Presentation to Portfolio Committee on Energy - Eskom Holdings Ltd 15 March 2011 - Amazon AWS
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Presentation to Portfolio Committee on Energy 15 March 2011 Eskom Holdings Ltd
Update of Eskom’s
Capital Expansion
Programme
Paul O’Flaherty
Finance Director
2
1. Business overview
2. South Africa requirements and the capital expansion programme
3. Alignment with SA macro-economic principles
4. Costs and funding
5. Conclusion
3
Eskom at a glance
• Strategic 100% state-owned electricity utility, strongly Eskom power grid(1)
supported by the government
• Vertically integrated across generation, transmission and
distribution
• Supplies approximately 95% of South Africa’s electricity
(45% of the total electricity consumed in Africa)
• 40 887 employees as at 31 December 2010
• Serves 3 000 industrial, 1 000 mining, 48 000 commercial,
84 000 agricultural and more than 4 million residential
customers
• 27 (including 1 nuclear) operational power stations with a Existing grid system Thermal power station
Possible future grid system Future interconnection substation
net maximum capacity of 40.87GW as at 31 March 2010 Future hydroelectric power station Nuclear power station
Future thermal power station Future gas station
Hydroelectric power station Gas power station
• Total electricity sales of 218 591GWh and total revenues of Interconnection substation Town
R71.21bn for the year ended 31 March 2010 (R71,6bn for 9
months ended 31 December 2010) Eskom’s net capacity mix – 31 March 2010
Total: 40.87GW
• Infrastructure includes 390,338km of power lines and
cables (all voltages) as at 31 March 2010
• Committed to build 17GW new generation capacity
expected by 31 March 2018. This includes 5,032MW
already commissioned as at 31 December 2010
(1) The map indicates the South African power network and interconnections with neighbouring countries
4
Generation
• Operates Eskom’s generation plants Key figures
• 27 power stations: 13 coal, 4 gas / liquid fuel turbines,
Financial Year 2009 Financial Year 2010
6 hydro electric, 2 pump storage, 1 nuclear and 1
wind
Net Capacity (MW) 40,506 40,870
• Total net capacity of 40,870MW as at 31 March 2010 Capacity from Coal (MW) 34,294 34,658
Coal Share in Total Capacity 84.7% 84.8%
• Approximately 85% of net capacity is coal-fired
Capacity from Nuclear (MW) 1,800 1,800
• Koeberg nuclear power plant Nuclear Share in Total Capacity 4.4% 4.4%
Total Output (TWh) 229 233
• 1 800MW net capacity Production from Coal (TWh) 212 216
Coal Share in Total Output 92.6% 92.8%
• 12 806GWh electricity produced from nuclear in Production from Nuclear (TWh) 13.0 12.8
year ended 31 March 2010 Nuclear Share in Total Output 5.7% 5.5%
• 17 000MW of new capacity plans committed
expected by 31 March 2018 (including already
commissioned since 2005) Reserve margins
• 10 896MW of new capacity to come from three
projects
• Medupi: 4 764MW coal-fired; first unit expected 15% international norm
and Eskom target
to be commissioned in 2012
• Kusile: 4 800MW coal-fired; first unit expected to
be commissioned in 2014
• Ingula: 1 332MW pumped storage; expected to
be commissioned in 2014
• Reserve margin of 15,1% for the nine months to31
December 2010, up from 5,6% as at 31 March 2008
and above international norms and Eskom’s target of
15%
• No load shedding since April 2008 5
Transmission and Distribution
• Total electricity sales of 218,591GWh and more
Key Figures – 31 March 2010
than 4,46 million customers (including transmission
2010 Gross Electricity
customers) as at 31 March 2010 2010 Sales Split Revenue Split Customers
Total: 218,591GWh Total: R69,942m Total: 4.46 million
• Directly provides electricity to 45% of all end users
in South Africa
• Country split into six regional distribution areas
• Two main types of customers:
• Redistributors: Mainly municipalities that sell
electricity to residential customers. Eskom bills
the municipality; the municipalities are
responsible for billing and collecting their own
tariffs
• Direct customers: Industrial, commercial,
mining, agricultural and residential consumers
Energy Losses
• Key Sales and Customer Service unit (‘KSACS’) NERSA 2010
deals with customers using more than 100GWh of 2008 2009 2010 Target
energy per year
Distribution losses 5.47% 5.46% 5.87%
