Green Industries, Department of Trade and Industry

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Sherilyn Blankenship
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1 Solar and Wind Sector Development Strategy Solar Energy Technology Roadmap 18 June 2012 Green Industries, Department of Trade and Industry

2 Challenges Solar and wind strategy Content Local Content Requirements Window 2 Bid Summary Way forward

South Africa is in a difficult position 87% of primary energy supply from fossil fuels 86% of power generation capacity from coal 95% of crude oil requirement is imported

3 South Africa is in a difficult position 87% of primary energy supply from fossil fuels 86% of power generation capacity from coal 95% of crude oil requirement is imported 2006 data, Source: DoE 2011 data, Source: Eskom Electricity demand may reach MW with economic growth 4% if 6% 2.3 % if 4% Source: Eskom

imported 2006 data, Source: DoE 2011 data, Source: Eskom Electricity demand may reach

4 Manufacturing employment and manufacturing share of GDP 1,350,000 1,300,000 1,250,000 1,200,000 1,150,000 1,100,000 1,050, Sour So urc e A large renewable energy programme can put electricity on the grid, support industrialisationand jobs and address South Africa s climate commitments 4 4

5 Motivating Factors Addressing the country s energy needs. Meeting GHG emission reduction commitments (climate change). Very good solar and wind resources. Existing industrial capabilities in a range of relevant areas, e.g. engineering, metal fabrication, composites, etc. Growing number of component suppliers into renewable energy value chains. Job creation.

6 2011 Renewable Energy Year Early balanced scenario had no solar commitment. Revised balanced scenario had 400 MW solar commitment - 11,4 GW renewables. Policy adjusted Integrated Resource Plan(IRP) 8400 MW solar PV and 1000 MW CSP and 8400 MW wind. December 2011 announcement of 1st 28 projects (1415 MW). May 2012 another 19 projects (1044 MW). August 2012 round 3.

Policy adjusted Integrated Resource Plan(IRP) 8400 MW solar PV and 1000 MW CSP and 8400 MW

7 KEY ACTION PROGRAMMES Market creation and Independent Power Producer (IPP) facilitation ensures investor certainty. IRP and Renewable Energy Independent Power Producer Procurement Programme (REIPPP). Local manufacturing and industry upgrading incentives:secure economic opportunities across value chains and develop and maintain local skills. Manufacturing Incentives Manufacturing Competiveness Enhancement Program (MCEP), etc. Renewable energy finance. IDC, SARi and NT.

Local manufacturing and industry upgrading incentives:secure economic opportunities across value chains and develop and maintain local

8 KEY ACTION PROGRAMMES Development and upgrading of technical and physical infrastructure: Standards for wind turbines developed. Testing facilities investigation. Possible standards for solar to be investigated. Trade and investment support and facilitation: ITAC tariff reviews. TISA investment facilitation and export promotion. Research, demonstration and skills development:support focused and coherent approach to Research and Development and skills development. Support DST and DHE initiatives.

Trade and investment support and facilitation: ITAC tariff reviews. TISA investment facilitation and export promotion.

9 KEY ACTION PROGRAMMES Minimum levels and targets for local content required to participate in the REIPPP. Review annually and increase targets to optimum levels.

10 Local Content Requirements Local Content Technology First Bid Submission Date Second Bid Submission Date Third Bid Submission Date Current Current Target Threshold Onshore 25% 45% 25% 60% 40% 65% Wind Solar Photovoltaic Solar CSP Without Storage Threshold Target Threshold Target 35% 50% 35% 60% 45% 65% 35% 50% 35% 60% 45% 65% CSP with 25% 45% 25% 60% 40% 65% storage Biomass 25% 45% 25% 60% 40% 65% Biogas 25% 45% 25% 60% 40% 65% Landfill gas 25% 45% 25% 60% 40% 65% Small scale hydro 25% 45% 25% 60% 40% 65% 25% 45% 25% 60% 40% 65%

Threshold Target 35% 50% 35% 60% 45% 65% 35% 50% 35% 60% 45% 65% CSP with 25% 45% 25% 60% 40% 65% storage Biomass 25% 45% 25% 60% 40%

11 Emerging issues Request for Proposals (RFP) for round 3 will be amended to incorporate briefing notes, etc. Other issues: Clarification of local content issues (definition and its application). SABS standard SATS 1286:2011. Investigate deeming of certain components. Split between natural localisation and new industries equipment. Local content measurement and verification. Clear commitment required for long term plan; will DoE stick to IRP? Pace of roll out? Determine optimum level of local content: Wind Industry Roadmap. Economic impact of localisation. Capacity and competitiveness of local suppliers.

