SEA-Salga-SACN City Power Presentation - Presented by: Paul Vermeulen Manager DSM and SSM City Power - Sustainable ...
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SEA-Salga-SACN
City Power Presentation
Presented by: Paul Vermeulen
Manager DSM and SSM
City Power
Contents 1 Drivers of change 2 Key trends 3 What is in the headlines? 4 What are the key challenges 5 What are the key opportunities 6 What is COJ doing?
Drivers of change 01
Transformational change in P&U is being driven
by numerous factors
Significant investment is required to
update or replace power, gas and
water assets.
Infrastructure
Aging workforce and challenges of Generation mix is shifting to cleaner
investment
the new digital economy require sources, including natural gas and
Changing
effective knowledge transfer and Talent and renewables, and is becoming more
energy mix
fresh thinking. diversity decentralized.
and DG
Customers are being offered choices
New and powerful entrants have
begun to offer customers innovative
New Sector in Empowered to manage their energy use, through
competitors transformation customers both distributed generation (DG) and
home energy management products
energy management solutions.
and services.
Regulatory
frameworks Digitization
Regulatory compact is under Smart meters, “big data” and
pressure to accommodate changing Market and analytics can be used to optimize
customer demands and encourage policy energy delivery, improve energy
innovation. reforms efficiency and enhance customer
experiences.
Federal and state mandates are
driving restructuring, creating
incentives and imposing new rules.
4
Key trends 02
Global demand for electricity is expected to
increase at 2.1% CAGR through 2040 with
most growth coming from emerging markets
Growth in electricity demand by region, 201240 (CAGR) Electricity generation in OECD and non-OECD countries
4.0% 30.0
3.3% 25.0
2.7% 20.0
2.5%
Global average: 2.1%
15.0
1.4%
10.0
0.8%
5.0
0.0
OECD E.Europe Latin Middle East Africa Asia (inc 1990 2012 2020 2025 2030 2035 2040
Eurasia America China,
India) OECD Non-OECD
Source: World Energy Outlook (WEO) 2014 Source: WEO 2014
CAGR: Compound Annual Growth Rate – The year-over-year growth rate of an investment over a specified period of time
OECD: Organisation for Economic Co-operation and Development, an international economic organisation of 34 countries, founded to stimulate economic progress and world trade
► World electricity demand is expected to increase by more than three-fourths over the period 201240, growing at an average rate of
2.1% per year.
► The most dramatic growth in demand will come from Africa (4% CAGR).
► Asia, led by China and India, is also expected to experience dramatic growth in electricity demand of 3.3% CAGR through 2040.
6
Meeting this demand will require enormous
infrastructure investment of more than
US$23t in power and gas alone
Investment in supply infrastructure, 201440 (2013 US$b) Drivers of capex
Total Total Total Total ► Aging power stations
Replacement
power power gas
cycle ► High expenditure on asset replacement
plant T&D T&D*
Europe 2,109 970 303 3,382
E.Europe/Eurasia 835 526 417 1,778 Environmental ► Government-imposed environmental
targets targets imply massive spend
Middle East 479 273 241 993
India 1227 788 70 2,085
Africa 776 848 241 1,865 ► Power demand to grow especially in
Demand growth
emerging markets
Asia-Pacific 4,180 3,536 588 8,304
OECD Americas 1,952 1,215 586 3,753
Non-OECD Americas 593 530 93 1,216
More than US$23.3t globally in power and gas
World 12,151 8,686 2,539 23,375
* Gas T&D values are for the period 2014-35 in 2012 US$b
Sources: IEA, WEO 2014; World Energy Investment Outlook 2014
In addition, the OECD estimates that more than US$1t per annum needs to be invested globally just to replace and maintain water infrastructure.
7
Coal-fired generation is expected to continue to
account for a significant share of global
electricity supply
Global coal-fired electricity generation is expected to grow from 9.2TWh in 2012 to 12.2TWh in 2040,
representing a CAGR of 1.02%.
Coal-fired electricity generation Global electricity generation by source
22,721TWh 40,104TWh
16
14 21%
33%
12 11%
Trillion kWh
10 12%
22%
8
24%
6
4 41%
2 31%
0 5% 1%
2010 2015 2020 2025 2030 2035 2040 2012 2040
United States Rest of World Oil Coal Natural gas Nuclear Renewables
Source: US Energy Information Administration International Energy Outlook 2013 Source: IEA WEO 2014
Reference
► Coal will still be a dominant fuel source for power generation in 2040, accounting for more than 31% of global generation, but there will be a
massive decline from its 40%-plus share today.