1. Business overview
2. South Africa requirements and the capital expansion programme
3. Alignment with SA macro-economic principles
4. Costs and Funding
5. Conclusion
7
IRP 2010 – balanced scenario
8
The future
• South Africa needs to create ~40 800MW of new electricity capacity by
2030 – more than doubling the current requirements
• This assumes decommissioning of 10 000MW of existing capacity
• There will be two periods in the next 20 years when the risk of supply
interruptions significantly increases in South Africa
• from 2011-2013, and then again …
• from 2018-2024
• South Africa needs to take urgent action in 2010 in order to ensure
security of supply for the country for the next 20 years
9
Eskom Capital Expansion Programme – began in
2005
Mpumalanga
Return-to-service (RTS) New Baseload Peaking & Renewables Refurbishment Transmission
Komati Medupi Ankerlig Arnot 765 KV projects
Camden Kusile Gourikwa Central projects
Grootvlei Ingula Northern projects
Sere Cape projects
3,720MW 9,564MW 3,516MW 300MW 4,000km
Commissions of new stations
First Unit Last Unit 17,000MW of new capacity
(5,032MW commissioned )
Medupi 2012 2016
Kusile 2014 2018 4,000km of required transmission
Ingula 2014 2014 network (3,103km commissioned)
Medupi is the first coal-generating plant in Africa to use supercritical power generation technology
10Progress to date (as at 31 December 2010)
• To date, a large amount of construction work has been completed, adding ~5,031.8 MW,
~3,103.40 km of transmission network, and ~15,670 sub-stations . . .
Megawatts
MW of capacity 125
452.5
1,769.9
1,042.6 5,031.8
1,351.8
0 290
Transmission
278.80
Km line 600.30
418.30
480
430 3,103.40
237
659
Substations
3,940
1,630
MVAs 1,375
1,355
1,000
5,280 1,090
15,670
FY FY FY FY FY FY FY Total
2004/5 2005/6 2006/7 2007/8 2008/9 2009/10 2010/11
11Of the new capacity being installed, baseload coal-fired power stations
account for 73%, while the peaking portfolio (OCGT, pumped storage,
wind) will contribute the remaining 27%
Of the coal-fired power stations, all but
Medupi are located in the
Mpumalanga province. Medupi is in
Lephalale (Limpopo province). Medupi
Kusile
Arnot
Peaking Komati
Grootvlei Camden
Ingula
New coal
Return To Service Sere
Ankerlig
Gourikwa
Capacity upgrade
12Key Transmission projects
Medupi
integration
East Grid
765kV
Ingula
integration
Cape
corridor
Southern
Grid
765kV
13 13While there is quite some progress already, there is a lot
more construction work to be done in this programme
The main technical KPIs are on track. . .
Installed to date
Not yet installed
29% MW
MW installed ~5,031.8 ~12,188.5
~17 220.3
78% Km
Transmission
~3,103.4 ~896.6
lines installed
~4 000
76% MVAs
Substation ~15,670 ~4,930
projects
~20 600
14Focus is now on Medupi, Kusile, and Ingula - the first units
will come on line between 2012 and 2014
Construction activities 1st unit commissioned Fully commissioned
started December 2012 Mid 2016
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Fully
Construction Construction 1st Unit commissioned commissioned Fully commissioned
Fully commissioned
1st unit commissioned
January 2014
activities started activities started September 2014
October 207
December 2014 October 2017 December 2018
October 207
•Medupi Power Station Kusile Power Station Ingula Power Station
•Execution partner: Execution partner: Road works
•Coal supply Coal supply Civil works
•Boiler Boiler
•Turbine Main Civils
•Enabling Civils Infrastructure
Turbine B&E Quanza
•Main Civils Enabling Civils
Dam construction Concor
-Silver -WBHO
Rock
•Generator transformers Generator transformers Edwin
15Build programme overview
Medupi Kusile Ingula
Project Summary Project Summary Project Summary
► Greenfields Project – Lephalale ► Greenfields Project – Delmas ► Greenfields Project – Ladysmith
(Limpopo Province) (Mpumalanga Province) (KwaZulu Natal Province)
► 6 Unit Coal Fired Power Station ► 6 Unit Coal Fired Power Station ► 4 Unit pumped storage power
station
► Planned capacity 4,764MW ► Planned capacity 4,800MW
► Planned capacity 1,352MW
Financial & Economic Impact Financial & Economic Impact Financial & Economic Impact
► Projected project cost to ► Projected project cost to completion ► Projected project cost to
completion ~R98.900 bn (excl. ~R121,000 bn (excl. IDC) completion ~R21.377 bn (excl.
