Exxaro’s energy, climate change & renewable
energy journey
12 October 2011
Exxaro’s energy and carbon journey
Finalised
IRP 2010
Energy and climate change environment in SA
SA Emissions
Commitments at COP15
Regional electricity
supply shortage
National Load shedding
Cape Town local
load shedding
REFIT
published
Electricity
Price up 22%
2011
2010
2008
2007
2006
- Lekgotla
- Clean Energy
Forum
Exxaro
Business
Growth
structure,
including
Energy
formalised
DoE, RE
IPPPP
Draft
IRP 2010
2009
Energy
identified as
risk issue
Climate Change
Green Paper
- Energy &
Carbon
Framework/
Program
- Energy
business
strategy and
vision
formalised
- E&CM
- Energy
projects
development
- Eco
housing
- E&CM
- Energy
business
formation
The current energy environment presents both
risks and opportunities to Exxaro
Analysis of business
environment
Energy demand projections indicate a power
supply shortage in South Africa
Generation Capacity vs Electricity Demand
Low Demand Growth
100,000
Existing Businesses
Can we match moderate demand growth?
90,000
Long term IPP
Opportunities
How?
At what cost?
80,000
70,000
Available Capacity
MINUS 17% Reserve
Margin
50,000
Short term: How? Peakers,
Co-gen, Renewables?
• Energy Security
• Carbon Footprint
• Improving energy
efficiency
• Carbon offsets
High Demand Growth
40,000
Moderate Demand
Growth
30,000
20,000
Linear (Low Demand
Growth)
10,000
2007
2008
2009
2010
2011
2012
2013
2014
2015
Source: Fieldstone Africa (Pty) Ltd
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
Year
Demand is already suppressed
Energy Supply Shortage
+
120
100
Electricity Price (c/kWh)
MW
60,000
80
60
40
20
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Avg price charged (Frost & Sullivan Forecast - March 2010)
Avg price charged (Exxaro Forecast - July 2010)
Avg price charged (Exxaro Forecast - February 2010)
Energy Price Pressure
+
Carbon Constrained Future
Business Response:
Prepare for a Low-Carbon,
Energy Constrained
Future
Business Growth
Opportunity
• Base load IPP
• Renewable Energy
• Energy and carbon
trading
Develop
portfolio
of energy
projects
Energy and carbon management framework and
programme
2011
2010
2009
2008
2007
2006
Energy
identified as
risk issue
- Lekgotla
- Clean Energy
Forum
Exxaro
Business
Growth
structure,
including
Energy
formalised
- Energy and
Carbon
Framework/
Program
- Energy
business
strategy and
vision
formalised
- E&CM
- Energy
projects
development
- Eco
housing
- E&CM
- Energy
business
formation
Energy & Carbon Management Strategy
Framework
Development of new energy business
2011
2010
2009
2008
2007
2006
Energy
identified as
risk issue
- Lekgotla
- Clean Energy
Forum
Exxaro
Business
Growth
structure,
including
Energy
formalised
- Energy and
Carbon
Framework/
Program
- Energy
business
strategy and
vision
formalised
- E&CM
- Energy
projects
development
- Eco
housing
- E&CM
- Energy
business
formation
Energy Newco’s vision
VISION
Become the leading cleaner energy
Independent Power Producer in
Southern Africa, serving an expanding
energy market
… a share in 16,5 GW
installed capacity by
2025
Key focus areas for Energy Newco
Development of a balanced
portfolio of projects
Formation of Energy Newco
Development of new energy business
2011
2010
2009
2008
2007
2006
Energy
identified as
risk issue
- Lekgotla
- Clean Energy
Forum
Exxaro
Business
Growth
structure,
including
Energy
formalised
- Energy and
Carbon
Framework/
Program
- Energy
business
strategy and
vision
formalised
- E&CM
- Energy
projects
development
- Eco
housing
- E&CM
- Energy
business
formation
Project development
Own Projects
Project
Development
• Continuous
development of the
value of Energy Newco
Acquisitions
IPP Procurement Programme
