Energy Research Priorities for a Future South Africa

1. Energy Research Priorities for a Future South Africa KM Nassiep Chief Executive Officer SA National Energy Research Institute

2. Contents • About SANERI • Energy Sector Characteristics • Policy and Legislative Framework in SA • Energy R&D Priorities

3. The time to act has come and …. • “We are not starting to address climate change with the technology we have in hand, and we are not accelerating our investment in energy technology research and development,” • Prof John Holdren (Harvard University Professor, Director of WHRC, President of AAAS)

4. Background to SANERI establishment • Established in response to concerns from government regarding perceived threat to indigenous energy research capacity • Established under Ministerial Directive (Minister of Minerals and Energy) in October 2004 • Reports to both Ministries of Minerals and Energy & Science and Technology in terms of governance • Is directed by the objectives of the Draft National Energy R&D Strategy of South Africa (10th Order Draft, 2007) • Has mandate to conduct own research or solicit work from external parties

5. CEF Group Structure

6. State Funding of SANERI • SANERI is 100% state funded at present, receiving grants via the Department of Science and Technology • A total of R70 million has been transferred to SANERI from government, since 2004/5 • An amount of R42 million has been made available in 2007/8 for activities related to: • Flagship project development • Chairs of Energy Research Programme • Bursary Support Programme • Establishment costs • SANERI mandated to leverage additional funds through grants, royalty income and through collaborative projects

7. SANERI Key Objectives • Ensure long term health of energy research capacity in the country and assist in stimulating a culture of innovation in the energy research environment • Support government goals of energy security of supply through identifying viable and sustainable diversified energy supply options • Address deficiencies in current race, gender and age profile of postgraduate students, academia and scientists • Stimulate socio-economic upliftment through improved access to modern, clean and affordable energy services • Support economic growth through development of flagship projects that will ultimately result in commercial rollout

8. Key Challenges Faced by SANERI • Low PIER&D spend in SA – about 0.8% of GDP is spent on R&D, of which about 6% is Energy • Low contribution from Black scientists – measured in publications where about 8% is produced from Black Scientists • Percentage women in energy R&D sector is low, about 26.5% in 2004, which is well below equity targets of government • Challenge of meeting national development goals with consequent increase in demand of natural resources and energy • Access to modern, clean and affordable energy remains a challenge for about 30% of South Africans • Skills loss in Energy R&D sector, particularly Eskom Research

9. SA energy contribution to overall publications

10. Number of energy publications by year

11. Top Research institutions by publishing

12. SA in the international Context

13. Findings

14. Human Capital status • Identified 19 core researchers; 30 tail and 540 post-graduate students (2000-2007) • Core: 84% male, 63% white; 79% PhD; median age 49 • Tail: 84% male; 79% white; 85% PhD; median age 43 • Post grads: 81% male; 62% white; 23% PhD

15. Thematic Areas addressed by SANERI (proposed) • 9 thematic areas identified as areas of focus for energy R&D • Energy infrastructure optimisation • Energy Efficiency and DSM • Understanding the impact of energy use on the environment • Stimulating socio-economic development through the productive use of energy • Cleaner fossil fuels, including clean coal technology • Renewable energy • Alternative energy, including hydrogen economy and fuel cells • Energy planning and modelling and • Energy policy research • These areas are covered in the Draft National Energy R&D Strategy (10th Order Draft, 2007)

16. SANERI Role in context NERSA Universities Regulatory Research Chairs Contract R&D Bursaries The DME Implementation Strategies / Legislation Policy / Planning R&D Activities All Spheres of Government Commercial Contract R&D SOEs Private Sector Human Capital Development

17. Universities, Technical Universities, Research Chairs, Hubs, CoE, CoC SOEs & Pvt Sector (e.g Eskom ERID, Sasol, Anglo, etc) JFP CR NL NL SFCB PRP JFCB SFCB SANERI In-house R&D Activity JFP DFP Legend CR – Contract Research JFP – Jointly Funded Projects DFP – Donor Funded Projects NL – Jointly Funded National Laboratories PRP – Postgraduate Research Programmes SFCB - SANERI Funded Capacity Building JFCB - Jointly Funded Capacity Building International R&D Agencies, donors, governments SANERI Collaboration Focus

18. Key Strategic Focus Areas • Energy R&D Agenda • Human Capital Development and Transformation • Energy Research Chairs at Universities • Renewable Energy and Sustainable Energy Hub at the University of Stellenbosch • Bursary Support Programme • Cooperative Energy R&D Activities • Flagship projects • Clean Energy Solutions • Advanced Fossil Fuel Use • End Use and Infrastructure Management • Energy Policy and Planning (R&D) • Governance

