Integrated Electricity Demand Management The role of alterna ve

Document Sample
Integrated Electricity Demand Management The role of alterna ve Powered By Docstoc
					        Integrated	
  Electricity	
  Demand	
  
                      Management
       The	
  role	
  of	
  alterna6ve	
  energies	
  
	
  



         LPGSASA	
  Annual	
  Conference
             15	
  November	
  2010
              Mr	
  John	
  Thorby
                     Eskom
Opening thoughts

South Africa is a country undergoing widespread transformation and
change since 1994, especially in the energy sector

• Electricity for all, not just the few. Large increase in residential demand
  and greater complexity of Eskom demand profile

• Sustained economic growth and rising living standards since mid
  1990’s

• Electricity driven economy especially in industry, mining and smelting
  attracting inward investment and further fuelling necessary growth

• Electricity generation and supply infrastructure under increasing
  demand pressure. But electricity not alone, so too, liquid, gaseous and
  solid fuels

• But with change come opportunities and greater diversity of energy
  supply especially with fuels such as LPG that can substitute electricity

                                                                                2
 Presentation Contents

Integrated Demand Management - The role of alternative energy

 1. Eskom’s challenges and focus areas
    •   Vision and priorities
    •   Supply demand balance
 2. Eskom’s Integrated Demand Management overview
    •   Roll of IDM
    •   IDM quantum's
 3. South African energy supply – an Energy Industry responsibility
 4. Reflections on LPG as an alternative to electricity
    •   Position in the energy mix
    •   Constraints and concerns
    •   Possible areas of focus
 5. Conclusions




                                                                      3
Eskom Purpose – Why we exist?




              To provide sustainable electricity
                solutions to grow the economy
                and improve the quality of life
                 of all people in South Africa
                      and in the region.




                                                   4
The Eskom we are creating

 Low Cost Good Investment                      Top 5 Power Utility
 • We are the global benchmark for             • We are in the Top 5 peer benchmarking
   Investment Analysts.
                                               Satisfied Customers
 A Trusted Company Globally                    • Our Customers consistently rate us in the
 • We are ethical, well governed and build       top quartile and promote us as a company.
    a trusted relationship with stakeholders
    and we are a trusted advisor.              Electricity for All
                                               • It is in our business interest to have
 A Green Energy Company                           electricity for all.
 • We have lower emissions, higher
   efficiency, top ¼ of Global Reporting       Zero Harm
   Initiative                                  • Zero harm to people and the environment.

 Best Company to work for                      Significant Regional Player
 • We are rated as the employer of choice      • Driving Investment in entire value chain
   in SA and SADC by employees and                (Gx, Tx, Dx) and growing customer base.
   prospective employees.




                                                                                             5
 Eskom's current priorities


• Regaining the confidence of all South   • Relationship with Labour
  Africans and markets in Eskom – our     • Strong Engineering governance
  reputation
                                          • Energy efficiency movement in South
• Keeping the lights burning                Africa
• Find and implement a funding solution • Develop competencies for execution
  that strengthen the Eskom balance
  sheet and retain current investment   • Safety
  grading for BBB+                      • Operational excellence “back to basics”
• Become customer centric               • Southern African strategy
• Deliver the build                       • Transforming our supply chain
• Lean and mean – cost efficiencies       • Efficient management of Capital
• Comprehensive response to climate       • Introduction of private generators in the
  change                                    South African Market
• Universal access                        • Management of bad debt
• Employee value proposition
                                                                                        6
SA electricity supply-demand balance will remain
tight until 2015 with 2011/2012 the crucial period

  Current forecast of the annual energy gap for 2010 to 2017, TWh shortfall
                                              9

                                                                             9 TWh is equivalent
                                                                             to ~1000 MW
                                                                             baseload capacity
            6                6