Energy project pipeline
Base Load IPP
Gas & Fuel
Wind
Solar
Cogeneration
Mpumalanga
Biodiesel
Botswana CBM
(100% Exxaro
owned)
Idea generation
& desktop
studies
Concept studies
Tsitsikamma
Community
Wittekleibosch
West Coast
Wind
Transfer to operations
Reductants
Onsite (100%
Exxaro
owned)
Namakwa
Onsite
(100%
Exxaro
owned)
Conditions Precedent
Tsitsikamma
Expansion
Base Load
Coal
Thabametsi
Investment Decision
AssMang
Mittal Steel
Saldhana
Concept Screening
Samancor
Chrome
Completed Business Case
Lephalale
PV
Possible acquisitions
Pre-feasibility
Feasibility
Build
Operate
Projected cumulative generation capacity
2500
2000
1500
MW
EOS/COGEN
GAS
COAL BASE LOAD
1000
SOLAR
WIND
500
0
2012
2013
2014
2015
2016
2017
2018
Of which Energy Newco will have circa 50% effective
ownership
Development of new energy business
2011
2010
2009
2008
2007
2006
Energy
identified as
risk issue
- Lekgotla
- Clean Energy
Forum
Exxaro
Business
Growth
structure,
including
Energy
formalised
- Energy and
Carbon
Framework/
Program
- Energy
business
strategy and
vision
formalised
- E&CM
- Energy
projects
development
- Eco
housing
- E&CM
- Energy
business
formation
The eco housing project reflects Exxaro’s commitment to
sustainability in the fast growing town of Lephalale
Global
warming and
impact on
resources
The need for
sustainability
Exxaro’s
commitment to
sustainability
The Exxaro commitment to sustainable development
made the need for green housing non-negotiable
To reduce Exxaro’s carbon footprint
Engineering News – 29 April 2009
Garner said that Exxaro was also forming alliances with companies in the renewable
energy field in wind, solar and coalbed methane gas…. “We really want to be big in wind,
and may even move up to 1 000 MW, but let’s talk about 500 MW for a start,” Garner
said
The introduction of energy efficiency goals in the strategy
of the DME
Exxaro Publication - Date released: 5 June 2008
Exxaro commits itself to both national and international protocols aimed at encouraging
countries and industries to adopt more responsible energy use programmes. In
particular, the company has committed to optimising energy use by improving energy
efficiency by 15% by 2015, as outlined in the national energy efficiency accord of the
Department of Minerals and Energy for the industrial and mining sectors.
There is a constraint on the availability of resources in
Lephalale
(i.e. water)
A mixture of housing types to cater for differing needs
and employment grades were built in and around
Lephalale
Housing units were situated within a ±7km
radius of the community centres to create
a mutually beneficial relationship between
the Housing residents and community
businesses
Allocation of housing/flat units:
• 81 housing units in Onverwacht
• 40 housing units in Marapong
• 284 flat units in Onverwacht
• 292 flat units in Marapong
*Housing standards same across all units
A range of green design principles were applied to minimise
the impact on the environment and community
Profilence
Shower
Heads
Waterwise and
Low Maintenance
Gardens
Thermov
ents
In conclusion
Finalised
IRP 2010
Energy and climate change environment in SA
SA Emissions
Commitments at COP15
Regional electricity
supply shortage
National Load shedding
Cape Town local
load shedding
REFIT
published
Electricity
Price up 22%
2011
2010
2008
2007
2006
- Lekgotla
- Clean Energy
Forum
Exxaro
Business
Growth
structure,
including
Energy
formalised
DoE, RE
IPPPP
Draft
IRP 2010
2009
Energy
identified as
risk issue
Climate Change
Green Paper
- Energy &
Carbon
Framework/
Program
- Energy
business
strategy and
vision
formalised
- E&CM
- Energy
projects
development
- Eco
housing
- E&CM
- Energy
business
formation