Transcript Document

ROLE OF NERSA IN DIVERSIFICATION OF ENERGY IN
SOUTH AFRICA
By Andile Gxasheka
Southern Africa Biofuels Association National Stakeholders Forum 2009
1-2 December 2009
PRESENTATION OUTLINE
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Mandate of NERSA
Objectives of the ERA
Renewable Energy Policy
REFIT Phase 1 Regulatory Guidelines
REFIT Phase 1 Tariffs
Qualifying Technologies under REFIT Phase 2
Definitions of the REFIT Phase 2 Qualifying Technologies
REFIT Phase 2: NERSA public consultation process
REFIT Financial Assumptions
REFIT Phase 2 Tariffs
Issues raised during REFIT Phase 2 Public Hearing
MANDATE OF NERSA
Regulate the electricity, piped-gas and petroleum pipeline industries
in terms of the Electricity Regulation Act (ERA), 2006 (Act No. 4 of
2006), Gas Act, 2001 (Act No. 48 of 2001) and Petroleum Pipelines
Act, 2003 (Act No. 60 of 2003).
OBJECTIVES OF THE ERA
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Achieve the efficient, effective, sustainable and orderly development and
operation of electricity supply infrastructure in South Africa,
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Promote the use of diverse energy sources and energy efficiency,
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Promote competitiveness, customer and end-user choice
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Facilitate a fair balance between the interests of customers and end users,
licensees, investors in the electricity supply industry and the public.
In terms of tariff principle the ERA prescribes that the Setting or approval of
tariffs must enable efficient licensee to recover the full cost of its licensed
activities, including reasonable margin of return
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RENEWABLE ENERGY POLICY
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Renewable Energy is a major contributor in protecting our climate, nature and
the environment as well as providing a wide range of environmental,
economic and social benefits that will contribute towards long term global
sustainability.
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The NERSA initiated a development of the REFIT regulatory framework to
promote renewable energy in South Africa and to meet the Government’s
target of 10 000 GWh by 2013.
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Approved technologies in REFIT Phase 1 were:
− Concentrated Solar Power with storage
− Landfill Gas
− Small Hydro
− Wind
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REFIT PHASE 1 REGULATORY GUIDELINE - 26 MAR 2009
The main principles of the Regulatory Guidelines include:
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The REFIT Qualifying Principles/technologies.
REFIT applies to new grid connected projects with capacity >= 1 MW
Renewable Energy Feed – in Tariffs.
Renewable Energy Purchasing Agency (REPA)
Term of REFIT PPA 20 years.
Annual review of the REFIT every year for the first 5-year period and every 3year thereafter.
The MTPPP PPA be used as a basis for the REFIT PPA.
Tariffs based on the life cycle cost of electricity produced by RE facilities using
financial assumptions.
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REFIT PHASE 1 REGULATORY GUIDELINE - 26 MAR 2009 (2)
The term of the Power Purchase Agreement is twenty (20) years:
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This is in line with international best practices and ensures bankability of the
renewable energy projects.
Clean Development Mechanism (CDM) was not included:
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In the context of the number of uncertainties post 2012 the NERSA REFIT act as
a “stand alone” financial instrument and is separated from third party market
volatility.
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IPPs to apply for CDM revenue separately, this will improve the attractiveness of
the FITs.
REPA (Eskom) is the Single Buyer of electricity from REFIT IPPs
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This is in line with the Cabinet Meeting statement of 5th September 2007.
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REFIT PHASE 1 TARIFFS - 26 MAR 2009
Technology
Unit
REFIT
Wind
R/kWh
1.25
Small hydro
R/kWh
0.94
Landfill gas
R/kWh
0.90
Concentrated solar
power with storage
R/kWh
2.10
The above tariffs are in constant Rand 2009
Licensees awarded these tariffs will have them adjusted for inflation using CPI
once per annum
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THE REFIT PHASE 2
The second phase of the REFIT includes:
a)
Development of generic Power Purchase Agreement (PPA) for renewable
energy projects on the basis of the Medium Term Power Purchase Program
(MTPPP) PPA
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Development of qualifying principles for additional commercially available RE
technologies such as: biogas, biomass solid, photovoltaic, concentrated solar
without storage and concentrating PV
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Development of the tariffs for the newly included technologies as per b) above
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QUALIFYING TECHNOLOGIES UNDER REFIT PHASE 2
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Biogas
Biomass solid
Concentrated Solar Power plant without storage
Concentrated Solar Power (Central Tower)
Photovoltaic (PV) systems (large ground- or roof-based > 1 MW)
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DEFINITIONS OF THE REFIT PHASE 2 QUALIFYING
TECHNOLOGIES
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Biogas can be obtained from two different forms of technologies, namely,
anaerobic digestion and Landfill gas (LFG).
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Biomass solid is based on 100% forest wood with no mill waste, plants and
residues from agriculture as well as trees residues. It also covers power
generation based on solid fuel produced as a result of physical processing of
municipal waste.
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Photovoltaic (PV) refers to the direct conversion of light into electricity. A PV
device consisting of two semiconductor layers is used. The two layers are
doped oppositely so as to create a net voltage across the terminals of the
cell.
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DEFINITIONS ON THE REFIT PHASE 2 QUALIFYING
TECHNOLOGIES (continue..)
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Concentrated Solar Power (CSP) Central Tower uses many large, suntracking mirrors (heliostats) to focus sunlight to a receiver at the top of a
tower. A heating transfer fluid heated in the receiver is used to generate
steam which, in turn, is used in a conventional turbine-generator to produce
electricity.
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Concentrated Solar Power (CSP) Trough uses solar energy to generate
electricity. Large fields of parabolic trough collectors supply the thermal
energy used to produce steam for steam turbine power generation cycle.
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REFIT PHASE 2: NERSA PUBLIC CONSULTATION PROCESS
Publication of consultation paper
(Qualifying principles, tariffs & PPA)
20 Jul 2009
Public comments submission on REFIT Phase 2
20 Aug 2009
Public Hearing on qualifying technologies, tariffs & PPA
03 Sep 2009
NERSA decision of technologies and tariffs
29 Oct 2009
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REFIT FINANCIAL ASSUMPTIONS
Financial parameter
Unit
IPP REFIT
Debt
%
70
Equity
%
30
Nominal cost of debt
%
14.9
Inflation
%
8
Real cost of debt after tax
%
6.39
Tax rate
%
29
Real return on Equity ROE after tax
%
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Weighted Average Cost of Capital
(WACC)
%
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REFIT PHASE 2 TARIFFS
Technology
Unit
REFIT
Biogas
R/kWh
0.96
Biomass solid
R/kWh
1.18
Concentrated Solar Power without
storage
R/kWh
3.14
Concentrated Solar Power (Central
Tower with 6hrs storage)
R/kWh
2.31
Photovoltaic (PV) Systems (large
ground or roof based > 1MW
R/kWh
3.94
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KEY ISSUES RAISED IN REFIT PHASE 2
PUBLIC HEARING
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The REFIT Guidelines together with REFIT PPA must be revised to be in line
with Electricity Regulations on New Generation Capacity.
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Electricity generation from based on sugar bagasse, mill waste and pulp and
paper waste will be covered by separate cogeneration COFIT to be developed
in the next review of the REFIT.
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All garden waste, landscape waste as well as all forms of invader bush must
be included under biomass solid.
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The biogas definition must be expanded to include anaerobic digestion of
industrial waste water sources and pineapple plant material.
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THANK YOU!
Email: [email protected]
Tel:
012 4014775