                                                                3
                                                                                 2
                                                                                                      1
                                                                                                          0     0
         11/3              11                11              11                 11                11      11   11/3
         0/10               /3               /3              /3                 /3                /3      /3   0/10
                            0/               0/              0/                 0/                0/      0/
Assumptions                10               10               10
Eskom estimate of the IRP2010 moderate load forecast (~260 TWh in 2010);
                                                                                10                10      10
New build (e.g., Medupi, Kusile, Ingula) & RTS at current dates; REFIT as per IRP1 (1GW by FY2018);
DSM as per base plan (3.9 GW by FY2018); Planned maintenance allocation increased to ±10%
                                                                                                                      7
 Presentation Contents

Integrated Demand Management - The role of alternative energy

 1. Eskom’s challenges and focus areas
    •   Vision and priorities
    •   Supply demand balance
 2. Eskom’s Integrated Demand Management overview
    •   Roll of IDM
    •   IDM quantum's
 3. South African energy supply – an Energy industry responsibility
 4. Reflections on LPG as an alternative to electricity
    •   Position in the energy mix
    •   Constraints and concerns
    •   Possible areas of focus
 5. Conclusions




                                                                      8
  Role of the IDM Programme Delivery
• The key function of the IDM Programme Delivery function will be to achieve the targeted
  MW/MWh saved, in accordance with MYPD and IRP plans
• Alignment and specific support to “keeping the lights on” strategic initiative and others
• The savings will be achieved:
    • Targeted initiatives in the sectors, i.e. residential, industrial, corporate/commercial,
       agriculture, government, municipalities
    • A strong market focus with the customer base segmented to identify drivers for the
       uptake of Energy Efficient technologies
    • Direct contribution, aimed at leading by example, by leveraging and enhancing the
       Eskom guardians and ambassadors program
     •   Market intimacy coupled with insights into the customer base and customer operational processes
         will be leveraged to deliver comprehensive energy saving solutions
• Manage, influence and direct all appropriate Channels to market including:
    • Customer Relationship Managers
    • Industry bodies such as BUSA, EIUG, AMEU, community forums
    • Suppliers, including OEM, distributors and retailers
    • Energy service companies
• Targeted marketing messages crafted to cater for customer segments
• Strong internal Delivery integration and dependency with other IDM function and external
  bodies
     DSM PROGRAMME
                                                                            OUTCOMES:
                 MANDATE                          •Energy and demand savings, keeping the lights on
• To LEAD and ENSURE DELIVER Y of                 •Improved country energy productivity profile/reduced energy intensity
  SUSTAINABLE energy efficiency solutions         •Reduction of Eskom and country carbon footprint
  to keep the lights burning and create a         •A more energy aware and efficient culture in SA
  culture of energy efficiency in South Africa

                                                                                            Targets
               MARKETS
                                                 Year      Targets*                 Target *             BUDGET*       Internal EE
                                                                                                         Rm
 •   Industrial /Mining                                    (Eskom)                 (NERSA)
 •   Residential
 •   Commercial/Corporate
 •   Agriculture/Government/SoE’s                          MW            GHW       MW       GWH          R’m           MW   GWh   R’m
 •   Municipalities                              2010/11   301           994       289      977          1406          8    24    55
 •   Internal Energy Efficiency
                                                 2011/12   313           1280      301      1263         1688

                                                 2012/13   459           1827      447      1815         2351
           TECHNOLOGIES
                                                 3 YRS     1073          4102      1037     4055         5445
The focused TECHNOLOGIES, incl:
• Lighting and HVAC
• Hot Water
      •   Heat pumps                                 Sector targets            2010/11         2011/12      2012/13
      •   Solar Water Heating
      •   Shower heads)                              Sectors
• Demand Reduction                                                          Under development


           *Excludes Government SWH , AMI Programme, ULM
                                                                                                                                        10
       Key Focus Areas – DSM Programme Delivery

          Sector Focus                                       Approach                                         Technology Focus

                                                                                                      1.   Efficient lighting,
                                                                                                      2.   Process optimisation, and
         Industrial / Mining                                                                          3.   HVAC
                                                                                                      4.   Compressed Air



                                                                                                      1. Efficient lighting,
             Residential                                                                              2. Hot water strategy
                                                         Advisory Services                            3. Smart Meters

