Tag Archive | integrated energy plan

Gas Utilisation Master Plan gets things going

Gas a “game changer” in energy mix…

gas pipelineWith the publication for comment of the Gas Utilisation Master Plan (Gump) by the department of energy (DoE), South Africa came a step further towards the finalisation of its Integrated Energy Plan (IEP), meaning also that the document has received approval by the cabinet.

The document, based on a Green Paper released by DOE some years ago, provides a framework for investment in gas-supporting infrastructure and outlines the role that gas could conceivably play in the electricity, transport, domestic, commercial and industrial sectors.

LNG and gas, offshore -onshore

The Gump outlines, amongst other issues,  the import of liquified natural gas (LNG) and piped gas from Namibia and Mozambique and plans for production of natural and shale gas in South Africa.  A plan to have 67 GW of installed gas generation by 2050 is considered by the paper.
The plan is particularly relevant at the moment with Eskom having to rely, as grid backup during the current winter, on expensive diesel-fueled open-cycle gas turbines. The Gump proposals on electricity generation, talk of conversion to closed-cycle turbine power using gas.

The paper also expands on importing electricity from gas sourced from Mozambique and Namibia with lines to the Eskom system grid including imports from the largest present and mainly undeveloped gas fields in Tanzania neighbouring the northern Mozambique fields.

Learning curve

New minister of energy, Tina Joemat-Pettersson, will have deepen her knowledge base very quickly on such matters as the IEP, energy resources and liquid fuels plans, all urgent and with immediacy.   Such issues as the process of energy integration overall and the issue of the stalled independent power producers (IPP) programme in terms of the held-over Independent System Market Operators (ISMO) Bill, are also waiting for position on the energy starting track.

DoE has also pointed to its intended coal gas programme with an IPP programme for the generation of some 6,500MW of power. The department further states that the Gump takes a 30-year view of the industry. It not only deals, they say, with the regulatory environment and economic predictions but does touch on social issues and environmental matters as well.

The master plan also talks of a gas line from Mozambique to Gauteng via Richards Bay and how gas will be distributed and stored, together with the issue of LNG terminal storage.

As a separate issue to Gump but part of the same overall plan, DOE has also released public comment the issue of investment by private merchants in fuel and gas storage, particularly referring to Saldanha Bay.

Storage, a vexed issue

Fuel storage at the present moment is traditionally undertaken by the major oil companies, in some cases integrated with state facilities and who can more easily absorb some of the more riskier aspects of this sector with their vertical interests both upstream and downstream.

DoE sees a greater contribution from investment by private merchants in storage and is currently attempting to re-structure the system to attract and build the industry to counter present storage problems and for early consideration as part of South Africa’s strategic fuels plan and as part of a licensing and regulation background.

In the short term, DoE says in its Gump programme, such a system is needed in terms of LNG holding reserves, imported as LNG or from state owned PetroSA’s gas-to-liquids plant at Mossel Bay, until more natural gas comes down the envisaged pipelines from the current exploration areas.

At the moment Sasol pipes 188-million gigajoules a year of gas into South Africa from Mozambique.  The possibility of LNG re-gasification plants offshore on the West coast in the near future is also debated in the Gump programme released.

Other articles in this category or as background
http://parlyreportsa.co.za//energy/parliament-re-starts-oilsea-gas-debate/
http://parlyreportsa.co.za//energy/shale-gas-exploration-gets-underway/
http://parlyreportsa.co.za//energy/oil-and-gas-industry-criticizes-minerals-petroleum-bill/
http://parlyreportsa.co.za//energy/future-clearer-as-gas-amendment-bill/

Posted in Electricity, Energy, Facebook and Twitter, Fuel,oil,renewables, LinkedIn, Public utilities, Special Recent Posts, Trade & Industry0 Comments

Integrated energy plan (IEP) around the corner

IEP a few months off

Benedict MartinsAn integrated energy plan (IEP) for South Africa covering the full energy spectrum will definitely be published before the year end, according to the director general, department of energy (DOE), a fact also confirmed by minister Ben Martins when addressing an energy conference in Johannesburg recently.

Ms Nellie Magubane, when addressing the relevant portfolio committee under chair, Sisi Njikelana who had called for an update on the energy plan, was accompanied by minister Ben Martins at the time and present for his first meeting in Parliament. The minister acknowledged and highlighted the importance of unfolding the plan as part of the country’s investment credentials as soon as possible.

Continuing energy story

Whilst re-confirming that the strategy was still at public participation stage, DG Magubane said there was “no end-state tomorrow” with the plan but rather a reflection of a “phased approach as the country’s appetite for energy as it  develops”.

The process began, she said, with the 1998 White Paper, the development of independent powers system operators (ISMO) and the accompanying ISMO Bill also awaiting the production of the IEP, the National Energy Act in 2008 and regulations on resources that have followed. The IEP this year would start the energy initiative rolling to be followed by gas development plans.