Investigate deeming of certain components. Split between natural localisation and new industries equipment. Local content measurement and verification.

12 Component Technology: Onshore Wind Project Percentage of Component total project Cost cost Local Content Committed Equipment Balance of Plant Wind turbine blades R15 000,00 15% 5% Nacelle R30 000,00 30% 0% Towers R10 000,00 10% 5% Transport R8 000,00 8% 5% Civil works R12 000,00 12% 5% Electrical R6 000,00 6% 6% Erection costs R5 000,00 5% 5% Spares and tools R2 000,00 2% 2% Total EPC Costs R88 000,00 88% 10% 23% Project development: R3 000,00 3% 3% Consultants Project development: R2 000,00 2% 2% Operating assets Project development: R1 000,00 1% 1% Administration Other costs: Contingencies R3 000,00 3% 3% Other costs: Initial working R3 000,00 3% 3% capital Total Non-EPC Costs R12 000,00 12% 12% R ,00 100% 10% 35%

R2 000,00 2% 2% Total EPC Costs R88 000,00 88% 10% 23% Project development: R3 000,00 3% 3% Consultants Project development: R2 000,00 2% 2% Operating assets Project development: R1

13 REIPPP Window 2 Bid Summary Bids received Approved bids 79 (3200 MW) Only 51 met the requirements 19 (due to capacity limitation) Value of approved projects Value of local; content committed MW Approved Job creation potential R28,1bn R11,8bn construction jobs and 328 operation jobs

approved projects Value of local; content committed MW Approved Job

14 Zooming in on solar photovoltaics (PV) 1450 MW total allocation for Solar photovoltaics (PV). 631,53 MW awarded in window ,.47 remained to be allocated in subsequent windows. 450 MW was allocated for window ,10MW was awarded in window 2 (9 projects). Total remaining allocation 401,37 MW for subsequent windows. Average price in Window c/kwh. Average price in Window 2 165c/KWh.

450 MW was allocated for window 2. 417,10MW was awarded in window 2 (9 projects).

15 Zooming in on concentrated solar power (CSP) 200 MW total allocation for Solar PV. 150 MW awarded in window MW remained to be allocated in subsequent windows. 50 MW was allocated for window MW was awarded in window 2 (1 project). Total remaining allocation 0 MW, for subsequent windows. Average price in Window c/kwh. Average price in Window c/kwh.

50 MW was allocated for window 2. 50 MW was awarded in window 2 (1 project).

16 Zooming in on the Wind Sector 1850 MW total allocation for wind. 633,99 MW awarded in window remained to be allocated in subsequent windows 650 MW was allocated for window ,60MW was awarded in window 2 (7 projects). 1. Total remaining allocation 653,41 MW for subsequent windows. Average price in Window c/kwh. Average price in Window 2 89c/KWh.

01 remained to be allocated in subsequent windows 650 MW was allocated for window 2.

17 Technology MW allocation per determination Onshore wind Summary of MW allocation within the REIPPP MW allocated in the 1 st bid submission round MW allocated in the 2 nd bid submission round MW awarded in 2 nd submission round Remaining MW to be allocated in the next rounds , ,60 653,41 Solar PV , ,10 401,37 CSP Biomass 12,5 0 12,5 0 12,5 Biogas 12,5 0 12,5 0 12,5 Landfill gas Small hydro ,3 607 Totals , ,48

in the next rounds 1 850 633,99 650 562,60 653,41 Solar PV 1 450 631,53 450 417,10 401,37 CSP 200 150 50 50 0 Biomass 12,5 0

18 Way Forward Incorporation of the SABS standard (SATS 1286:2011) in the revised RFP. Finalisingthe decisions on the deemed levels of local content. Communication of the clarified local content Communication of the clarified local content rules.

19 Thank you Ntombifuthi Ntuli Director: Renewable Energy Department of Trade and Industry (012)

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