                                                            ESCo Projects
                                                                                                      1. Efficient lighting,
           Commercial /                                Mass roll out projects                         2. Heating, ventilation and air
            Corporate
                                                                                                         conditioning (HVAC)
                                                            Standard offer

                                                         Standard Products
                                                                                                      1. Compressed Air
             Agriculture                                                                              2. Process Optimisation




          Internal Energy                                                                             1. Efficient lighting,
                                                                                                      2. Heating, ventilation and air
             Efficiency                                                                                  conditioning (HVAC)


Strategy key focus areas were derived from analysis of technology cost vs. avoided cost, and technology life cycle vs. time to implement   11
 Presentation Contents

Integrated Demand Management - The role of alternative energy

 1. Eskom’s challenges and focus areas
    •   Vision and priorities
    •   Supply demand balance
 2. Eskom’s Integrated Demand Management overview
    •   Roll of IDM
    •   IDM quantum's
 3. South African energy supply – an Energy Industry responsibility
 4. Reflections on LPG as an alternative to electricity
    •   Position in the energy mix
    •   Constraints and concerns
    •   Possible areas of focus
 5. Conclusions




                                                                      12
Energy a collective responsibility


• Electricity is an extremely costly fuel to produce that needs to be
  conserved for unique electricity applications, e.g. motor power, lighting,
  electronics, etc. Price of electricity rising to reflect this.
• Use of electricity for thermal heating applications now inappropriate –
  the fuel usage mix in SA needs to change – radical shift to nonelectric
  fuels for thermal processes
• Department of Energy, NERSA, Parliamentary PC all need to
  understand the seriousness of the situation, the need for urgent change
  and the correct policy/regulatory frameworks.
• Energy supply is not only the responsibility of Eskom - up to the
  Government, through their various arms (Regulatory, Trade and
  Industry, DoE, State Enterprises etc.) to liaise with the necessary
  alternative fuel suppliers (gas, oil, LPG, CEF, et al) to make the
  necessary provisions
• Petroleum fuel shortages also need urgent attention as well!


                                                                          13
  Presentation Contents

Integrated Demand Management - The role of alternative energies

  1. Eskom’s challenges and focus areas
     •   Vision and priorities
     •   Supply demand balance
  2. Eskom’s Integrated Demand Management overview
     •   Roll of IDM
     •   IDM quantum's
  3. South African energy supply – an Energy industry responsibility
  4. Reflections on LPG as an alternative to electricity
     •   Position in the energy mix
     •   Constraints and concerns
     •   Possible areas of focus
  5. Conclusions




                                                                       14
LPG – Price competitive position


Current fuel prices




Notes:
    • Most prices regulated by NERSA or DOE
    • Max LPG now regulated
                                              15
LPG – Price competitive position

Relative cost between fuels




Notes:
   • LPG still very high relative to others
   • Domestic electricity prices approaching LPG
   • R3/kg can make a big difference - Residential vs Industrial LPG
                                                                       16
LPG – Constraints and Concerns

LPG supply reliability concerns:
    • Finite refining capacity & Sasol production – already import dependent
    • Under capacity in winter – refinery shut downs & greatest time of demand
    • Limited local storage capacity – not declared a strategic fuel?
    • Rail and trucking constraints?
    • Possible development of import terminals, Richards Bay, Saldana – but will
      they be open access terminals? Competitive rivalry necessary.
    • Cylinder supply/investment constraints – but without dedicated cylinders
      impossible to grow your market.
    • CONCLUSION – supply infrastructure investment needed
LPG prices
    •   Maximum retail price regulation – major positive – Enforcement the key
    •   Crude oil price risk, but fortunately only on around R6 of the R16/kg
    •   Coming short term electricity price increases will see LPG < Electricity.
    •   LPG needs to move from high margin/low volume to low margin/high volume
        – overseas successful LPG cylinder supply enterprise have demonstrated
        the commercial success of this business model.


