Monitoring Renewable Energy Performance of Power Plants

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MONITORING RENEWABLE ENERGY PERFORMANCE OF POWER PLANTS

Progress in the first half of 2018 (Issue 12)

October 2018

Prepared by: Dr A Gxasheka, Mr H Mokhonoana, Ms R Mokoena

Tel: 012 401 4600

Table of contents

Glossary of terms ...... 3 Abbreviations ...... 4 1. Introduction ...... 5 2. Rationale and Scope of the Report ...... 7 3. Progress in terms of Installed Capacity of Renewable Energy ...... 8 4. Energy Contribution of REI4P Projects ...... 9 Power system contribution ...... 9 Monthly energy production ...... 11 Hourly energy profiles of RE ...... 12 Average load factor for the first six months of 2018 ...... 14 5. Renewable Energy Power Plants Outside Department of Energy Procurement Programme ...... 14 6. Calculated Cost of Energy to Consumers ...... 16 6.1 Cost trends of global renewable energy projects ...... 16 6.2 Prices of renewable energy in South Africa ...... 18 7. Concluding Remarks ...... 19 APPENDIX A: List of operational power plants under REI4P ...... 20

Glossary of terms

Bid window Means any of the procurement phases under the Renewable Energy Independent Power Producer Procurement Programme of the Department of Energy.

Energy Regulator Means the regulatory authority established as a juristic person in terms of Section 3 of the National Energy Regulator Act, 2004 (Act No. 40 of 2004).

Government Means the Government of the Republic of South Africa, and any of its departments, agencies or other entities that it manages or controls.

Gigawatt hour Energy unit in which electricity consumption is measured (1GWh = 1000MWh).

Independent power producer (IPP) An IPP is defined as typically limited-liability, investor-owned enterprise that generates electricity either for bulk sale to an electric utility or for retail sale to industrial or other customers with certain conditions.

Load factor Means the ratio of the power plant output over a period of time, to its potential output if it were possible for it to operate at full nameplate capacity continuously over the same period of time.

Megawatt hour Energy unit in which electricity consumption is measured (1MWh = 1000kWh).

Minister Means Minister of Energy

Renewable energy (from the 2003 White Paper on Renewable Energy) Renewable energy harnesses naturally occurring non-depletable sources of energy, such as solar, wind, biomass, hydro, tidal, wave, ocean current and geothermal, to produce electricity, gaseous and liquid fuels, heat or a combination of these energy types.

Abbreviations

BW Bid window COD Commercial operation date CSIR Council of Scientific and Industrial Research CSP Concentrated solar power DoE Department of Energy IPP Independent power producer IRP Integrated resource plan MW Megawatt MWh Megawatt hour GWh Gigawatt hour NERSA National Energy Regulator of South Africa OCGT Open cycle gas turbine PPA Purchase Power Agreement PV Photovoltaic RE Renewable energy REIPPPP (‘REI4P’) Renewable Energy Independent Power Producer Procurement Programme

1. Introduction

The number of large-scale renewable energy (RE) power plants connected to the grid has increased significantly over the past years, contributing towards water saving and cleaner environment. Three RE Ministerial Determinations1 issued in recent past have ensured that the implementation of Integrated Resource Plan (IRP) 2010-2030 is realised. In the previous publication of this report, Issue 112, which is available online, detailed information of all procured Bid Windows (BWs) and licensed projects was covered extensively, hence it will not be repeated in this issue.

Reports3,4,5 published in the recent past have praised the way in which the country has implemented RE power projects, from bidding stages of the Renewable Energy Independent Power Producer Procurement Programme (‘REI4P’), to the signing of power purchase agreements (PPAs). The delay of almost two years in signing PPAs of BW3.5 and BW4 projects has been resolved through negotiations between Government, Eskom and IPPs. The PPAs of 27 projects from BW3.5 and BW4 IPPs were signed on 4 April 2018. Furthermore, the negotiations yielded positive results in that some initial bid prices of IPP projects were negotiated downwards in a bid to provide affordability for consumers. Figure 1 shows proposed electricity generation mix plan in the Draft Integrated Resource Plan 2018 until the year 20306. By 2022, the draft plan intends to have additional capacity of 2 288MW for solar PV, while wind is expected to have additional capacity of 3 342MW. From 2026 till 2030, PV will have annual capacity additions of 1 000MW, while wind will add 1500MW in 2026 and then introduce 1600MW annually from 2027 to 2030. By 2030 it is envisaged that the combined new capacity additions of the above technologies will be 19 400MW.