► Natural gas-fired generation is expected to maintain its 22%-24% share of global generation, which will still imply a huge expansion in natural
gas absolute volumes.
► The real global growth story of course is renewables, which are expected to overtake coal as the primary source of power generation by 2040.
8
Fossil fuels will hold a dominant position in
global electricity generation for several
decades, with renewables gaining ground …
New capacity additions by region, 201440
25%
43% 40%
49%
63% 13% 60%
69%
1% 5%
6%
34% 43%
14% 4%
2%
46%
5%
28% 32%
30% 19%
17% 19%
3% 9% 3% 6%
3% 5% 1% 1% 2% 0%
Latin America Africa Middle-East Asia, Asia-Pacific E.Europe/Eurasia OECD Americas OECD Europe
* Renewables include hydro-power plants.
Oil Coal Gas Nuclear Renewables*
Source: IEA WEO 2014
► Renewables will represent the lion’s share of new capacity installed over the next couple of decades in every region.
9
… and growth in renewable energy investment
shifting to emerging markets
Non-hydro renewables share of power generation Investment in renewables by region, 2013
by region
8.2% Middle East & Africa
Oceania
US$9b US$9b
5.7% Central & 4%4%
South America 5% Europe
4.9% 24%
US$12b US$57b
3.1%
2.8% 22%
2.0% 1.9% North America &
1.3% Caribbean
0.2% 0.4% US$52b
Asia
41%
Middle East Asia-Pacific North Central & Europe US$98b
& Africa America & South
Caribbean America Total = US$237b
2002 2012 Solar PV has attracted the highest annual investment for the past three
years (US$112b in 2013).
Source: BP Statistical Review of World Energy, 2013 Source: EY analysis of BNEF data
► For most regions, the share of non-hydro renewables in the ► Investment in renewable energy sources across Europe and
generation mix at least doubled between 2002 and 2012. North America peaked in 2011 at $108b and $62b, respectively.
► In Europe, driven by subsidies and government incentives, the ► Investment is shifting to emerging markets, led by China as they
share of non-hydro renewables in total generation quadrupled from pursue clean power sources and reduce dependence on fossil fuel
2% in 2002 to just over 8% in 2012. generation.
10State mandates and the need for energy
efficiency are driving the deployment of
smart meters across the globe …
Expected smart meter penetration (by region, 201222)
“Smart technology has already cut load
growth for utilities by half through energy
conservation. Adding distributed
generation and storage systems would
accelerate that trend.”
– GTM Research
Source: Navigant Research report, 2013
smart meters are expected to be installed CAGR is expected in the smart meter
by 2022, (currently 313m), bringing the revenue in Europe through 2020, making it
1.1b global market for smart meters to US$22b
9.4% the fastest growing region.
by 2020.
penetration to be achieved in US with the of overall shipments of smart meters in
deployment of 65m by 2015. Almost 2012 were attributable to Asia-Pacific and it
45%-50% US$3b has been invested in smart meters
49.2% is expected to remain the largest regional
in the US. market in terms of volume.
11Although recent electrical energy
sales were flat growth is expected
* Excludes Sandton, Soweto; Natural Gas represents piped gas from eGoli gas 14What is in the headlines 03
The latest headlines
Nuclear Energy: a 'secure' option for South Africa BRICS bank a global game changer , says Eskom’s
Load shedding drags down sub-Saharan growth
Although South Africa could procure more energy Molefe: The launch of the Brics New Development
report Gross domestic product (GDP) growth rate in from other African countries to help plug its energy Bank would change global development finance,
sub-Saharan Africa will average 4.2% in 2015, gap, nuclear energy would be a more secure option said Eskom‟s Brian Molefe on Thursday. “They will
according to the latest World Bank report. In its in the long run, says former South African Nuclear talk about global development finance before and
Global Economic Prospects report for June 2015, the Energy Corporation CEO Dr Rob Adam. He told after Ufa,” said Molefe, acting CEO of South Africa‟s
World Bank made a 0.4% downward revision of the attendees at a South African National Energy... Full power utility and head of the nation‟s section of the...
