 Today I'm going to talk to you about energy in South Africa focusing largely on the electricity sector and how the sector is likely to transition in the future. So the title of my presentation is a story unfolding and you'll see why in the sense of as with the case of Vietnam there's still this debate about which direction South Africa will be going in and it's actually a very critical time for policy makers in terms of making the right decisions. So historically and even today coal remains the main fuel source for energy in South Africa in 2015 it was about 73% of primary energy use. The power sector is also highly dependent on coal with coal accounting for 74% of capacity and 82% of total generation. The power sector is therefore the largest consumer of coal in the country consuming around 120 million tons each year. There are other key demanders of coal in the country such as liquid fuel sector as well as industry. So historically planning well not just historically but planning in South Africa in terms of electricity capacity has continued to focus on coal as a primary source of generation. So the graph on the left which is this one over here shows you the integrated resource plan in 2010 for South Africa and the graph on the right shows you the plan for 2016. So the integrated resource plan is essentially government's electricity plan for electricity production in the country and while the 2016 IRP has been released the 2010 plan still remains the official plan of government as the 2016 plan was not approved. But what you can see from the two graphs is that coal is still dominant in 2020 and still plays a very important role in 2030 according to official government plans. If you compare the 2010 and the 2016 IRPs which you can also see is that the amount of capacity that's expected to be added has come down and that's because electricity demand in South Africa has decreased over the last 10 years as electricity prices have increased by almost 350%. The increase in electricity prices was driven by coal and labor costs and then also the underway capital costs of coal power production capacity bills. Another important point to highlight is that the declining demand in South Africa for electricity along with the additional commitment to build another two coal power stations has actually resulted in a surplus of electricity supply in the country where the existing capacity is able to meet demand up until 2025. So while planning has focused on coal, renewable energy resources have been included in the official plans and this has taken place through the renewable energy independent power producer program, it's a really long, long word, which is a bidding program essentially for private investment into renewable energy. The private generation of electricity is then sold to the National Electricity Operator Escom, which then further sells it on to customers. So to date, there's been four bed windows and two smaller bed windows which has resulted in an additional capacity of about 6.8 gigawatts. Not all of this however is operational. Currently only around 3.8 gigawatts is operational. However, the RI4P program has resulted in significant declines in the prices of wind and solar PV in South Africa from the first bed-journed window in 2011 to the most decent window in 2015. And what we saw in terms of the prices that came from the bed-journed windows in 2015 was that wind and solar was actually now competitive with new-build cost estimates for other technologies such as coal, nuclear and gas. So further adding to the argument that now renewable energy is a competitive technology for electricity generation in the country. In addition to, or rather with the RI4P program has also tried to do in the country is to place a significant focus on the localization of renewable energy industry and has done this through minimum requirements for bidders. And this has actually led to the development of several manufacturing companies in South Africa. However, last year there was a delay in the national regulator signing the new RI4P programs which actually resulted in many of these manufacturing companies closing down. So what we can take away from this is that in order for us to build up any sort of benefits associated with renewable renewable lighting in terms of localization, a firm commitment from government is required. Costs of renewable energy in the country is also expected to continue to decline. So estimates from the Energy Research Center at the University of Cape Town shows that under conservative assumptions solar PV and wind costs would decline by 35% and 18% by 2050. Whereas under optimistic assumptions that's largely regarding faster learning rates, we could see solar PV and wind costs come down to by 58% and 37% to 2050. This is already after the significant declines in prices that we've seen. So South Africa is also reported to have some of the best solar resources in the world resulting in high solar PV energy yields. So this is evident in the picture which is illustrated over here on the left with darker shades of red show higher potential kilowatt production levels. So about 220 gigawatts of potential has already been identified in what is called renewable energy development zones. So these are geographical areas that are being visited by government to be sort of hubs for renewable energy expansion in the country. However, 72 gigawatts of solar PV, a rooftop solar PV has also been identified in South Africa. So this suggests that potential in terms of solar PV is almost 300 gigawatts and to place that into context South Africa's entire power system is only 40 gigawatts. So there is a significant amount of resource and similarly with wind there's also a large potential for wind power generation with between 55% and 65% of South Africa's land