energy for a low-carbon e conomy
DESCRIPTION
Energy for a low-carbon e conomy. 11 November 2010. Presentation by Ernst Venter Executive General Manager Business Growth . Contents. South African context The changing energy environment Exxaro’s response Energy and carbon management programme Energy business - PowerPoint PPT PresentationTRANSCRIPT
Energy for a low-carbon economy
11 November 2010
Presentation by Ernst VenterExecutive General ManagerBusiness Growth
Contents
• South African context• The changing energy environment• Exxaro’s response
– Energy and carbon management programme– Energy business
• Exxaro’s contribution to national objectives• Road ahead
2
South African context
3
Six key sectors and activities:
1. Infrastructure expansion
2. Agriculture and agro-processing
3. Mining and mineral beneficiation
4. Green economy and associated services
5. Manufacturing sectors identified in IPAP
6. Tourism and selected services sectors
5 million
jobs by 2020
Government objectives for economic growth
4
The energy environment within our economy is changing
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
MW
Year
Generation Capacity vs Electricity DemandLow Demand Growth
Long term IPP Opportunities
Available Capacity MINUS 17% Reserve Margin
High Demand Growth
Moderate Demand Growth
Linear (Low Demand Growth)
Source: Fieldstone Africa (Pty) Ltd
From:Energy oversupply
To:Energy constrained
5
The energy environment within our economy is changing
From:Cheap electricity
To:Rising electricity prices
R 0.70
R 0.75
R 0.80
R 0.85
R 0.90
R 0.95
R 1.00
R 1.05
R 1.10
R 1.15
R 1.20
2013 2014 2015 2016 2017 2018 2019 2020 2021
Base Case Base Case with Carbon Tax
Balanced Scenario Balanced Scenario with Carbon Tax
6
The energy environment within our economy is changing
From:Carbon intensive
To:Carbon constrained
MtCO2e/a
7
Exxaro developed a strategic response to this changing environment
Analysis of business environment
Business response:Prepare for a low-carbon, energy constrained future
+
+
Energy Supply Shortage
Energy Price Pressure
Carbon Constrained Future
Existing businesses
• Energy security• Carbon footprint• Improving energy
efficiency• Carbon offsets
Business growth opportunity
• Base load IPP• Renewable energy• Energy and carbon
trading
Energy demand projections indicate a power supply shortage in South Africa
Demand is already suppressed
How?At what cost?
Can we match moderate demand growth?
Short term: How? Peakers, Co-gen, Renewables?
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
MW
Year
Generation Capacity vs Electricity DemandLow Demand Growth
Long term IPP Opportunities
Available Capacity MINUS 17% Reserve Margin
High Demand Growth
Moderate Demand Growth
Linear (Low Demand Growth)
Source: Fieldstone Africa (Pty) Ltd
Develop portfolio of energy projects
Specific strategies have been developed to drive implementation of our response
R 0.70
R 0.75
R 0.80
R 0.85
R 0.90
R 0.95
R 1.00
R 1.05
R 1.10
R 1.15
R 1.20
2013 2014 2015 2016 2017 2018 2019 2020 2021
Base Case Base Case with Carbon Tax
Balanced Scenario Balanced Scenario with Carbon Tax
8
Exxaro developed a strategic response to this changing environment
Analysis of business environment
Business response:Prepare for a low-carbon, energy constrained future
+
+
Energy Supply Shortage
Energy Price Pressure
Carbon Constrained Future
Existing businesses
• Energy security• Carbon footprint• Improving energy
efficiency• Carbon offsets
Business growth opportunity
• Base load IPP• Renewable energy• Energy and carbon
trading
Energy demand projections indicate a power supply shortage in South Africa
Demand is already suppressed
How?At what cost?
Can we match moderate demand growth?
Short term: How? Peakers, Co-gen, Renewables?
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
MW
Year
Generation Capacity vs Electricity DemandLow Demand Growth
Long term IPP Opportunities
Available Capacity MINUS 17% Reserve Margin
High Demand Growth
Moderate Demand Growth
Linear (Low Demand Growth)
Source: Fieldstone Africa (Pty) Ltd
Develop portfolio of energy projects
R 0.70
R 0.75
R 0.80
R 0.85
R 0.90
R 0.95
R 1.00
R 1.05
R 1.10
R 1.15
R 1.20
2013 2014 2015 2016 2017 2018 2019 2020 2021
Base Case Base Case with Carbon Tax
Balanced Scenario Balanced Scenario with Carbon Tax
Energy and carbon management strategy
9
CURRENT REALITY• High carbon economy• Reactive to legislation• Identified threat & commitment• Part of third world – huge window of
opportunity• High level management commitment• Energy strategy
FUTURE INTENT • Thrive in low carbon
economy• Pre-empt legislation• Improve competitive
intelligence• Participate in
o Clean Energyo Renewable resourceso Carbon tradingo Co-generation
• Brand, image & perception
Environmental regulatory
environment
Energy efficiency management drive
Mitigation opportunities and
clean technologies
Low carbon economy
Sustainability reporting
Energy procurement
10
2010… An Exco pledge reconfirms Exxaro to improved energy efficiency and reduction of carbon emissions
The Energy & Carbon
Management Strategy
The EXCO pledges its support for the Energy and Carbon Management programme and reconfirms the commitment to improve energy
efficiency by 10% and reduce our carbon emissions with a similar 10% by 2012
The business planning process will cascade this target to
practical objectives at each BU
These targets will be included in the EGM and BU Managers’
performance contractsCURRENT REALITY
• High Carbon Economy• Reactive to legislation• Identified threat & commitment• Part of third world – huge window of
opportunity• High level management commitment• Energy Strategy
FUTURE INTENT • Thrive in low carbon
economy• Pre-empt legislation• Improve competitive
intelligence• Participate in
o Clean Energyo Renewable resourceso Carbon tradingo Co-generation
• Brand, Image Perception
Environmental Regulatory
Environment
Energy Efficiency Management Drive
Mitigation Opportunities and
Clean Technologies
Low Carbon Economy
Sustainability Reporting
Energy Procurement
While implementing our strategy, we have made significant progress...