IDC) IDC)
► Estimated 25% impact on Delmas
► Estimated 95% impact on town GDP ► Estimated 7% impact on
Lephalale town GDP Ladysmith town GDP
Project Schedule Project Schedule Project Schedule
► Construction commenced March ► Construction commenced Mid 2008
2007 ► Construction commenced Mid
► First Unit planned to be 2006
► First Unit planned to be commissioned December 2014
commissioned December 2012 ► First Unit planned to be
► Subsequent Units 2 & 3 at 12 month commissioned January 2014
► Subsequent Units at 6 to 9 month intervals and Units 4, 5 & 6 at 8
intervals thereafter ► Subsequent Units at 3 month
months thereafter
intervals thereafter
► Last Unit planned for ► Last Unit planned for
commissioning late 2015, mid ► Last Unit planned for
commissioning during December
2016 commissioning during September
2018
2014
16Build programme overview
Return to Service Transmission Mpumalanga & Other
Projects Summary Project Summary Projects Summary - Mpumalanga
► Refurbishment and return to service of ► Transformers – 20 600 MVAs: ► Major refurbishments of existing and
previously moth-balled coal fired •765kv (Planned: 12,000 MVAs) operational power stations, i.e.
power stations in Mpumalanga. Duvha, Matla & Kriel.
•Cape Grid (Planned: 1,500 MVAs)
- Camden (8 units – total 1,600MW) ► Arnot capacity increase (300MW).
•Northern Grid (Planned: 3,500 MVAs)
- Komati (9 units – 1,000MW) ► Majuba Rail infrastructure for coal
•Central Grid (Planned: 3,600 MVAs) supply for the operational Majuba
- Grootvlei (6 units – 1,200MW)
► Transmission Lines – 3,977.5 Km: Power Station. CO planned for August
2014.
Financial & Economic Impact •765kv (Planned:1,689.9 km)
► Camden Rail infrastructure for coal
► Projected RTS cost to completion •Northern Grid (Planned: 1,253.6 km) supply for the operation Camden
~R23.477 bn (excl. IDC) power station.
•Cape Grid (Planned: 621 km)
Project Schedule •Central Grid (Planned: 413 km) ► Tutuka Brine Project to reduce
► All 8 units at Camden power plant are amount of brine in water.
now in commercial operation Financial & Economic Impact ► Projected Mpumalanga Projects cost
► 3 units, each rated at 125MW, have ► Projected Transmission cost to to completion ~ R12.950 bn (excl.
been commissioned at Komati power completion ~R27.800 bn (excl. IDC) IDC)
station. Last unit (unit 1) planned for Other Projects (not part of original)
Project Schedule
handover May 2012. (Projected completion dates) ► 100 MW Greenfields pilot Wind Farm
► 4 units, each rated at 200MW (total ► 765kv: December 2013 (Sere) project on the West Coast. CO
800MW) have been commissioned at planned for October 2013.
Grootvlei. Last unit (unit 6) planned to ► Northern Grid: June 2015
► 100 MW Concentrated Solar Power
be completed end March 2011 ► Central Grid: Mar 2015 (CSP) pilot plant project. CO planned
► Cape Grid: Aug 2016 for December 2015.
