The National Energy Bill PPC presentation 7 May 2008 Nhlanhla Gumede Deputy Director General –...

The National Energy Bill

PPC presentation

7 May 2008Nhlanhla Gumede

Deputy Director General – Hydrocarbons & Energy Planning

The team

• Nhlanhla Gumede– Deputy Director General Hydrocarbons

& Energy Planning

• Ms. Tshilidzi Ramuedzisi– Chief Director – Energy Planning

Energy policy formulationHow do we evaluate the impact of our policies

Energy policy formulationPolicy impacts depend on where you sit

Commodity composition of household consumption

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

HH

0 -

9 %

HH

10

-19

%

HH

20

-29

%

HH

30

-39

%

HH

40

-49

%

HH

50

-59

%

HH

60

-69

%

HH

70

-79

%

HH

80

-89

%

HH

90

-94

%

HH

95

-100

%

Other products

Other services

Business services

Transport services

Petroleum products

Vehicles

Clothing, textiles, leather& footw earBeverages

Food

Mining

Agriculture

Source: Sadelec Report, 2003

The BillBackground

• Was first developed in 2003 to cover all EWP not covered that far

• Cabinet approved public consultation in 2004

• Widely consulted in 2004

• Withdrawn in 2006 to effect certain changes

• Focus now is largely energy security

BackgroundEnergy Security Framework

Energy security is not only about security of supply

Energy infrastructure

planning Energy security

Macro-economic

framework

Climate change (mitigation & adaptation)

Demand management

Standards & specifications

Foreign policy

Reserve margins

Diversity of supply

Import & Export

policies

Local production

Energy Research

BackgroundThe essence of the Bill

• The National Energy Bill is essentially about– Provision of energy data and information– Energy development

• Alternative and future energy • Efficient production & use • Coordinated research on carriers & technologies

– Security of supply (both carriers & feedstock)– Data driven strategy/policy/plans– Effective communication with stakeholders

BackgroundSome facts

-10

-8

-6

-4

-2

0

2

4

6

8

10

2001 2002 2003 2004 2005 2006 2007

Trade balance excluding oil imports

Total Trade Balance

R b

illio

n, 3

mon

th m

ovin

g av

eImpact of high oil prices on the trade balance

Source: National Treasury, 2007


Source: Eskom Holdings Limited Annual Report 2007


Source: Eskom Holdings Limited Annual Report 2007

We have to shift this load to an appropriate thermal energy source


• Electricity production capacity has run out– Current wholesale price - 3 US c/kWh– Current average domestic consumer – 6 US

c/kWh (3 c/kWh is tax!!)– Some industrial customers paying a low 2 US

c/kWh– Long run marginal cost – 9 US c/kWh– Short run marginal cost – 60 US c/kWh

• This short run marginal cost is largely due to domestic and commercial

thermal load.• South African economy cannot afford

this short-run marginal cost!

RSA SOYBEANS: PRODUCTION, CONSUMPTION & CLOSING STOCKS

0

50

100

150

200

250

300

350

400

450

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

MARKETING SEASON

TH

OU

SA

ND

TO

NS

PRODUCTION CONSUMPTION CLOSING STOCKS


Source: Grain SA, 2008

RSA SUNFLOWER: PRODUCTION, CONSUMPTION & CLOSING STOCKS

0

200

400

600

800

1 000

1 200

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

MARKETING SEASON

THO

US

AN

D T

ON

S

RSA PRODUCTION RSA CONSUMPTION RSA CLOSING STOCKS



RSA MAIZE: PRODUCTION, CONSUMPTION & CLOSING STOCKS

2 000

4 000

6 000

8 000

10 000

12 000

1997/98 1998/99 1999/2000 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08

MARKETING SEASON

TH

OU

SA

ND

TO

NS

RSA Production RSA Consumption RSA Closing stocks



RSA WHITE MAIZE: IMPORTS & EXPORTS

200

400

600

800

1 000

1 200

1 400

1 600

1 800

2 000

1997/98 1998/99 1999/2000 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08

Marketing Season

Th

ou

san

d t

on

s

Exports Imports



PRYSE VAN VSA WITMIELIES VIR LEWERING IN JULIE 2008 (RANDFONTEIN)PRICES OF USA WHITE MAIZE DELIVERED IN JULY 2008 (RANDFONTEIN)

1,0001,1001,2001,3001,4001,5001,6001,7001,8001,9002,0002,1002,2002,3002,4002,5002,6002,7002,8002,9003,0003,1003,200

