research, Development & Demonstration

Whilst it is accepted that virtually all cleaner technologies are at or beyond the advanced pilot or demonstration stages, it is essential that such programmes be undertaken in a variety of countries. The perceptions around costs, availability and reliability will only be addressed if pilots are undertaken in the countries of final application, especially developing nations. This will also enable the technologies to be tailored to meet unique local conditions and develop enabling capacity for ultimate application. In this regard incentives for cleaner technology pilot plants in developing nations should be developed.

Technology Transfer

In most countries, especially developing nations, the current technological infrastructure and capacity is aligned with current technologies. There are limited skills available to develop parallel capacity in new technologies. As such it is suggested that intensive technology transfer programmes are entered into to develop this capacity. Technology transfer from developed to developing nations must include consideration of:

  • funding

  • long term training in the receiving nation

  • development of a technological support infrastructure

  • technology adaptation to local conditions

  • lifecycle funding.

It must be stressed that technology transfer must be applied in the most holistic sense possible. It is necessary to have systems in place that support the technology for its lifecycle, not merely to the commissioned stage. In this regard the ongoing capacity building component of technology transfer is a critical success factor.

Costs, Availability and Reliability

In order for new technologies to penetrate the market they must clearly demonstrate business advantages over current technologies. In this regard further efforts to reduce costs and improve availability and reliability should be intensified. It is considered that advanced technologies must demonstrate significant advantages over current technologies before they will be widely applied in developing nations. In this regard the pilot programmes mentioned above could have an important role to play.

Direct Intervention

In developing nations, governments are often the main catalyst of new energy development, as motivated by a variety of political factors and rarely driven by economic considerations. Whilst direct intervention is obviously a potential mechanism to increase the speed of application of cleaner technologies, it is generally non-sustainable in economic terms, especially where excess capacity exists.

Development of Human Capacity

In many utilities in developing or under-developed nations, significant efficiency improvements are possible via the effective application of current technologies, ie what is already in place. In this regard more attention needs to be placed on the training of skilled technical and managerial personnel. In particular the organisational skills in initiating and managing inter-utility projects across national boarders need to be developed. The greater local availability of such skills would be extremely useful in optimising efficiencies in a region such as Southern Africa.

CONCLUSION

Thus the Integrated Strategic Electricity Planning process is a powerful tool in maintaining the competitive edge of a business and contributes towards sustainable development.

REFERENCES

US Department of Energy "Energy in Africa" Energy in Africa", Energy Information Admin, Washinghton 1999

International Energy Agency "Regional Trends in Energy – Efficient, Coal Fired, Power Generation Technologies", OECD, Paris, 1998.

Lennon SJ and DuToit J (1995): Journal of Energy in Southern Africa, "Energy and the