19. Characteristics of Energy Sector • Energy economy dominated by energy intensive industry and synthetic fuel production - energy intensive industries, largely coal dependent • Cheap coal + high efficiency steam coal-based generation + amortised plants = lowest cost electricity in the world (powerful disincentive for market conditions supporting RE) • No major investment needed in new power generation or refining capacity in last 20 years • Limited market exists for natural gas (mainly imported from Mozambique) although offshore discoveries are sustaining national oil and gas company’s synfuel and chemicals plant • Apartheid left majority of citizens without electricity • Large electrification drive to attain universal access to energy • Remote communities too expensive to electrify –But…. • Photovoltaic (SHS) programme - largely unsuccessful (no thermal energy and high maintenance) • Paraffin – unacceptable deaths, injuries and damage to property

20. Electricity Capacity Outlook Source: Eskom ISEP, 2006

21. Future Supply Options Research Opportunity Identification Pre - feasibility Feasibility, Business 1000 Build 165 Case, Contract 0 Concluding PBMR 3500 1332 800 New Coal Supply Hotel Oscar 1775 Yankee 112 1775 600 1000 600 0 1000 1600 961 UCG Discard Coal November India Lima Juliett Sierra Komati 1200 1520 100 1600 1800 Victor 6000 4200 1000 800 Camden Concentrating Solar 1800 *Papa 4000 Romeo Echo Mike 2000 Foxtrot 300 Arnot P1&P2 Uniform 4200 200 800 Nuclear 1 500 Bravo 3600 Hwange 500 0 Tango 0 1050 1128 Zulu 90 Songo Apollo Quebec Delta 4200 Grootvlei W Rainbow Millenium HVDC Link Capacity Upgrade Hydro Hydro - - 2100 Alpha CBM Golf 2100 9 Nuclear Nuclear 872 1300 - - 90 1050 500 Charlie 1050 0 Kilo Gas 1 Gas Gas - - Whiskey OCGT Trans KalahariInterconnector Coal Coal - - Coal Coal - - *Possible 2400MW Mid Merit 90 - Solar Transmission - 7800 MW 23100 MW 17375 MW * Brown outer circle indicates – out of Borders project Version CPF 1.3.16 Date: 30/08/2006

22. National Government Objectives • Major energy related priorities • Universal access to energy by 2012 • Energy security of supply • Liquid Fuels Master Plan approved by Cabinet in August 2007 • Electricity Master Plan under development • Deputy President leading the programme of fastracking economic growth through several strategic projects • Accelerated and Shared Growth Initiative of SA (ASGI-SA 2005) • Ties in to Government’s Plan of Action to improve service delivery • Energy related strategic projects selected include • Accelerated electrification • Biofuels industry development • Beneficiation of raw minerals and materials

23. Energy Policies of SA • White Paper on Energy in SA (1998) • White Paper identified the following objectives: • Increasing access to affordable energy services; • Improving energy governance; • Stimulating economic development; • Managing energy-related environmental and health aspects; and • Securing supply through diversity (including renewables) • White Paper on Renewable Energy (2003) • Approved by Cabinet in November 2003 • Follows on the direction set by the Energy White Paper (1998) • White Paper calls for: • real, measurable increase in renewable energy use, based on prescribed target • Calls for strategies to be developed to promote specific areas where RE could be developed • Policy aimed to create an enabling environment for renewable energy, setting a platform for industry development.

24. Legal and Regulatory Framework • Electricity Regulation Act (No. 4 of 2006, became operational 1 August 2006) • Objects of the Act: • (d) facilitate universal access to electricity; • (e) promote the use of diverse energy sources and energy efficiency; • (f) promote competitiveness and customer and end user choice; • Regulator regulates prices and tariffs • The Regulator may make any licence subject to: • conditions relating tothe setting and approval of prices, charges, rates and tariffs charged by licensees; • compliance with energy efficiency standards and requirements, including demand-side management • A transmission or distribution licensee must, to the extent provided for in the licence, provide non-discriminatory access to the transmission and distribution power systems to third parties. • The Minister may, by notice in the Gazette, make regulations regarding: • (m) new generation capacity; • (n) the types of energy sources from which electricity must be generated; • (0) the percentages of electricity that must be generated from different energy sources; • (p) the participation of the private sector in new generation activities;

25. SANERI role in electricity sector • Research and develop technology-based solutions that support grid stability and diversification of energy supply • Develop human capital that supports project implementation in this sector • Support national development objectives by identifying income-generating opportunities that tie in with electricity provision • Support national goals of energy efficiency by supporting local government in implementation of sound projects, in conjunction with the National Energy Efficiency Agency