Not just supply factors

In the years since apartheid, said Magubane, when energy had different directives which were focused primarily on just maintaining supply, what had changed significantly were economic, environmental and social imperatives which now were being drawn in and superimposed. “The fixation with supply capacity is not now the only criteria to be considered in the energy paradigm”, she said.

The liquid fuels shortages of 2005 and subsequent electricity disruptions in the years up to 2008, Magubane said, had shown the need for coordinated planning to avoid disparate plans and contradictory initiatives in the sectors of electricity, liquid fuels and gas.

A twenty-year road map for the liquid fuels industry was in progress by the department, she said, and a gas planning infrastructure plan was to be developed once the extent of resources were better understood.

International view

Through time, and above all because of energy security, Magubane said, scenario planning has changed in South Africa to take in security, environmental and climate response factors. In conjunction to long-term climate change policy and agreements, lessons had been learnt from the IEA, Austria, Belgium, Canada, the Czech Republic, Italy, Japan, the Netherlands, Norway and Spain, she said.

When asked what had been learnt from a study tour of the USA, DG Magubane said that the primary aspect learnt there was the success of establishing localised energy resources, focusing on what mattered most to the USA and reducing dependence on imports. We learnt, for example, that we must not try a change the impossible or employ unrealistic factors but move according to what was a fact locally. “For example, South Africa has a lot of coal but little water and these factors have to be built in, not ignored.”

She said that the overseas studies where different economies and different state policies were involved, due note that the position had changed radically in South Africa had to be acknowledged, as had been the case in many of those countries.

Control of resources

“For example, government has come from a position where in SA we were determining the appropriate level of involvement with the liquid fuel levels industry during transition to a rapidly globalising picture, to now having to maintain a strategic role in shaping all key sectors of the economy.”

In response to queries from parliamentarians, she acknowledged that the IEP to be produced would not incorporate any powers to the minister, who “would rather be able to exercise any powers affecting energy matters through normal regulatory enforcement contained in the many pieces of legislation that applied to the energy sector, such as the Energy and Gas Acts.”

Pricing restructuring

On pricing issues as far as the IEP was concerned, Ms. Magubane responded to questions that national treasury figures had so far been the base of determinations but in the light that submissions and input from stakeholders which were to emerge from the process now in progress, the issue of price factors could in all probability be reshaped.

In answer to complaints that that there was still no indication from her, or DOE, where the country was going in hydrocarbons, electricity or renewables and what pricing factors were involved for urgent investment needs, the chair asked that DOE be given time to develop the final report or “everything would go in different directions”.

DG Magubane assured parliamentarians that the final plan would enable everybody to weigh up infrastructure plans with government policy, even bearing in mind that the position is constantly changing given such issues as hydro input from neighbours, gas exploration in various forms and global tensions.

previous articles on this subject
http://parlyreportsa.co.za//uncategorized/mineral-and-petroleum-development-bill-grabs-resources/
http://parlyreportsa.co.za//cabinetpresidential/president-obama-and-power-africa/
http://parlyreportsa.co.za//cabinetpresidential/nuclear-goes-ahead-maybe-strategic-partner/
http://parlyreportsa.co.za//energy/petrosa-has-high-hopes-with-the-chinese/

Posted in Electricity, Energy, Facebook and Twitter, Finance, economic, Fuel,oil,renewables, LinkedIn, Mining, beneficiation, Public utilities, Trade & Industry0 Comments

Integrated Energy Plan (IEP) not crystal ball gazing, says DOE

Department reports to Parliament on energy plan.

It must be understood that the integrated energy plan (IEP) for South Africa  was going to be a “simplistic representation of a number of possible future outcomes encapsulating the state of energy demand and supply that could materialize in light of current policies and macroeconomic trends.  The IEP will not be a representation of a most likely energy future.”

So said Ms Tshidmidzi Ramendozi, chief director, energy planning, department of energy (DOE) when addressing parliamentarians of the portfolio energy committee on the state of the IEP, where the DOE had arrived at in terms of producing such a plan and when it was likely to come about.

Under questioning Ramendozi estimated a final draft in the hands of the cabinet by  the middle of 2013.

The development of an IEP was envisaged in a White Paper on Energy in 1998 and the minister in terms of the National Energy Act of 2008 was then mandated to develop and publish such an IEP on an annual basis. The purpose of the IEP was described in the Act “to provide a road map of energy policy and technology development future energy landscape in South Africa to guide future energy infrastructure investments.”

Seven test cases would be studied in the current exercise, Ramendozi said, which would indicate what could happen if particular actions were taken. She was at pains to point out that such test cases were not really scenario planning exercises, which would have allowed for outside forces or factors over which DOE or those associated with energy generation had no control.