Ran

d/to

n

SAFEX WM JUL'08 Invoer Pariteit/ Import Parity Uitvoer Pariteit/ Export Parity

Invoerpariteit / Import Parity

Uitvoerpariteit / Export Parity

SAFEX Jul'08



RSA SORGHUM: PRODUCTION, CONSUMPTION AND CLOSING STOCKS

0

50

100

150

200

250

300

350

400

450

1997/98 1998/99 1999/2000 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08

MARKETING SEASON

TH

OU

SA

ND

TO

NS

PRODUCTION CONSUMPTION CLOSING STOCKS




Source: Energy Information Administration Conference, 2008

BackgroundSome facts – US biofuels




• Another view on peak oil



• Peak oil view - Lower Recovery Factors



• Peak oil view - Lower Initial-in-Place Estimates

Purpose of the Bill (1/3)Energy Security

• diverse energy resources, • in sustainable quantities, and • at affordable prices

are available to the South African economy, in support of…

• economic growth, • poverty alleviation,

taking into account environment management requirements and interactions amongst economic sectors.”

Energy security means “ensuring that…

Purpose of the Bill (2/3)Institutions

• To be responsible for the promotion of efficient generation and consumption of energy

• Energy modelling and planning• Increased generation and consumption of

renewable energies• Energy research• Contingency energy supply• Holding of strategic energy minerals stocks• Adequate investment in, appropriate upkeep and

equitable access to energy infrastructure

To establish institutions in support of the Bill …

Purpose of the Bill (3/3)Enabling provisions

• The furnishing of certain data and information regarding energy demand, supply and generation

• For all matters

To provide measures for

General guiding principlesEnergy Bill development

• The Energy Bill does not seek to replace existing institutions but to strengthen them– Energy, like water, is an economic integrator– “Energy is the lifeblood of energy economy”– Economic decisions made w/o consideration of

energy availability and price are problematic– Focuses on issues intended to strengthen

energy security– Like water & land, to operate more like the

competition law, in economic development matters (concurrency!)

– On data, the intention is to complement data collection and facilitate sharing

General Guiding Principles Areas of concurrent mandate

General Principles• Addresses areas not contemplated in

other legislation• Programmes and initiatives to be

established in consultation with Ministers who have concurrent mandates

• Appointment of members of Board and mandates to be done in consultation with relevant Ministers

• Regulations to be proposed and made in consultation with all Ministers whose areas may be affected by those regulations

General Guiding Principles Establishment of Institutions

General Principles• Must act as advisory or executing agents for the Minister

on the mandate for which they were created• Avoid creating entities with conflicting mandates• Only take into account published Government principles• Where relevant, must be established in consultation with

other Ministers• Not be driven by private agendasConstitution of governance structures• May include representatives from industry as may be

prescribed by the Minister in consultation with other Ministers

• May contain part-time members who are involved in the overseeing and decision-making duties and full-time members who are involved in the day-to-day operations and management of the entity

The BillThe structure

• Ch 1:Definitions & Objects of the Act• Ch 2: Energy Supply, optimisation and utilisation

– Provision of Data and Access to Data– Safety, Health and Environment– Energy Access by Households– Energy Related International Obligations

• Ch 3: Energy Modelling and Information Agency• Ch 4: Integrated Energy Planning• Ch 5: Energy Development Institute

– Renewable Energy– Energy Efficiency– Energy Research

• Ch 6: Security of supply• Ch 7: Energy Infrastructure• Ch 8: General Provisions

The BillData, Safety, Health, Environment

Provision of Data• Mandatory provision of any data and information required for the

purposes of the energy modelling and planning

• Connection to any data and information management system, or any other system within the public administration for the acquisition of energy data and information

Safety, Health & Environment• Programmes to minimise the negative safety, health and

environment impacts of energy carriers through the prescription of standards and specifications (in consultation with DTI and DEAT)

Energy Access by Households• Programmes to provide for the universal access of appropriate

forms of energy to all South Africans at affordable prices

• Energy Related International Obligations

• Measures to give effect to the energy implications of international agreements entered into or ratified by the Republic

The BillIntegrated Energy Modelling & Planning

Drivers for change• Energy crisis show need for coordinated

planning– Liquid Fuels in 2005– Electricity in 2006, 2007 & current

• Disparate plans create potential for contradictory initiatives and activities

• No integrated or coordinated view of-– energy sector – impacts of the different plans

• The need for the ability to develop – numbers driven energy plans– a tool to evaluate proposed energy policies