26. Research Vision for the electricity industry Stabilise Markets Protect the Environment Provide for Public good Educate and empower the Consumer Unleash Innovation

27. Energy Sector Challenges • Regulatory challenges and competition • Unbundling value chains (Electricity) • Consolidation (merges, acquisitions) • Environmental concerns • Increasing energy requirements • Large demand increases (Asian glut) • Diminishing surplus supply capacity • The need to secure alternative renewable resources • Energy security • Increasing pressure on margins • Increasing production cost • Skills shortage • Equipment supply and lead times • Ageing infrastructure due to limited capital for re-investment • Increasing importance of innovation and technology • Increased use of technology to reduce costs and improve reliability • Convergence of technology (IT and telecommunications)

28. Current Status of Grid-connected RE • Slow uptake of renewable energy – based on current market conditions • Limited CDM project development, limited PIER&D expenditure on renewable energy • Focus placed squarely on top-up feed-in tariff as only realistic incentive for investors • Department of Minerals and Energy and National Treasury are studying implications of introducing the feed-in tariff and expect decision by April 2008 • Eskom to consider competitive bids for renewable energy as part of new supply options • Eskom to construct at least 2 large-scale renewable energy plants as part of their own build programme

29. Status Quo of Strategy (Biofuels) • An Industrial Development Strategy has been developed and submitted to Cabinet • Government in the process of soliciting input from stakeholders to refine strategy • Strategy calls for 4.5% contribution by biofuels to petrol and diesel supply • Debate over whether food crops such as maize, sugar-cane and soya should be used for biofuels • Research programmes underway to investigate use of japtropha, algae and other plant types for biodiesel production • Research underway into enhancing cellulosic extraction of ethanol for bioethanol

30. Energy R&D Priorities • Grid-connected Technologies • Resource assessments (ongoing) • Pilot and Demonstration projects • Potential for local design and manufacture of components, e.g. heliostats for CSP • Potential for development of low-wind speed turbines • Potential for development of advanced hybrid mini-grid technology • Development and testing of local, high quality solar water heaters • Integrate RE into building design, beyond passive solar design

31. Energy R&D Priorities • Non-grid electrification • Refinement of model for hybrid mini-grid deployment • Investigation into possible use of fuel cells to provide more sustainable energy supply to remote communities • Ongoing development of PV, small wind turbines, biomass digesters and gasification projects

32. Energy Efficiency: Vision To encourage sustainable energy sector development and energy use through efficient practices thereby minimising the undesirable impacts of energy usage upon health and the environment, and contributing towards secure and affordable energy for all (DME).

33. Research Focus Areas: Energy Efficiency Applying the 80/20 principle Criteria Value added Technology breakthrough Social, environmental Focus areas that are going to make the biggest difference in the short term (1-3 years) Water heating Compressed air Pumping Minimizing electricity transmission and distribution Steel industry Commercial lighting Solar Traffic lighting Solar street lighting

34. Research Focus • Major focus is on : • Sustainability (economic, social and environmental) • Carbon capture and storage ( oil and gas and electricity) • Emissions • Energy security • Alternative fuel sources (solar, gas, batteries) • Support the development of the hydrogen economy • Planning for capacity expansion (what, when, how) • New technologies to deal with capacity expansion (choices) • Optimisation • Asset management (oil and gas and electricity sectors) – increasing the life-cycle of existing assets, efficiency and reliability • Electricity sector network/ substation automation

35. Medium to long term focus: Electricity • Reviewing generation options • Increasing transmission capacity • Superconductors (conductors, transformers) • Improving power quality and reliability • Understanding service level requirements • Planning for reliability • Transformer research • Increasing robustness, resilience and security of supply • Exploiting energy storage • Transforming markets • Creating infrastructure for a digital society • Electricity transportation • Technology innovation

36. Superconductor Research Applications • Underground power transmission • HTS underground power transmission cables will carry electricity from the utility stations to transformer substations. • Since the cables are composed of superconducting wire there is very little loss of electricity. • This transmission cable can carry 3-5 times the current of conventional power cables. • This capacity will be great value in places where new rights of way are restricted.

37. Superconductor Research Applications • High temperature superconducting transformers • Offer utilities and industry a highly efficient, lightweight compact and environmentally friendly alternative to today’s oil filled transformers • Fault current limiter (FCL) • Can protect power transmission, cable and operating equipment from surges of excess electricity caused by lightning strikes, short circuits and power fluctuations. • The HTS coils in the FCL control the high current burst just long enough for the circuit breaker to open. • Generator coils • The coils will be used in high efficiency low cost generators for electric utilities

38. We would like to take the opportunity to invite all members of the AMEU to join us in the effort to affect a change to a sustainable energy future Thank You