Major factors within the ambit of the planning exercise, she said, for projections in the IEP, were the original energy White Paper; the 2010 integrated resources plan; the national development plan; the new growth plan; the national climate change response paper; the national transport master plan; South Africa’s beneficiation strategy and the proposed carbon tax policy.

Parameters governing the base assumptions were, Ramendozi said, renewable energy targets; the fuel reserve margin; the limits governing annual carbon emissions and the penalties involved.   Naturally macroeconomic factors such as banking rates, economic growth and global oil prices were involved in the assessments.

From this base, for which DOE had to make certain assumptions on GDP factors forecast in the 2012 budget, was to take a middle, moderate growth scenario out of low to high growth patterns, and assume a certain amount of skills restraints into the future.    It also had to assume global oil price projections from the Energy Information Administration and, also to be accounted for, were international projections from the annual energy outlook documents of 2012 in order to establish some sort of formula to go forward.

Assumptions for various test cases could then be undertaken, Ramendozi said, with or without the new nuclear build programme; in one case with existing nuclear structures and one without and mothballing existing structures.  Such would form the basis in test cases one and two.

Then came test cases three and four, at which point Ramendozi referred to the national development plan which had presented a number of factors which had to be borne in mind although these directly affected the integrated resources plan (IRP) and were incidental to the IEP under consideration as far as test cases were concerned.

These factors were that as a net importer of crude oil, South Africa was very much a taker in the oil market and susceptible to fluctuating prices. Also to be considered were the new fuel specifications being considered and the fact that refineries were to be re-equipped to capacitate such and that South Africa would no doubts continue on its path of intensive use of fuel-powered vehicles but improving its national transport system generally.

She noted the options in the national energy development plan, as far as liquid fuels were concerned, and these were as DOE saw it – to build a new oil-to-liquid refinery; build a new coal-to-liquid refinery; upgrade existing refineries; import more refined product or build or buy a shareholding in a new refinery in Angola or Nigeria.  All this had to be considered at this point of the running of test models.

Turning to test case three in the process, Ramendozi said this included expanding existing refineries with greenfields operations. Test case four included upgrading or expanding refineries and possibly, in addition, increasing importation of refined product, allowing for consequent upgrades of port infrastructure and associated costs such as transportation.

Test cases five and six, DOE noted, included the issue of carbon emissions, which was based around South Africa’s international commitment to reduce emissions by 34% by 20120 and 42% by 2025. Factors to be considered were the findings of the long term mitigation exercise involved at the time which had established that South Africa’s energy use emissions constituted 80% of all emissions, 40% of which, a majority on a comparative generating basis, arose from the generation of electricity.

Test case five, Ramendozi said, therefore involved the issues of refurbishing the existing “fleet” of generating plants to meet targets set by the department of environmental affairs (DEA).  This would produce a result for this test case.

However, there was little doubt that such a “retrofit plan would still leave demand outstripping the supply of electricity” so that, as per test case six, the plan to be modelled would involve  “South Africa mothballing its (coal) power plants and investing solely in new technologies as a substitute.”

Ramendozi concluded that the issue of carbon tax finally arose in test case seven. Here, the impact of carbon tax on the choice of energy technologies throughout the entire value chain had to be considered, bearing in mind the DOE was aware of a current proposal to tax emissions of CO2 @ R75 per ton of with an increase of around R200 a ton.

For this modelling exercise and still to be completed, she said, was quality checking of the data collected; the actual configuring of the base for the test cases; subsequent analysis and evaluation and then the final report writing.

Stakeholders would be consulted before a draft report was issued, the draft report being considered first by cabinet before the draft became public.

MPs commented that quite obviously things were still therefore at a very early stage and were surprised that the DOE paper at this stage gave no evaluations of each energy source and no comments on job creation or job losses or skills so far reached.   Ramendozi replied to this, and a number of other similar questions on energy resources, that parliamentarians were confusing the IRP, which dealt with resources and the effects and consequences of their use, with the purpose of the IEP.

It was not the job of the IEP to evaluate and decide upon the quality of resources and their use or not.

The IRP was very much on the subject of electricity energy, she said, to repeated and similar parliamentary questions on coal issues and the future of coal as a primary industry.  Questions on gas reticulation and exploration off the Mozambique coast and what PetroSA were planning, for example, and similar issues in the hydrocarbons area, she noted, similarly involved specific resource evaluations and this was not what the IEP was about. She said the job in hand which looked at the whole sector in a broader sense.

“For example”, Ramendozi said, “when looking at the transport master plan it becomes quite evident that whilst improving rail transport systems, a knock-on result in a broader sense would be a swing perhaps from road to rail, meaning a different call upon the rail electricity need. This would be an IRP issue, however.”