17Kusile and Medupi will be the third and fourth largest coal-
fired power plant in the world, respectively,…
Higher than Sandton 4x more investment than
City Towers Gautrain
Coal-fired power plants (MW)
1▪ Taichung (Taiwan, 7 1001)
2▪ Waigaoqiao (China, 5 000)
3▪ Kusile (South Africa, 4 800)
4x
4▪ Medupi (South Africa, 4 764)
~113m
5▪ Zouxian (China, 4 540)
6▪ Kendal (South Africa, 4 374)
7▪ …
8▪ …
Medupi
18existing + 1 600 planned
1 = 5 500 18…requiring huge amounts of materials and large
transport effort in their construction
Characteristics of Medupi/ Kusile
▪ … to build 4 Greenpoint stadiums will be
Concrete… used per plant
Parts and ▪ …weighing the same as 14 super tankers
cement… will be transported over land
▪ …to build one of the world’s tallest
Steel… buildings (The Burj Khalifa) will be used
▪ …of materials to site is equivalent to at least 40
Transport… times around the world
191. Business overview
2. South Africa requirements and the capital expansion programme
3. Alignment with SA macro-economic principles
4. Costs and funding
5. Conclusion
20As such, the programme will have significant impact on local
industry, skills, jobs, infrastructure and regional development
1 2Local skills 3 4 5Regional
Local content development Jobs Infrastructure development
>50% of local content
Rapid growth in SA’s ~40 000 jobs created, Development of roads Spend and invest-
directly benefiting the skills pool ment in local areas
directly and indirectly and railways
SA economy
1 Based on GDP in 2008
SOURCE: Eskom Enterprises division and Medupi project, STATS-SA 21A large share of the Medupi, Kusile and Ingula spend will go
to the local economy, thereby also benefitting local
construction companies
%
Composition of
total project Examples from Medupi, Kusile, and Ingula
spend
Main civils
Main civils (MPS-JV):
Medupi 42% 58% 84% of contract (~2,5bn) are
Foreign Local
spent locally
Main civils
Main civils (KCW-JV):
Kusile 56% 65% of contract (~2,9bn) are
44% Local
Foreign
spent locally
Access roads package
26%
Ingula Foreign Main civils (Grinaker-LTA):
100% of contract (~0,3bn)
74%
Local are spent locally
SOURCE: Medupi, Kusile, and Ingula project management 22Many skills are being developed as local content
requirements kick-start whole new industries in SA
New fabrication and training facilities 90% of major orders placed
established on Mechanical equipment
Equipment Local content
▪ Brand new fabrication facility built Air Cooled Condenser (ACC)
in Nigel >90%
– Boiler Membrane Wall Workshop Major pumps >55%
– Two new CNC Benders commissioned Heaters >45%
– New welding training centre
– CNC header drilling machine LP outer casing Unit 6 100%
Feedwater tank >80%
▪ Training facilities in Pretoria and in
Wadeville Heaters Drain recovery pumps >20%
SOURCE: Medupi project management 23The programme will fuel demand for relevant graduates and
artisans and will grow the wide required skill base
Medupi would …
… consume 43% of a year’s relevant
university graduation (engine-
ering, project planning, etc.)
… deploy 48% of a year’s output
of artisans
… rapidly grow South Africa’s supply
of engineers, artisans, R&D and
project management experts
… develop a wide range of additional
skills through ASGI-SA commitments
SOURCE: Eskom Enterprises division and Medupi project 24Across Medupi, Kusile, and Ingula new employment
opportunities will touch the lives of ~160 000 people
Medupi Kusile Ingula
DIRECT
On site construction 8 300 7 200 4 100
Supporting project staff 2 200 2 000 300
Coal mine expansion 2 100 2 000
Transmission expansion 2 700 200
Crocodile River expansion 3 000
Ongoing operations 700 600 100
Subtotal ~19 000 ~12 000 ~4 500
INDIRECT
Social services + 1 700 1 700 1 100
local business
Total employed 20 700 13 700 5 600
x family multiplier x4
(4/family)
People directly impacted ~160 000 Other projects such as 765kV and
RTS provide
by Medupi, Kusile & Ingula ~ 11 000 direct employment
opportunities during construction
and a further ~1 700 during
operation
SOURCE: Eskom Enterprises division and Medupi project 25Medupi, Kusile and Ingula will support local and
national infrastructure
Area of impact Example
National infrastructure Richards Bay to Lephalale and Lephalale bypass 22 km of new
Roads
roads reinforcing of 3 bridges: >R500bn, 500 jobs
Ongoing roads maintenance Maintenance of local access roads: > R100m p.a.