                                                                              17
LPG Market focus areas


Current focus areas – too narrow!
   • Household cookers
   • Restaurant cooking
   • Small industrial heat applications
Few examples: future areas
   • Typical gas based food processing technologies include:
       • Process steam and hot water
       • Drying: Tray or cabinet drying, Tunnel dryers, Fluidized bed dryers’ Puff drying,
         Spray, drum and rotary drying, Freeze drying
       • Evaporation: Batch pan evaporators, Rising and falling film evaporators, Forced
         circulation evaporators, Agitated thin film evaporators
       • Refrigeration, Cold rooms and stores, Plate freezers, Fluid freezers, Immersion
         freezers, Direct and indirect air blast freezers
       • Cooking, Fryers, Pot cooking, Ovens, Flash cooking




                                                                                        18
LPG Market focus areas


Few examples: future areas continued:
   • Typical gas based plastic processing technologies are listed below:
       •   Blending and compounding thermal units
       •   Hot extrusion presses
       •   Hot moulding presses
       •   Thermoforming
       •   Foam processing
       •   Central thermal fluid systems
       •   Radiant sheet heating
       •   Resin drying
       •   Absorption chillers
       •   Curing/drying ovens




                                                                           19
LPG Market focus areas


Few example future areas continued:
   • Typical processes and energy consuming equipment used in the textile
     industry:
       • Singeing machines, Cleaning and dyeing equipment, Scouring kiers, Paddle
         machines, Yarn dyers, Beck dyers, Pressurized jet dyers,
       • Pre-heaters, Packaged pre-heaters, Carpet pre-heaters,
       • Drying and curing equipment, Drying cylinders, Suction drum dryers, Hot-flue
         dryers, Infrared dryers
       • Sub systems, Infrared burners, Heat exchangers




   BUT?

   Do we have the specialist equipment suppliers and necessary skills to enable
   rapid growth in South Africa of the LPG market? If not now, when? Rarely will
   the market conditions ever be so favourable.



                                                                                        20
  Presentation Contents

Integrated Demand Management - The role of alternative energies

  1. Eskom’s challenges and focus areas
     •   Vision and priorities
     •   Supply demand balance
  2. Eskom’s Integrated Demand Management overview
     •   Roll of IDM
     •   IDM quantum's
  3. South African energy supply – an Energy Industry responsibility
  4. Reflections on LPG as an alternative to electricity
     •   Position in the energy mix
     •   Constraints and concerns
     •   Possible areas of focus
  5. Conclusions




                                                                       21
Conclusions

In conclusion, some possible pointers for the future:

• Needs to be greater commercial risk sharing between energy suppliers
  in developing and enjoying the fruits of new energy markets

• Eskom has already worked closely with the LPG industry with
  residential cooker switch programmes in the Cape with generous
  Eskom IDM subsidies, so we have experience of each other

• For IDM programmes, Eskom looking for large scale and professional
  energy partners to deliver mutually sustainable solutions. Supply side
  scale, critical mass and commercial professionalism becoming
  increasingly important. Eskom unable to shoulder the complete burden
  and commercial risk alone

• When change comes, innovative, competitive and customer centric
  companies flourish, while those with yesterday’s thinking flounder.
  Even Eskom is having to learn this painful lesson so all our ‘comfort
  zones’ are being torn down by the rapid changes around us
                                                                          22
Conclusions

• LPG industry in ideal situation right now to grasp a major opportunity to
  greatly expand the South African market for its product. Unlike
  electricity, the elasticity of supply more flexible for LPG with imports

• Price of LPG becoming more competitive with very large captive
  markets waiting to be converted such as residential cooking, various
  thermal applications in industry and commerce.

• The existing market for LPG in South Africa could be doubled within
  just a few years but only if the local industry desire it and organise
  themselves to do so. Needs diversification into new processes

• There is so much real commercial opportunity – if Ultragaz, a dedicated
  LPG cylinder company in Brazil that alone supplies four times the total
  SA LPG market can do it, so can you!

• Eskom is always eager to hear from fellow members of the SA energy
  supply industry about sensible collaborative energy supply initiatives -
  my door is always open
                                                                             23

				
DOCUMENT INFO