This should answer many parliamentarian’s questions, she said, why there was so little to be said in the IEP on the specific issues surrounding liquid fuels in the planning process.

The IEP was to be a road map and the process leading to building such a plan would yet have to “unpack” many of the issues surrounding energy and the economy from a macro-economic viewpoint.  Such macro-economic issues as job losses and the use or over-use of water, for example, would indeed be in the considerations for individual test case models.

“This is going to be a particularly difficult aspect of preparing the IEP”, Ramendozi said, “because it involves cross-debate with many government departments, including treasury, environmental affairs, labour, health and transport, for example, and the final document needed to be both visionary and re-active to findings and take into account policy matters that had been adopted as courses of action”.

“What the IEP will not be”, she said, “is another IRP which evaluates resources but rather a document which will consider test case models, with or without certain weightings, based on inclusivity or excluding issues, and also to incorporate known supply options with given macro-economic factors.”

She commented, in reply to questions on the effect of carbon tax, that this would indeed be a “challenge” to assess, since whilst MPs saw this as an effect on the purse of the individual, DOE’s thinking on this at this very early stage might be to take the treasury viewpoint that the effect carbon tax could be countered by incentives in the system in the form of allowances, before costs reached the individual.

On augmenting the IEP with the liquid fuels strategy, Ramendozi said, that here again DOE was more concerned with producing transportation and demand factors at this stage. She said, in a similar vein, when asked about the Mathombo project, that her department could not even talk the need for a new refinery, “until we start running the various test case models”.

On questions regarding fracking and gas exploration activities in the Karoo, Ramendozi responded, “With all the geological and logistics issues facing fracking, we are hardly even considering this contribution in terms of the time frame of the IEP. We do not see Shellgas playing an effective role in the energy picture in the immediate future as far as short term test cases are concerned”.

She told parliamentarians that one of the test cases included natural gas related to electricity needs, compared with to gas to liquid technologies. However, she said the whole exercise was not to consider one resource against another but how to complement resources into a common system.

The IEP, she said, “must take on board government policy towards the environment, attitudes toward climate change and therefore such issues and water and water resources used in coal fired plants will have to be considered.   However, social issue answers are not something that will come out of the IEP”, she told parliamentarians.

In many cases we see the final IEP highlighting many issues but not addressing their manner of implementation”, she concluded.

Ramendozi said that in terms of producing the IEP, DOE would consider a reserve fuels margin of 19% and when asked as a final question by an MP what DOE were “going to do about the elephant in the room – the growth rate”, she responded that DOE had to follow exactly what treasury were stating for growth “otherwise all other related data would not make sense”.

Chair, Sisa Njikelana, concluded by saying the IEP presentation was the final document in an “important parliamentary year on energy matters,” stating that DOE had to get the concept behind the IEP right in their minds “before it moved into the nuts and bolts of the various test case issues”.

He said that the energy committee was to put on whole host of questions in writing to DOE based on a forthcoming parliamentary summation of the situation so far on the IEP, and this would be an exercise undertaken once parliament re-assembled in the New Year.

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Energy plan assumptions on nuclear build out in New Year

Stressing that the final integrated energy plan (IEP) from the department of energy (DOE) will be subject to public scrutiny and comment, energy minister Dipuo Peters, in a written reply to parliamentary questioning, confirmed that her department will shortly be producing the first set of energy modelling assumptions involving nuclear energy planning for the country and these could be out in the New Year.

DOE have told Parliament seperately, however, that the final draft of the whole IEP will not be in the cabinet’s hands before the middle of 2013, the department having now completed a full round of presentations to interested portfolio committees in Parliament on the background and preliminary work to be undertaken on the IEP.   The IEP is not to be confused with the integrated resources plan (IRP) which will specifically study the individual energy resources themselves.

There will be extensive consultation before any matter on the IEP is even tabled in cabinet for approval, the minister noted.    Demand forecasts have also been finalised for some time, she said, and last month “quality checks on the data had been carried out on the data supplied.”

The minister also indicated that the final full draft document with all test cases incorporated with a plan might not be in the hands of cabinet before mid-2013.  As such it will be in draft form to be published for stakeholder comment.

Clearly nuclear energy is deeply involved in the IEP since the cabinet, at its latest meeting in Pretoria, has now agreed to the implementation of the nuclear build programme in time its seems for the IEP report. Working models will look at various plans with and without various resources, one of the critical resources being the nuclear issue.

A strategy to involve stakeholders in regard to nuclear build is also being worked out, cabinet says.    Kgalema Motlanthe, who heads up the national nuclear energy executive coordination committee, held the first meeting of this body in August and communication has been ongoing.

Eskom has also been endorsed by the cabinet as the owner-operator in terms of the nuclear energy policy

Cabinet has now approved the second version of the draft national energy efficiency strategy, following the 1998 White Paper, published for public comment some time ago.

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