1 RE Ministerial Determination of 11 August 2011, 3 725MW (includes 100MW for small projects) RE Ministerial Determination of 19 December 2012, 3 200MW RE Ministerial Determination of 18 August 2015, 6 300MW (includes 200MW for small projects) 2 NERSA Report, Monitoring Renewable Energy Performance of Power Plants (Issue 11), March 2018. Available Online: http://www.nersa.org.za/Admin/Document/Editor/file/Electricity/SustainableEnergy/Monitoring%20Ren ewable%20Performance%20of%20Power%20Plants%20- %20%20Tracking%20progress%20of%202017%20-%20Issue%2011%20(March%202018).pdf, Last accessed 15 August 2018. 3 Article published on Engineering News Online: 9th May 2016, http://www.engineeringnews.co.za/article/tallying-the-benefits-of-south-africas-renewable-energy- power-producers-procurement-programme-2016-05-09/rep_id:4136 4 T Bischof-Niemz: Financial benefits of renewables in South Africa in 2014. CSIR Energy Centre: Pretoria, 2015. 5 A Eberhard, J Kolker and J Leigland: South Africa’s renewable energy IPP procurement program: Success factors and lessons. World Bank: Washington, 2014 6 Proposed Integrated Resource Plan 2018, Page 41, Table 7.

There are also annual capacity additions of 200MW planned for embedded generation. It is expected that a large portion of the embedded generation capacity will be rooftop photovoltaic (PV).

78 344MW

+30 526MW

47 818MW

Figure 1: Energy mix of South Africa (Data sourced from Draft IRP 2018)

Figure 2 shows the geographical distribution of the electricity sources in the country. Looking at the figure, the introduction of RE in the grid has changed the geographical distribution of generators, from being centralised in the north east in Mpumalanga, to other provinces such as the Northern Cape, Western Cape and Eastern Cape. This is important for the grid as it ensures that energy generated is consumed near the sources, thereby reducing transmission losses. For intermittent resources, it is important to have generators distributed in all areas to avoid localised weather patterns, such as cloud cover, which affect the production output of solar PV plants.

Figure 2: Geographical location of RE IPP projects in the Department of Energy’s procurement programme (Source: Eskom Transmission Development Plan 2018)

2. Rationale and Scope of the Report

South Africa is still on a learning curve when it comes to grid connected large-scale renewable energy (RE) power plants. The introduction of RE requires planning around its impact as a variable resource and how best it can be used to supplement conventional baseload resources in matching load. Countries with high penetration of RE have studied its impact by using data that is collected from the distributed generators across the grid. This ensures that historical data collected is used for studying and updating country energy long-term plans. In terms of section 4 of the Electricity Regulation Act, 2006 (Act No. 4 of 2006) ('the Act'), NERSA has a mandate to “establish and manage monitoring and information systems and co-ordinate the integration thereof with other relevant information systems”. The REI4P power plants are required to submit reports on their monthly energy production, pursuant to section 15 of Grid Connection Code for Renewable Energy, version 2.8 of 2015. The report is intended to inform the industry, including electricity consumers, about the progress of RE in terms of supplying power to the grid. This issue of the monitoring report covers the update of installed capacity (MW), the energy production and analysis of the costs associated with energy produced by RE power, as this ultimately affects the consumers through revenue allocation in Eskom’s price determination by NERSA.

3. Progress in terms of Installed Capacity of Renewable Energy

The grid-connected contracted capacity of REI4P power plants is approximately 3 910MW. The combined achieved capacity of these power plants is nearly 3 881MW. Figure 3 shows the achieved cumulative capacity of REI4P power plants till 30 June 2018 and the forecast installed capacity from 2019 to 2021. The Kathu Solar Park, located in the Northern Cape was connected and synchronised to the grid on 23 February 2018. The project added 100MW of capacity to the grid and is capable of contributing to peak periods with its 4.5 hours of thermal storage. Table A1 in Appendix A shows the list of all operational REI4P projects.