area being deemed technically recoverable with wind capacity exceeding 35%. So in addition to having these resources we find that the supply of solar PV and wind when they're combined is also really or highly complementary to electricity demand in the country. So the graph presented over here shows the demand coverage factors for South Africa and for Denmark and what you can see is that 50% of the weeks in the year you have a very good demand coverage factor typically matches ideally it will vary well. So it implies that including a balanced combination of variable wind and solar PV into the South African power generation mix will not contribute significantly to rapid fluctuations in the power system. So this slide shows three decent studies that were done on optimal power generation planning in South Africa. So they cover the studies of right, it's all Mervyn and Riba. Right and Riba use extensive adequacy testing at very high temporal resolution and only consider the electricity sector in the model that they used whereas Mervyn's in the case of the paper by Mervyn the resolution isn't as detailed but it does consider the full energy system and sort of one of the key findings or one of the key things that comes out of competing these three papers is that one there's a large adult for variable renewable energy in South Africa. Based on the papers by Right and Riba we see that this is also sort of it's technically feasible because these models are at such a deeper resolution and then the third point to make from this is that the solar PV and so no real new capacity is needed over the medium term to 2025 and these models are also producing very similar results in terms of what the optimal mix or the least cost generation mix for South Africa is likely to be. So generally what we see is that the capacity expands by four gigawatts in the case of wind and three gigawatts in the case of solar PV after 2025 to 2040. So in the paper by Mervyn solar PV and wind capacity just 20% and 16% of total capacity by 2030 and if we compare that to sort of the most recent government plan which was quite optimistic for government plans on renewable energy they've only saw the potential for 9% and 13% by 2030. So what does this mean in terms of generation? So it equates to about 68% of total generation by 2050 and other studies that have considered more optimistic prices than the studies by Mervyn and others have actually also included the endogenous retirement of coal power stations so coal power stations that closed down before reaching the end of life have actually shown that the contribution of variable renewable energy to total generation in South Africa could be as high as 80% by 2050. So I'm just going to focus a bit on the work that was done by Mervyn and others and what they looked at was the impact of constraining solar PV and wind inclusion in electricity planning which is what or rather has been the way government has approached it thus far to a case where one allows basically for two optimal cost plan. So in the case of the capacity or additional capacities from solar PV and wind are limited per annum the graph shows the green line of the graph shows us the electricity price in that scenario and the blue line shows us the electricity price in a truly scarce scenario and what you can see is that when you remove these cap limits on how much solar PV and wind can be added there are significant gains that can be made in terms of electricity prices in the country. So by 2030 and 2050 we see that the electricity price is 6% and 13% lower respectively and in a country such as South Africa where we've already seen the significant of rapid rising of electricity prices and slowing down interjecties is definitely what we want. So one of the models that was sort of developed or that was developed under the UNU wider program so this was developed by the energy research center with UNU wider and the national treasure of South Africa was the development of a linked energy economic model so the model combines the energy research center's bottom up energy model with the national treasure esage model which is a dynamic computable general equilibrium model. So what this framework allows for is that the strengths of each model can be maintained while suggesting some of the disadvantages or weaknesses of each model in trying to do sort of analysis of energy systems and economic development. So to give you an example in the case of the energy model the demand for electricity or rather economic growth is generally an exogenous variable so it doesn't change over time so regardless of what happens to electricity prices depending on your generation mix there's no impact on there's no behavioral impact or behavioral response to changes in terms of electricity demand but by linking the energy and the economic models we now have this interaction. So the way the models work so the economic model passes on the economic model passes information onto the energy model with regards to economic growth by sector and then also household income growth. The energy model would then use this information to determine what energy demand is likely to look like based on expectations regarding efficiency improvements etc and then it solves optimally for an electricity mix that would meet the required level of demand. The outcomes from this model which include the expenditure plan or the investment plan required for the electricity sector as well as the electricity price and also any sort of behavioral changes on energy demanded is passed from the energy model to the economic model. So that allows for the economic model to then solve for the growth path of the country and these models sort of they done iteratively over time such that the models converge and you have a solution where you actually you