Freight forwarding Richards Bay facility: R90m, 150 jobs
3 x 38 wagon train per day for limestone, 2 x 12 tank carriers per
Trains
year of oil maintenance or rail lines: 100 jobs
Local infrastructure Catering and workforce Food, laundry, maintenance security supplied to workforce:
supply >R2bn, 1 000 jobs
Hotels Hotels to expand significantly
Local transport Additional buses at peak, increased taxis: ~500 jobs
Vehicle maintenance 1 000+ extra vehicles maintained locally: 50 jobs
3 300 houses and accommodation units to be built by Eskom and
Housing
suppliers: ~R4bn
Water Benefit from Crocodile River diversion pipeline from Kendal
Sanitation Sewerage plant upgrade: R50m
7 schools impacted, increased policing, recruitment centre, fire,
Social facilities
social club, ICT centre. Ongoing work with stakeholder forums
SOURCE: Eskom Enterprises division and Medupi project 265 Each project will measurably impact the local towns through
local spend & investment
Impact on local town’s
GDP from each project
Lephalale (Medupi) 95%
Delmas (Kusile) 25%
Other businesses and
Ladysmith (Ingula) 1% infrastructure created:
• Catering
• Laundry
• Building companies
Typical local businesses and infrastructure created
• House maintenance
• Hotels
• Entertainment
• Training facilities
• Security
Shops Civil infrastructure • Schools / education
• Policing
• Churches
• Medical care
• Banks & financial
services
Schools Transport
SOURCE: Eskom Enterprises division and Medupi project 271. Business overview
2. South Africa requirements and the capital expansion programme
3. Alignment with SA macro-economic principles
4. Costs and funding
5. Conclusion
28Significant progress in build programme
R billion spent and to be spent
(excluding borrowing costs capitalised)
% completion as at 31 December 2010
17.7%
121.2
38.6%
98,9
52.5%
33.1% 88.8%
27.4
23.5
21.4
16,3
5,2 6,6
23,7
29Strong Government support
The Government, through the Department of Public Enterprises, is the sole shareholder and after consulting
with the Board appoints the Chairman, the Chief Executive and Non-Executive Directors
The Government recognizes Eskom’s critical role in the economy and remains committed to ensuring Eskom’s
financial stability
To ensure Eskom has the financial resources necessary to deliver on its R550bn(1) capital expenditure up until
the 2017 financial year, the Government has committed R430bn financial support to Eskom:
In 2008 Government committed a subordinated R60bn loan to Eskom. R55bn disbursed so far with the
balance by 31 March 2011
In 2009 Government approved R176bn of debt guarantees to be used over 5 years. R117bn utilised as at
30 September 2010
Under the guarantee, the rights of Government are subordinated to all other unsecured and
unsubordinated creditors of Eskom, including the holders of the proposed Note issuance
In October 2010, Government announced that it would extend its guarantees for Eskom by a further
R174bn to a total of R350bn
In November 2010, Government announced a proposal for an additional equity recapitalisation of R20bn
(subject to internal Government approval) into Eskom to help it fund its capital expenditure.
(1) In 2005 Eskom embarked on a R340bn capital expansion programme that is planned to achieve additional capacity of 17GW by 31 March 2018
30Funding plan
• Eskom’s funding plan has been finalised with the Department of Public Enterprises, Department of Energy and National Treasury
• R300bn total funding requirement over the next seven years (from 1 April 2010); including R550 billion of capital expenditure of
which R250 billion relates to the completion of the capacity expansion programme (total cost R340billion)
• R300bn funding secured or identified as at 30 September 2010
• R160bn to come from bond and commercial paper markets
• R95bn from development finance institutions and export credit agencies
• R40bn from the government (R20 billion loan and proposed R20bn equity recapitalisation)
• R5bn from other sources
• Government guarantee facility increased to R350bn (R174bn increase)
• S&P and Moody’s have reaffirmed Eskom’s investment grade ratings under this funding plan and removed the negative watch
Eskom’s expected and assumed 7-year funding plan
ZAR bn
Eskom secured or identified R300bn of funding over the next seven years
311. Business overview
2. South Africa requirements and the capital expansion programme
3. Alignment with SA macro-economic principles
4. Costs and funding
5. Conclusion
32Expansion programme challenges - since inception
The market
The market within which Eskom is operating is extremely tight, with significant demands
on supplier capacity and basic commodities being a feature since 2005
Contracting and risk sharing
New thinking on contracting and risk sharing has become essential based on the
following:
•Global demand for new plant is high
•The supplier market is global and limited
•Supplier market experiencing shortages of material, components and engineering
capacity
•Fixed price or construction commitments cannot be secured
•Increased demand for power plants leading to significant escalation in prices
•Seller’s market, not a buyer’s market
•Contract and risk-sharing profiles fundamentally changed
Timeline
Given the reserve margin, the Eskom programme is working with very tight timelines
33Expansion programme challenges - since inception
Funding
Eskom clearly finds itself in a very challenging funding environment. Until October 2010, Eskom did
not have a full funding plan to complete the capacity expansion programme
Safety
Despite the importance of executing projects on a tight schedule and within a tight budget, it is
Eskom’s firm belief that safety is the most important objective of all. The inherent risky nature of major
construction activities requires constant management and leadership
Skills development
•The build programme is used to contribute to skills development and facilitate manufacturing
capability in South Africa
•Skills remain a significant factor for Eskom. The competition for skills is fierce, both internationally
and locally
Local communities
The new build impact on local communities is massive – housing, education, safety, health services
and social impacts
34In conclusion, since 2005 until today
• The new build programme is significant by any measure. Cost increases are understood and taken
into account, lessons have been learnt and implemented for future projects and across existing
projects.