Figure 3: Cumulative contract capacity of operational projects (Data sourced from IPPs and Eskom)

The distribution of commercial capacity for various provinces in South Africa is shown in Figure 4. The Northern Cape and Eastern Cape have the highest capacities due to abundance of solar energy and wind resources in the provinces, respectively.

Figure 4: Provincial capacity in commercial operation (Data sourced from IPPs)

4. Energy Contribution of REI4P Projects

Power system contribution

RE IPPs submit their monthly energy production to NERSA on a quarterly basis. The data includes all operating REI4P power plants from BW1, BW2 and BW3. Figure 5 illustrates the contribution of REI4P projects on the grid from January 2018 to 30 June 2018. The power plants contributed approximately 4.7% to the total electricity mix. As shown in the following section, some of the energy from RE power plants was generated during peak period, thereby assisting in reducing strain from the grid.

Figure 5: Daily system contribution of REI4P power plants from January to June 2018 (Data source: Eskom and IPPs) During constrained periods in the power system, RE power plants contribute in reducing load, thereby reducing use of open cycle gas turbine (OCGT) power plants. Figure 6 shows the contribution of RE during constrained days, specifically 14 and 15 June 2018. The quantity of energy produced by RE power plants is shown in Figure 6 and it corresponds to the hours in which the power system (OCGT) was used. Because the average cost of RE (currently at R2.01/kWh) is lower than running OCGTs7, going forward, RE will assist in reducing the use of OCGTs.

Figure 6: Contribution of REI4P power plants in constrained periods in June 2018 (Data source: Eskom and IPPs)

7 Eskom one-year application evaluated by NERSA projected the cost of running OCGTs in FY18/19 to be R3.27/kWh.

Monthly energy production

The total monthly energy production of the power plants is shown in Figure 7. Wind power plants produced the most energy in this period, followed by solar PV power plants. In the period under analysis, the abovementioned RE power plants produced nearly 2 900GWh and 1 560GWh, respectively. The concentrated solar power (CSP) plants also assisted in strengthening generation in the power system as they contributed in reducing load during peak hours by making use of thermal storage. The combined contribution of RE for the six-month period was approximately 5 117GWh. Comparing the latter energy production with energy in the first six months of 2017, there has been a growth of approximately 37%.

Figure 7: Monthly energy production of REI4P power plants from January to June 2018 (Data Source: IPPs)

As an illustration, the comparison of the current year and 2017 is shown in Figure 8. The growth is attributed mainly to newer REI4P power plants that were commissioned in the second half of 2017. As a result of seasonal variation of solar and wind technologies, there is a visible drop in total energy produced in the first six months. In 2017, the energy of wind and solar PV power plants that have been operating for more than a year increased in the second half of the year when compared to the first half of the year. For solar PV plants, the increase in the production was around 10%, while for wind, it varied between 7% and 21%. If the seasonal weather pattern remains the same as 2017, there is a high probability that the second half of 2018 would yield more energy from wind and solar PV technologies.

Figure 8: Comparing energy production in 2017 and 2018 (Data source: IPPs)

Hourly energy profiles of RE

Figure 9 shows the average hourly production of REI4P power for wind farms in (a), solar PV power plants in (b) and CSP plants in (c). The other technologies such as landfill gas and small-hydro have not been included in the figure due to their baseload characteristics.

(a)

(b)

(c)

Figure 9: Average hourly wind (a), solar PV (b) and CSP (c) energy profiles for each month from January to June 2018 (Data Source: IPPs)

In the plots for the three energy profiles of power plants, the evening peak period between 18:00 and 21:00 is within the green-dotted area. Comparing the three technology profiles, it is clear that wind and CSP plants assisted the power system during peak periods. The energy profiles also illustrate the effect of seasonal variation on energy output from summer to winter months. For the months before June 2018, wind generation peak corresponded predominantly with the peak load

hours in the evening, thereby contributing in peak-demand shaving. Solar PV energy peak profile occurred during the low demand hours around midday.

Average load factor for the first six months of 2018

Load factors of the power plants are shown in Figure 10 for five different technologies. Based on the energy data submitted by IPPs, the load factors of wind, solar PV and CSP plants were, 33%, 24% and 45%, respectively. These load factors are well within the norm for South Africa. The highest load factors were achieved by small-hydro with 65% and landfill gas with 51%.