Article Full Article
region's GDP growth rate. The report attributed this
to... Full Article
Solidarity launches plan to help households in Angola says to spend $432m on electricity
unlikely event of electricity blackout: Trade meters: Angola's government plans to spend
union Solidarity, in conjunction with KragDag $432-million to roll out over a million electricity
The National Energy Regulator of South Africa meters by 2017, the State news agency said, in
(Nersa) on Monday rejected Eskom’s application for and Maroela Media, has launched an
a move that could help boost revenues for
a further 2015/16 tariff hike in addition the 12.69% emergency plan to assist households in the power producers. Energy Minister Joao
already granted for the year. Nersa chairperson event of a total power blackout, owing to the Baptista Borges said the meters would be
Jacob Modise announced that, owing to a number of ongoing problems at State-owned electricity linked to a prepaid system, which is... Full
deficiencies in the application, the regulator... Full
provider Eskom. The plan offered practical tips Article
on how households could... Full Article
Article
16What are the key challenges 04
Power and Utilities: Key challenges and risks
Key challenges: The top 10 Global risks:
► Load shedding ► Compliance and regulation
► Theft (copper) and vandalism ► Commodity price volatility and access
► Economic downturn and increasing electricity to competitively priced long-term fuel
costs supplies
► Municipal finances ► Political intervention in power and
► Skills and capacity shortages utilities (P&U) markets
► Service delivery protests ► Uncertainty in climate policy and
► Illegal connections carbon pricing
► State of infrastructure and development ► Significant shifts in the cost and
affordability accessibility of capital
► Industry direction – embedded generation, ► Capital project execution
alternative energy, technology (DG), etc. ► Economic shocks and resulting short-
term energy demand shocks
► War for talent
► Aging generation and network
infrastructure
► Managing planning and public
acceptance
18What are the key opportunities 05
Utilities need to innovate across the value chain
to derive competitive advantage and turn
disruptive threats into opportunities
The top 10 opportunities:
1. Rising emerging markets’ energy demands
(including poverty reduction and access to
power)
2. Acquisitions or alliances to gain new
capabilities (including growing skills base)
3. Growth in energy and ancillary services
markets (including sustainable jobs)
4. Enhancing relationships with external
regulatory and compliance bodies
5. Improving public perceptions (including
customer control)
6. Increased focus on investor relations
programs and communications (including
security of supply to drive investor appetite)
7. Integration of distributed energy resources
(including necessity to innovate)
8. Increased investment in generation capacity
and delivery infrastructure in emerging
markets (including security of supply and
network investment)
9. Rising energy innovation in emerging markets
10.Improving onshore and offshore wind supply
chain efficiency
20In summary
► Global demand for electricity is expected to increase more than two-thirds between now and 2040.
► Meeting electricity demand will require about US$21t of investment in power infrastructure over this period.
► This amount more than doubles when gas pipeline and water infrastructure investment is included.
► Fossil fuel generation is expected to remain a significant part of the global generation mix in coming decades.
► Coal-fired generation is expected to continue to account for a significant share of global electricity supply
► The shift to renewable energy is a global growth trend with investment shifting to emerging markets.
► Utilities can turn disruptive threats into opportunities by:
► Investing in smart metering and grid modernisation for a more intelligent, responsive and reliable network.
► Expanding beyond the meter service offerings such as demand response and home energy management.
► Investing in distributed generation, energy storage and microgrids.
► Optimising the capture, storage and analysis of big data from smart meters and intelligent devices.
► African power and utilities is always a hot topic in the media
► Utilities need to innovate across the value chain to turn disruptive threats into opportunities
Challenges: Opportunities:
► Load shedding ► Rising emerging markets’ energy demands.
► Theft and vandalism ► Growth in energy and ancillary services markets.