have an optimal energy mix for the country and you also understand what the economic implications of that mix is and it's a very powerful tool for analyzing changes in technology mix looking at different government plans but also for understanding climate change and the impacts of meeting emissions or emission targets in South Africa. So we used the link model to further the work that was done by Mervin. So Mervin's work was done in a purely energy model and now we've used the economic model to see well what is the economic impacts of increasing renewable energy in South Africa. We did it for conservative as well as optimistic renewable energy prices so that's the blue and the yellow bars respectively and what we find is that increased variable renewable or the increase of renewable energy in the technology mix in South Africa can actually lead to higher growth and employment in the country but this is dependent on the availability of labour resources in the country so we would we need to make sure that the skills that are required to enter into the sector is available to meet the demand. So generally we find that these positive impacts extend across sectors in the country although the coal mining production sector does experience a decline in a loss in employment and we also see that this higher welfare impacts across all groups of households. The shift from coal to renewables also allows for significant declines in emissions so this graph shows us the electricity sector emissions in South Africa under a scenario of increased renewable energy and you can see that power sector emissions decrease from about 250 mt to about 100 by 2050 and this decreases the share of the electricity sector's contribution to emissions from 55% to 28%. So in a different piece of work that was done but which also looked at including the most decent costs on solar PV and wind for South Africa what we actually see so the graph of a year shows you emissions by sector in the country and the dotted line shows you sort of the upper limit and the lower limit of government's nationally determined contribution and what it's showing us is that purely by just considering or switching to renewable energy this is without any additional mitigation policy being added by government. South Africa has the ability to reach its peak upper peak plateau and decline commitments from 2020 and almost to reach the median of that commitments and that's purely just with reducing emissions in the power sector. So more recently the South African government has released an integrated resource plan for 2018 and for the first time one of the scenarios that was provided by the plan was actually a least cost generation which is awesome because they're actually looking at that now before it was very much sort of capping certain technologies and this graph shows the government's 2018 IRP relative to the previous studies that I showed and what you can see is that the least cost option even under government planning aligns quite well with the studies that have been done and I think it relatively just or rather compete to the CSRR and say this is the paper that was by right and by Mervin and they've got a bit more solar than what is expected in the 2018 IRP which has a bit more gas but that's more in line with what NL was expecting for the paper by D but rather. Okay so that being said they have acknowledged the least cost optimization scenario. The recommended plan however that was put forward by government is to continue to cap solar PV and wind and they find that the investment cost of doing this is higher but they also their reasoning for doing this is to provide more time for a social change or more time for development in the country but that plan is still has not yet been finalized it's still undergoing a two-month public consultation period in which hopefully we'll be able to change their minds to remove these caps that they would like to include and allow for a least cost or two least cost electricity system in the country. Okay so just the three sort of key messages from my presentation is large amounts of renewable energy can be included in South Africa. It decreases emissions and we find that we no longer face this trade of about cleaner energy and economic development. Cleaner energy can actually lead to economic development particularly if we try and localize these industries within the country. A really important topic of popular topic in South Africa now is well what does this mean for coal mining communities in South Africa because you've got certain areas in South Africa that are completely based on the coal mining activity and because coal mines are negatively impacted by coal by the decrease in coal demand for the electricity sector. Government does need to think about a transition plan and how it can mitigate negative effects on on the sector. However just to add to that a paper that was done by Burton and others in 2018 has shown that the coal mining sector in South Africa is already facing significant challenges. It's got rising coal costs, rising transport costs, electricity is becoming, well rising electricity costs as well and then also there's a significant risk from the global environment in terms of a decrease in demand for exports. So while we can't say that the coal mining sector decline is inevitable that's a bit of a strong statement to make. It is a really high likelihood and it is something that the South African government needs to start thinking about in terms of how do we transition away from coal and how do we sort of minimize the impact on these communities. And then lastly we've got the 2018 integrated resource plan which acknowledges the important role of renewable energy but it continues to cap the inclusion of solar PV and wind to 2030 and that's me. Thank you.