• Good progress has been made, but many serious risks will need to be carefully managed in the
future. Strong mitigating measures have been put in place to manage these risks.
• The global financial crisis has affected all sectors of the economy, Eskom included. This led to a
review of the build program taking into account:
• Financial contractions of the markets,
• Resultant re-prioritisation of certain capacity projects and
• Delaying the execution of some of the projects at certain times since 2005; full go ahead on
Kusile was given in October 2010
• Macro-economic factors have negatively impacted the build programme:
• CPA, and
• Cost of cover and other market forces
35State of the Power
System – Current
Situation and Future
Prognosis
Kannan Lakmeeharan
Divisional Director: System Operations and Planning
36Table of contents
Introduction
Reflecting on what we said
What Eskom is doing
What SA can do to help
Conclusion
37Introduction
We have said 2011-2012 will be tight. Now 2011 is here.
• The supply-demand margin will remain slim for the next 5 - 6 years and in particular the next 2 years.
Overview • Peak gap in 2012 equivalent to 9TWh – supply to Cape Town for a year.
• Plan in place that requires all stakeholders and citizens to work together to keep the lights on.
• Support from Government will ensure Eskom’s new build programme is completed.
• Procurement of 1 025MW renewable generation in the next 3 years.
Supply-side • Signing up co-generation and municipal generation on short to medium-term contracts (minimum of
600MW).
Initiatives
• Eskom will improve its plant performance over the next 3 years.
• Create an enabling framework to support own generation options.
• Support Government’s million solar water geyser rollout programme by 2012.
• Eskom will execute its planned demand-side management programme and aim to accelerate it by 25%
Demand-side over the next 6 years.
Initiatives • Eskom will aim to contract incentivised demand response from its customer base.
• Call to voluntarily save 10% across the customer base through campaigns.
• Need “safety nets” as last resort to prevent disruptive load shedding.
• Energy Conservation scheme enables mandatory savings from largest 500 customers.
Safety nets • Demand response programmes aimed at smaller customers to respond to price and system signals.
• Running Eskom’s open cycle gas turbines harder
• Switch off if you are not using it.
• Respond to the Power Alert messages on TV and other campaigns by Government and Eskom.
Call to action
• We can meet our resolve to never load shed again if we all work together. It is good for our economy and
for our environment
38Keeping the lights on: the next seven years
The system will be constrained
Annual energy gap for 2010 to 2017 under base case outlook, TWh shortfall
9 TWh is equivalent
to ~1000 MW
baseload capacity
2010 11 12 13 14 15 16 2017
Assumptions
Eskom estimate of the IRP2010 moderate load forecast (~260 TWh in 2010);
New build (e.g., Medupi, Kusile, Ingula) and RTS at current dates; REFIT as per IRP1 (1GW by FY2018);
DSM as per base plan (3.9 GW by FY2018); Planned maintenance allocation39 increased to ±10% 39Ensuring security of supply in the next 3 years
• Eskom’s generation plant performance and new build programme
• Ensure critical plant maintenance is done to ensure sustainable plant performance.
• Target to improve generation output by between 1% and 2%.
• Energy efficiency initiatives
• Eskom will need to execute its 4TWh demand-side management programme and do
more with its funding and internal energy efficiency programme (target is 1 billion kWh).