Figure 10: Load factors of power plants for various technologies

5. Renewable Energy Power Plants Outside Department of Energy Procurement Programme

In the past, NERSA has licensed a number of RE power plants, most of which are still operational under bilateral agreements and wheeling arrangements. These power plants are not part of the Department of Energy’s (DoE) procurement programme. Table1 shows the list of the licensed power plants that submitted their production data for the period from 1 January 2018 to 30 June 2018.

Table 1: Renewable energy power plant outside DoE IPP programme

# Renewable Energy Power Plant Capacity(MW) Technology Location /Resource type Independent power producers

1 Merino 4 Hydro Bethlehem, Free State

2 Sol Plaatjie* 3 Hydro Bethlehem, Free State

3 Darlipp (Pty) Ltd * 5.2 Wind Windhoek Farm, Darling, Western Cape 4 Electrawinds * 1.8 Wind Nelson Mandela Bay Municipality

5 Mpact Piet Retief* 16 Baggase Piet Retief , Mpumalanga

6 Friedenheim Hydro Electric Power 2.5 Hydro Nelspruit, Mpumalanga Station * 7 Bronkhorstspruit Biogas Plant * 4.2 Biogas Bronkhorstspruit, Gauteng

8 AC Witcher* 5.67 Biomass Eastern Cape 9 Illovo * 6.5 Bagase KZN 10 CPV Powerplant No. 2 (Pty) Ltd 0.477 Solar CPV KZN

11 L'omarins * 2.4 Hydro Western Cape

12 Sappi Saiccor 46 Black KZN Liquor/Pulp 13 Sappi Ngodwana 117 Black Mpumalanga Liqour/Pulp Municipality power plants

14 Lydenburg * 2 Hydro Lydenburg Dorpsgrond

15 Piet Retief Hydro 0.6 Hydro Mkhondo Municipality

16 Clanwilliam Hydro Power Station* 1.5 Hydro ClanWilliam, Western Cape

Eskom power plants

17 Gariep Hydro 360 Hydro Norvalsport/Between Free State & Northern Cape 18 Vanderkloof Hydro 240 Hydro Petrusville/Between Free State & Northern Cape 19 Transkei hydro Colleywobbles 42 Hydro Mbashe River/ Eastern Cape

20 Transkei Hydro First Falls * 6 Hydro Umtata River/ Eastern Cape

21 Transkei Hydro Second Falls 11 Hydro Umtata River/ Eastern Cape

22 Ncora Hydro * 2.1 Hydro Umtata River/ Eastern Cape

23 Sere Wind Farm * 105.8 Wind Western Cape Total Capacity (MW) 985.75 Note: *Power plants that reported data to NERSA.

As can be seen from Table 1 above, a large number of these power plants support industrial processes, such as sugar milling and paper manufacturing. Their availability in terms of feeding power to the grid is dependent on the season and self-consumption pattern of a given industry. It is therefore expected that in certain times during the year some power plants may not provide excess power to the grid due to self-consumption.

Figure 11 shows the energy production of the aforementioned power plants in the first six months of 2018. Their sent out energy was approximately 101GWh. It is evident from the figure that biomass/bagasse power plants started feeding power to the grid during the first months of the dry season (i.e. towards winter season).

Figure 11: Monthly energy of renewable energy power plants outside procurement programme of the Department of Energy (Data sourced from IPPs)

The majority of the power was generated by hydro, bagasse/biomass and landfill power plants. It is important to note that the analysis of these RE power will be limited in that their operation is mainly baseload and therefore there is less variability and intermittence than RE technologies in the REI4P.

6. Calculated Cost of Energy to Consumers

6.1 Cost trends of global renewable energy projects

According to a recent report published by the International Renewable Energy Agency (IRENA)8, cost of various renewable energy technologies have dropped considerably. IRENA attributes the cost reductions mainly to the following:

8 IRENA (2018), Renewable Power Generation Costs in 2017, International Renewable Energy Agency, Abu Dhabi. Available Online: https://www.irena.org/- /media/Files/IRENA/Agency/Publication/2018/Jan/IRENA_2017_Power_Costs_2018.pdf, Last Accessed 3 October 2018.

 technology improvements  competitive procurement; and  a large base of experienced, internationally active project developers.