► Municipal finances ► Enhancing relationships with external regulatory and
compliance bodies and the customer
► Aged infrastructure
► Increased focus on investor relations programs
► Skills and capacity shortages
► Rising energy innovation in emerging markets06 City of Johannesburg 22 22
A City of the future…
Interconnected
Integrated
Participatory
Efficient
Sharing
Distributed GX
Energy Diverse
Smart1. Improved quality of life and development-driven resilience for all
2. Provide a resilient, liveable, sustainable urban environment – underpinned by
infrastructure supportive of a low-carbon economy
3. An inclusive, job-intensive, resilient and competitive economy that harnesses
the potential of citizens
4. A high performing metropolitan government that pro-actively contributes to and
builds a sustainable, socially inclusive, locally integrated and globally
competitive Gauteng City Region
- Growth and Development Strategy (GDS) 2040
24A future view of energy availability
Electricity Natural Gas Automotive Fuels How do we manage this
Automotive Fuels
• In the short to medium term (without a bankable anchor project) the increase of piped natural gas
resources to the City is unlikely (for power generation purposes) and this won’t add significantly
to the diversification of energy supply and security;
• The current electricity business model has a key asset in terms of the network (wires) but limited
short term options for diversification exists (Eskom, Kelvin);
• The future electricity business model will be based on the utilisation of the network (wires) as
an asset and:
– diversify the input sources of energy (Distributed generation, PV, Batteries Storage) to
become more resilient, cleaner and less dependant on the national grid;
– be able to use the grid in the trading of electricity. This will be dependent on the smart grid
and sufficient telecommunications infrastructure (TELCO) and
– provide value added services to customers to negate anticipated revenue losses
• New electrical technologies innovation makes it a critical point for GHG emissions projects 25Supply and demand options
available to the City
A combination of these sources leads to
Technology options increases diversity in the supply mix and
(with high level consideration of technical, decrease net emissions.
economic and market potential)
National grid Kelvin upgrade Ops. efficiency Demand
+ Ownership options
(besides national grid)
management • Utility owned
Energy Efficiency • Customer owned (own supply)
• Third party / customer owned (grid supply /
wheeling)
• Partnerships (e.g.. PPP)
Demand Fuel switching WTE & landfill gas Cogen and biogas
reponse (gas)
+ Opportunity to be utilised as
an embedded or distributed
solution
(whether likely to be pursued as distributed or
embedded/onsite solutions)
Gas turbines Solar (PV and CSP) RE incl Wind Energy storage
Greener options
Other technology
… innovations including Joburg
Water Hydro conduit Dams
26
NuclearUtilities globally are grappling
with these challenges
Largest generation company in the US RWE is one of Europe’s five leading Germany’s biggest utility distributing
and a vertically integrated utility that electricity and gas companies – i.e. a across Europe – vertically integrated
includes a retail business. generation, trading and distribution (Gx, Tx & Dx).
business.
Move to “carbon-lite” electricity grid;
“Our traditional business model is “spinning off” conventional, centralised
collapsing under us”. Referring to fossil fuel generation assets; focusing
2010 2014 flat demand for electricity instead on distributed generation,
- November 2013, Peter Terium, including solar, storage, and micro-grids
“As part of our continued
CEO of RWE
commitment to consumers, NRG “I think everyone understands at this
has embraced the idea of point that value creation is moving
enabling customers to make their “A significant part of our business downstream, to the customer, from
own energy choices.” - David model is now facing new the commodity side to the solution
Crane, CEO of NRG challenges,” side. So E.on is striving hard in
“Whatever we do in terms of cost Europe to go to those parts of the
“Sustainability is our reality and Capex-cutting won’t fully value chain where we are close to
We're partnering with businesses compensate the profit loss we see our 25 million customers, where we
to build a more sustainable in conventional power generation.” enable them and can share with
future.” RWE CFO, Bernhard Guenther them the advantages of efficiency.
- 5 Dec 2013
Moving from volumetric to value will take courage, but some are taking the first steps
27Shareholder Mandate
Drive Whilst
• Increasing and securing the • Reducing the burden of cost on
supply of energy the consumer
• Acquiring electricity from • Balancing the financial
renewable and alternative sustainability of the business,
sources delivery of services and
Shareholder goals
• Reducing greenhouse gas
emissions • Moving to the “Smart City”
concept via a Smart Grid and
• Strategic use of a mix of integration with other City
technologies and energy initiatives (e.g. transport)
sources to achieve goals
28Time of Use Tariffs Basket of energy options
Load shedding IPP PV Renewable City – Waste to
240
mitigation applications Energy tariff Energy
Embedded GX PPA MTN / Rural Gas/PV City – Landfill
30
3
policy ABSA systems Gas
City –
Demand Solar Water Diesel
60
20
Gravitational feed
Response Heaters Generation GX
Demand Side
200
Electric Vehicles
Kelvin Battery Storage charging
Management
Smart meter / Gas Turbines
112
Independent Power Producers /
80
Load Limiting (OCGT) Embrace Renewable Energies
Own Rooftop
20
Ripple Control Structural Open
6
PV Changes Grid/Trading
Immediate Short term Longer termDISCUSSIONS /
THANK YOU
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