• Enabling the 1 million solar water geyser programme run by Government.
• Own and co-generation
• Sign up about 400MW of co-generation and own generation by April 2011.
• Procurement process for 1 025MW of renewable energy technologies, to be
commissioned in the next 3 to 4 years, should start as soon as possible. Eskom is
ready to connect and pay the IPPs.
• Investigating mechanisms with NERSA and Government to ensure already
commissioned municipality generators produce and further co-generation options are
secured.
• Working with industry and NERSA to finalise a grid access framework to enable
wheeling and own generation.
40Putting a safety net in place
A “safety net” is required in case further risks materialise, which would consist of:
1.Energy Conservation Scheme
• Mandatory and aimed at the largest 500 electricity users
• Will provide certainty of demand (for at least 7 years from those customers
that consume between 50% and 60% of the electricity)
• Will send strong signals to move to energy efficiency
• Imposes mandatory savings targets rather than disruptive load shedding.
2.Demand response initiatives
• Incentive-based demand response programme in place already for our
largest customers; achieves about 500MW.
• Imminent placement of contract with aggregator to obtain nearly 500MW
from the larger commercial and smaller industrial customers. This can be
ramped up to 2 000MW in the next 3 to 6 years.
• Investigation into technologies for residential demand response completed.
3.Open cycle gas turbine use
• The OCGTs in South Africa will have to be run at higher load factors
incurring significant cost.
41SA can prevent load shedding by working together
• There are risks to the successful execution of some of the initiatives identified.
• In the next two years, there is an energy gap and therefore an immediate focus
is needed on implementing the identified actions and establishing a “safety net”
• This can only be done through a national effort involving all stakeholders and
the people of South Africa
• Eskom will play its part in leading and partnering
Energy gap after all the “safety nets” and “levers”
10
5
0
‐5
‐10
‐15
‐20
‐25
‐30
‐35
‐40
2011 2012 2013 2014 2015 2016 2017
Worst case Best Case
42What is Eskom doing currently?
• Plant performance: Creating maintenance windows and targeting improved plant
performance of 1 to 2% in the next 3 years.
• Engaging with stakeholders: Eskom will update stakeholders and the country on a
quarterly basis over the next two years. Management is fully focused on keeping the lights
on and will monitor the state of the system on a daily basis and take action.
• Tackling the coal challenges: Eskom’s coal stockpile levels are healthy (over 40
days). The focus has shifted to improving the coal quality and coal handling at the power
stations. Steps taken have already resulted in improvements in the last 2 months. This is
still a significant challenge.
• Signing up non-Eskom generation:
• Eskom has signed up 373MW through the medium term power purchase programme
and aims to sign 376 MW by April 2011.
• Eskom is supporting certain municipalities to run their generation plant. 410 MW has
been signed up and 260 MW have been operational in the last month.
• Integrated Demand Management:
• Eskom is aggressively rolling out its demand management programme to achieve at
least 1000MW over the next 3 years and will work on accelerating the programme to
achieve 25% more.
• Eskom will aim to achieve 1billion kWh in savings through improved plant efficiency
and energy efficiency initiatives in its operations over the next six years
43What can SA do to help?
• In the next two years, there is an energy gap and therefore an immediate focus
is needed on energy efficiency
• This can only be done through a national effort involving all stakeholders and
the people of South Africa
• A voluntary, incentive-based demand response programme is in place for our
largest customers
• If needed, a mandatory Energy Conservation scheme aimed at the largest 500
customers may be implemented
• Eskom will play its part in leading and partnering
44Good for the environment and good for
the economy
• A 10% saving in consumption
could save up to 20 million tons
of CO2 emissions per annum.
• The demand forecast caters for
the projected growth in GDP
output and therefore any
improvement in energy efficiency
provides an increased reserve to
support this growth. Compared to other countries
with a similar per capita GDP
• Energy efficiency enables (15% variance), SA is more
electricity intensive by a factor
customers to save money and
of 30-85%
assists in shifting to a more This includes countries like
competitive economy. Argentina & Botswana. This is
influenced by the current
structure of the economy
45Energy intensity - based on
World Energy Outlook 2010 new policy projections
Energy intensity for selected countries and regions
toe per thousand Intl. dollars of PPP GDP (IMF 2010)
1.2
South Africa has a higher
1.0
energy intensity as well Brazil
compared to the BRIC countries
and Africa and higher the world Russia
0.8
average. This is influenced by
the current structure of the India
economy.