Some of our key successes are the:• Development and implementation of data processes for effective and efficient reporting• Eskom electricity baselines developed (PCP readiness)• Energy efficiency champions appointed at all business units• Increased awareness on energy efficiency at business units• Development and implementation of capital project guidelines• Ownership of energy efficiency at business units through clear role definition and
empowerment of individuals• CDP developed and good exposure received
11
We have achieved tangible successes
• Design of Grootegeluk Medupi Expansion Project:– Approximately 29% more energy efficient– Zero effluent coal beneficiation– Eco-friendly housing reducing carbon emissions by 60%
• Co-generation plant at Namakwa Sands smelter in final stages of feasibility to bring about 17% saving in energy and carbon emissions
• Biodiesel tests successfully conducted at Leeuwpan mine, being followed up with a full concept study
12
13
Exxaro developed a strategic response to this changing environment
Analysis of business environment
Business response:Prepare for a low-carbon, energy constrained future
+
+
Energy Supply Shortage
Energy Price Pressure
Carbon Constrained Future
Existing businesses
• Energy security• Carbon footprint• Improving energy
efficiency• Carbon offsets
Business growth opportunity
• Base load IPP• Renewable Energy• Energy and carbon
trading
Energy demand projections indicate a power supply shortage in South Africa
Demand is already suppressed
How?At what cost?
Can we match moderate demand growth?
Short term: How? Peakers, Co-gen, Renewables?
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
MW
Year
Generation Capacity vs Electricity DemandLow Demand Growth
Long term IPP Opportunities
Available Capacity MINUS 17% Reserve Margin
High Demand Growth
Moderate Demand Growth
Linear (Low Demand Growth)
Source: Fieldstone Africa (Pty) Ltd
Develop portfolio of energy projects
R 0.70
R 0.75
R 0.80
R 0.85
R 0.90
R 0.95
R 1.00
R 1.05
R 1.10
R 1.15
R 1.20
2013 2014 2015 2016 2017 2018 2019 2020 2021
Base Case Base Case with Carbon Tax
Balanced Scenario Balanced Scenario with Carbon Tax
Exxaro Energy’s vision
• Exxaro Energy’s strategy is based on Exxaro’s view that there is a business opportunity in the Southern African energy environment. Exxaro Energy’s vision is to:
14
Become the leading cleaner energy Independent Power Producer in
Southern Africa
Wind Power:Two wind farms under development on the West Coast and at
Tsitsikamma
Solar Power:Conducting pre-feasibility studies for Concentrating Solar and Solar
Hybrid power plants in the Limpopo province and Northern Cape
Co-generation:Final stages of feasibility for installation of co-generation at
Namakwa Sands smelter, various other projects in development
Coal Bed Methane:Exploration and drilling to prove economic gas flow in Botswana
Base Load IPP:Desk top study completed – utilising cleaner technology and signed
> 1000MW of term sheets with potential industrial customers
Bio Fuels:Concept study to replace 40million litres of diesel in first phase,
increasing energy and food security at the same time
Exxaro is developing a portfolio of energy projects
15
Exxaro’s contribution to national objectives
16
Six key sectors and activities:
1. Infrastructure expansion
2. Agriculture and agro-processing
3. Mining and mineral beneficiation
4. Green economy and associated services
5. Manufacturing sectors identified in IPAP
6. Tourism and selected services sectors
5 million
jobs by 2020
Government objectives for economic growth
The road ahead
Exxaro• Inspirational leadership through meaningful advocacy, facilitation and
commitment• Ongoing focus on improving energy efficiency of operations • Reducing our carbon footprint and offsetting the balance• Successful establishment of a cleaner energy business and implementation of
energy projects
17
Government• Finalisation of IRP2010• Implementation of REFIT programme• Establishment of a COFIT programme• Creation of friendly environment for IPPs through:
• Establishment of an Independent System and Market Operator (ISMO)• Support for bilateral energy agreements• Friendly grid access and wheeling regulations
• Practical support to industry for achievement of New Growth Plan
For sustainable energy security in Southern Africa