• Provision of high-quality, policy-neutral energy information, in manner that promotes sound policymaking, efficient markets and public understanding, to– Cabinet– National, provincial & local governments– Markets (for efficient market operation)– Public (communication)

PlanningAn integrated planning approach to ensure that all the constituting elements are addressed in a coordinated manner

ModellingAn integrated energy modeling capability which would be instrumental in the development of energy plans and evaluation of options that are proposed by policy-makers

RequiresRequires

• Establishes an Integrated Energy Modelling Agency entity to– Collect, compile and analyse energy data,

information– Publish reliable energy data, information &

analyses• daily, weekly and monthly energy reports• annual energy reviews• short and medium-term energy forecasts

– Analyse impact of proposed energy related programs, plans, policies and strategies

• Prepare reports on energy issues and legislation for Cabinet

• Prepare special analyses on energy issues and legislation for the Minister

• Prepare requested analysis for policy making departments

The BillIntegrated Energy Modelling

• Development of an annually reviewed and published Integrated Energy Master Plan– 25-year planning horizon– produced in an integrated and

coordinated manner– based on Energy Security principles– informed by the output of the Energy

Modelling activities– informed by other plans from all

demand, supply, production sectors whose plans impact or are impacted by the Master Plan

The BillIntegrated Energy Planning


Entity 1 Entity 2 Entity …Entity 3

Coordination

Entity… Entity n

Integrated Energy Planning

Policy,Options,Strategies

Otherfactors

Policy- Neutral Modelling

Government Departments

SOEs

ModellingAgency

Individual Policies, Strategies, Plans, (Infrastructure)


Example

The BillSouth African National Energy Development

Institute (SANEDI)

• Created using “existing” entities to– Promote of renewable energies– Implement of energy efficiency programmes– Research and develop energy technologies &

carriers • Transitional provisions

– CEO of SANERI will be transferred to new entity for period equivalent to remainder of his contract

– All personnel from existing entities to be transferred to new entity

– All assets and liabilities from existing entities to be transferred to new entity

The BillSANEDI: Renewable Energy Division

• Creates opportunities to enable increased consumption of renewable energies– Establishment of a Tradable Renewable

Certificates System– Framework for any other RE programme– Legally creating Renewable Energy Finance

Office– Prescription of measures and incentives to

promote the production, consumption, investment, research and development of renewable energy

44

The Bill SANEDI: Energy Efficiency Division

Key issue

• Unsustainable energy uses and limited implementation of

energy efficient practices in SA economy

• Each energy carrier to pay for its own efficiency program

Functions of EE Division

• Undertake energy efficiency measures as directed by Minister

• Increase energy efficiency measures throughout the economy

• Optimise utilisation of finite energy resources

• Prescribe standards and technologies to promote efficient use

of energy

• Facilitate use appropriate energy carrier for an application

The Bill SANEDI: Energy Research

Key issue

• Continued expansion of research in energy developments

and technologies

Functions

• Directs, monitors, conducts and implements energy research

and technology development

• Promotes energy technology innovation

• Conducts research and develop technologies in line with the

principles of the energy security framework

• Provides for economic growth and development through its

functions

The Bill Security of Supply

Key issue

• Inadequate stock held by energy industry

• Requirement to hold commercial and strategic stock

Recommendation

• Definition of measures that will ensure minimum levels of

disruption in supply

• Minister to prescribe quantities of primary energy and

“finished energy carrier” to be kept nationally

• Definition and implementation of energy rationing &

emergency measures

The Bill Security of Supply - Liquid fuels industry

Recommendation

• Creation of National Liquid Fuels Reserve Stock capability

• Measures to ensure minimum levels of primary energy

carriers

Functions

• Specify quantities of primary energy and finished product

required nationally

• Sources funding for the acquisition of stocks

• Manage all stocks and logistics on behalf of the state

• Put in place operational structures, systems and processes

• Implement and execute emergency reaction plan

The Bill Energy Infrastructure

Key issue

• Uncoordinated infrastructure investments and developments

Recommendation

• Measures to facilitate adequate investment in infrastructure

• Coordinate upkeep of infrastructure and benchmarking

• Ensure a holistic approach to infrastructure developments

and planning

Thank You

The National Energy Bill PPC presentation 7 May 2008 Nhlanhla Gumede Deputy Director General –...

Documents

Transcript of The National Energy Bill PPC presentation 7 May 2008 Nhlanhla Gumede Deputy Director General –...