Integrated Resource Planning:

An overview

Mark Howells & Bruno Merven Energy Research Centre University of Cape Town

Outline

Introduction Aims of resource planning The National Integrated Resource Plan NIRP outputs NIRP methodology Future planning

Introduction

Why electricity as a source of energy?

Electricity - a driver of our economy The Electricity Supply Industry (ESI) is very capital intensive – economies of scale Electricity is hard to store

Aims of Resource Planning

Meet electricity demand reliably at the cheapest cost Be consistent with environmental, social and economic policies Meeting increasing demand:  Expanding generating capacity  Reducing load via demand side management

The NIRP

National Energy Regulator initiative the driven by the Energy Policy White Paper for SA NIRP 1 in March 2002 NIRP 2 in September 2004   Advisory board: NER, DME, ESKOM, ERC, IPP, … Project team: NER, ESKOM, ERC

NIRP 2 outputs: 1. Capacity Plans

Capacity Plans

NIRP 2 Outputs: 2. Sensitivity to possible scenarios

Cost and Reliability

Primary energy e.g. Coal

Methodology

The Energy System Electricity generation Grid Demand process e.g. Electric Heater Final Energy e.g. Heat 1.

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Demand and projections Current generation capacity New generation capacity options Demand Side Management options Identify constraints – define scenarios Include all this into the computer model Run optimization

1. Establish current demand and projections

2. Establish current generation capacity 3. Identify suitable new generation capacity options Be technologically feasible Be economically viable Be socially, politically and environmentally acceptable Have suitable production pattern Have site availability – close to demand Under some level of suitable control

3. Identify Demand Side Management options

4. Program the Computer Model

Existing Capacity Primary Energy Coal Gas Nuclear … New Capacity Options Transmission and Distribution Nuclear PP Gas PP Wind PP Normal Demand Technology Efficient Demand Technology Useful energy per sector Heat Light … Specified: • Capital costs per MW • Fuel costs (as specified by mining/importing) • Operation costs per MWh • Lifetime (years) • Operating conditions: Peaking, base load • Constraints: Technical e.g. Capacity, availability • Constraints: Policy e.g. share of renewables, Emissions

Model outputs after optimization

Capacity and activity of selected processes (including timing + choice of investments) i.e. The Plan Total Costs Marginal cost of electricity Total emissions

Weaknesses of this approach

Deterministic approach, uncertainty:  handled in reserve margin  discount rates and scenario based constraints Suitable for finding a robust plan but not necessarily a flexible plan Technology diversity must be forced onto the system as a constraint Bottom up approaches tend to be bulky Difficult to asses impact of plan on overall economy

Possible alleys to be explored in the future To account for flexibility:  Decision analysis type approaches  Stochastic programming Link to general equilibrium models