Figure 12 and Table2 show the global weighted average Levelised Cost of Electricity9 (LCOE) of large scale RE technologies between 2010 and 2017. The data is based on IRENA’s LCOE database for costs of RE from various countries around the world.

Figure 12: Global costs of renewable energy from 2010 to 2017. (Source: IRENA 2018).

Table 2: Average global costs of renewable energy between 2010 and 2017 (@2016 USD CPI). RE Technology 2010 USD/kWh 2017 USD/kWh

Biomass 0.07 0.07 Geothermal 0.05 0.07 Hydro 0.04 0.05 Solar PV 0.36 0.10 CSP 0.33 0.22 Offshore Wind 0.17 0.14 Onshore Wind 0.08 0.06

9 LCOE is the ratio of lifetime costs to lifetime electricity generation, both of which are discounted back to a common year using a discount rate that reflects the average cost of capital.

Large-scale solar PV technology dropped by 73% between 2010 and 2017, from US$0.36/kWh to US$0.10/kWh, while in the same period, CSP technology dropped by 34% from US$0.33/kWh to US$0.22/kWh. Onshore wind technology cost reduction was 25%.

6.2 Prices of renewable energy in South Africa

In South Africa, the competitive nature of the procurement programme, coupled with the reduction of technology costs, resulted in lower energy prices for the last three BWs. Figure 13 shows the average prices of various technologies for each BW. The average prices were calculated using the energy produced by various IPP projects and their average tariffs from 01 January 2018 to 30 June 2018.

Figure 13: Monthly energy of renewable energy power plants outside procurement programme of the Department of Energy (Source: IRENA 2018)

Figure 12: Average cost energy of renewable energy power plants procurement programme of the Department of Energy (Data sourced from IPPs)

The average prices of CSP and solar PV power plants were R3.00/kWh and R2.71/kWh, respectively. Wind power plants in operation had an average price of R1.42/kWh. The average cost of all projects of REI4P in the first six months of 2018 was approximately R2.00/kWh. The latter amount spent by Eskom in paying the energy sent to the grid by operating REI4P power plants. The average prices of various technologies are expected to decrease significantly when BW4 projects begin commercial operation since BW4 prices were significantly lower than other BWs.

7. Concluding Remarks

Large-scale renewable energy projects are continuing to operate successfully in the national grid. As of 30 June 2018, the commercial capacity of grid-connected power plants under DoE’s REI4P was 3 910MW. This capacity is also supplemented by 886MW of capacity from RE power plants that are outside DoE’s procurement programme. The REI4P power plants fed approximately 5 117GWh of energy in the first six months of 2018, while RE power plants outside DoE’s procurement programme produced approximately 101GWh. The average price of RE4IP projects in the first six months of 2018 was R2.00/kWh. The PPAs of power projects of BW4 under REI4P were signed on 4 April 2018 in order to ensure that implementation of Ministerial Determinations on RE is achieved.

APPENDIX A: List of operational power plants under REI4P Power Plant Province Technology Contracted Achieved Capacity Achieved COD # Capacity (MW) (MW) 1 155 RustMo1 NW Solar PV 6.93 6.93 15-Nov-13 2 202 Hopefield WC Wind 65.4 65.40 01-Feb-14 3 138 MetroWind EC Wind 27 27.00 07-Feb-14 4 159 Kalkbult Solar PV NC Solar PV 72.5 72.40 19-Mar-14 5 163 Aries Solar PV NC Solar PV 9.65 9.65 20-Mar-14 6 128 Konkoonsies Solar PV NC Solar PV 9.65 9.65 20-Mar-14 7 182 PV De Aar (SAMR) NC Solar PV 45.6 45.60 05-Apr-14 8 572 Droogfontein (SAMR) NC Solar PV 45.6 45.40 06-Apr-14 9 696 Herbert Solar PV NC Solar PV 19.98 19.90 11-Apr-14 10 443 Greefspan Solar PV NC Solar PV 9.9 9.90 11-Apr-14 11 123 Dassieklip WC Wind 27 27.00 07-May-14 12 186 Jeffreys Bay (SAMR) EC Wind 138 135.11 15-May-14 13 031 Letsatsi FS Solar PV 64 64.00 21-May-14 14 032 Lesedi FS Solar PV 64 64.00 21-May-14 15 523 Linde NC Solar PV 36.8 36.80 30-Jun-14 16 052 Soutpan LP Solar PV 28 27.94 04-Jul-14 17 036 Nobelsfontein NC Wind 75 73.80 12-Jul-14 18 064 Mulilo de Aar NC Solar PV 10 10.00 19-Jul-14 19 375 Vredendal WC Solar PV 8.8 8.80 31-Jul-14 20 764 Upington Solar NC Solar PV 8.9 8.90 31-Jul-14 21 043 Dorper EC Wind 97.53 97.53 09-Aug-14 22 564 Solar Capital de Aar NC Solar PV 75 75.00 15-Aug-14 23 444 Reisa Kathu NC Solar PV 75 75.00 15-Aug-14 24 035 Witkop LP Solar PV 30 29.68 20-Sep-14 25 065 Mulilo Prieska NC Solar PV 20 19.93 01-Oct-14 26 750 Boshoff WC Solar PV 60 57.00 25-Oct-14 27 225 Cookhouse EC Wind 138.6 135.80 19-Nov-14 28 207 Sishen NC Solar PV 74 74.00 29-Nov-14 29 037 Touwsrivier (CPV No.1) WC Solar PV 36 36.00 05-Dec-14 30 562 Jasper NC Solar PV 75 75.00 17-Dec-14 31 373 Aurora Rietvlei WC Solar PV 9 8.90 23-Dec-14 32 527 Dreunberg EC Solar PV 69.6 69.60 31-Dec-14 33 815 Kakamas Hydro NC Hydro 10 10.00 31-Jan-15 34 118 Kaxu Solar One NC CSP 100 100.00 06-Feb-15 35 148 Kouga Red Cap EC Wind 80 77.70 17-Mar-15 36 364 Grassridge EC Wind 59.8 59.80 06-Jun-15 37 309 West Coast (Aurora) WC Wind 90.82 90.82 09-Jun-15 38 164 SlimSun WC Solar PV 5 5.00 05-Aug-15 39 014 Gouda WC Wind 135.5 135.50 28-Aug-15 40 372 Chaba EC Wind 21 21.00 12-Sep-15 41 362 Waainek EC Wind 23.28 23.28 10-Jan-16 42 798 Khi Solar One NC CSP 50 50.00 05-Feb-16 43 002 Bokpoort CSP NC CSP 50 50.00 18-Mar-16 44 168 Solar Capital De Aar 3 NC Solar PV 75 75.00 02-Apr-16 45 0028_004 Noupoort Wind Farm NC Wind 79.05 79.05 11-Jun-16 46 0269_002 Mulilo Sonidix Prieska PV NC Solar PV 75 75.00 22-Jul-16 47 240 Amakhala EC Wind 137 133.70 28-Jul-16 48 490 Stortemelk NC Hydro 4.22 4.22 29-Jul-16 49 0269_003 Mulilo Prieska PV 4 NC Solar PV 75 75.00 05-Aug-16 50 303 Tsitsikamma EC Wind 94.8 93.68 17-Aug-16 51 0338_001 Tom Burke Solar Park LP Solar PV 64 64.00 29-Aug-16 52 0077_001 Paleisheuwel WC Solar PV 75 75.00 12-Oct-16 53 0024_002 Nojoli EC Wind 86.6 86.60 31-Oct-16 26-Nov-16; 25- GP Landfill 8.5 5.28 54 0029_001 Robinsons Deep; Goudkoppies Apr- 17 55 Adams Solar PV NC Solar PV 75 75.00 23-Jan-17 56 Pulida FS Solar PV 75 75.00 23-Jan-17 57 Red Cap Gibson Bay EC Wind 110 110.00 28-Apr-17 58 Xina Solar One NC CSP 100 100.00 01-Aug-17 60 Lingyuan Mulilo de Aar 2 North Wind NC Wind 144 138.96 31-Oct-17 61 Lingyuan Mulilo de Aar Maanhaaberg NC Wind 100.5 96.48 31-Oct-17 62 Loriesfontein 2 Wind Farm NC Wind 138 138.00 08-Dec-17 63 Khobab Wind Farm NC Wind 136 136.00 08-Dec-17 64 Khathu CSP NC CSP 100 100.00 23-Feb-18 TOTAL COMMERCIAL CAPACITY 3910.51 3880.69