China
0.6
South Africa
0.4
Africa
0.2 World
0.0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Source: 1) Calculations based on IMF World Economic Outlook, BP Energy Statistics and IEA World Energy Outlook 2010 policy projections.
2) South Africa projection based on trend growth for period 2005 ‐ 2009 since IEA WEO 2010 does not provide policy projection.
46Action needed from households
• “If you’re not using it, switch it off.”
• Geyser: Switch off geysers between 06:00 and 22:00, reduce thermostat to 60
degrees, insulate geyser and water pipes and replace geysers with solar water
heaters using Eskom’s rebate programme
• Lighting: Replace incandescent light bulbs with energy savers, and switch off lights
in unoccupied rooms
• Bathing: Shower rather than bath as less hot water is used, and install an energy
efficient shower head
• Climate control:
• Minimise use of air conditioners by first opening windows to allow cool air to
circulate
• When using an air-conditioner keep the temperature setting between 18 – 22
degrees C
• Insulate ceilings to keep home cool in summer and warm in winter
• Pool pumps: Reduce the operating time to limit water circulation to twice a day and
set the pool pump to operate between 24:00 and 05:00
• Vampire appliance usage - Don’t leave appliances in standby mode. Unplug
cellphone charger
• Participate in the Power Alert programme on national TV (SABC and etv)
47Action needed from commercial offices
• “If you’re not using it, switch it off.”
• Standby electricity: At the end of the day, don’t leave your computer, copier, printers and
fax machines on standby mode
• Lighting:
• Replace inefficient systems - Eskom incentives available
• Motion sensors for meeting rooms and security lighting,
• Reduce lighting levels in parking areas to the minimum legal
requirement during the day, and turn it off at night after the building lights have been turned off
• Climate control:
• Replace inefficient systems - Eskom incentives available
• Maintain a difference of not more than 10 degrees Celsius between inside and outside a building,
• Extraction fans can be turned on at around 04:00 to draw cold outside air through the building to
cool down the structure,
• Close window blinds to shade your rooms from direct sunlight, allow your workers to wear light,
comfortable clothing during hot weather.
• Appoint an Energy Manager for each building to monitor usage and identify savings
opportunities
48Action needed from industry
• Electricity usage optimisation needs to be driven by top management
• Participate in a voluntary 10% energy reduction programme – some SA
companies have already reduced by 10%
• Identify opportunities for improved energy utilisation
• Process optimisation
• Technology improvements
• Shift usage to off-peak periods
• Participate in Eskom’s demand saving programme
• Incentives available for energy savings projects
• Approval lead times improved considerably
• Participation in Demand Market Participation Programme
• Incentives for hourly load reduction when constrained system
conditions prevail
49National Power Alert Impacts – Evening Peak
Impacts
Power Alert impact during the World Cup period (11
June to 11 July 2010)
Average MW saved
Worst day MW impact
1800
1600
1400
1200
1000
MW
800
600
400
200
0
1
Worst day indicates the highest daily savings on a red alert. The
energy savings during the World Cup in terms of the public reacting to
Power Alert on national television is showing that working together,
South Africans can make a difference
50Reserve Margin – based on the draft IRP2010
35
%
Reserve Margin
30
25
20
15
10
Total Capacity
5 Total Reliable Capacity
0
0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0
1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 3
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
The draft
NoteIntegrated
to Kannan:Resource
Does not Plan (IRP)
include aimsand
Co-gen to Own
keepbuild
the reliable
reserve margin
from 2011 closeRemember
– 2015. to or above 15% Ifrom
Medupi 2013
1 year lateronwards.
than
mtrm and Kusile 2 years.
51Reserve Margin – Not further Expansion after
current commitments
30
% Reserve Margin ‐ No Expansion after
Committed
25
The reliable reserve margin
20
goes below 15% after 2018
15
10
Total Capacity
5
Total Reliable Capacity
0
0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0
1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 3
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
It is important
Note tothe decisions
Kannan: Same are made this
as previous yearallonnon
but with capacity to build
after 2018 tocommitted
ensure security of supply after 2018
taken out
52Conclusion
• The supply/demand balance will
be tight for the period 2011-2013
• The summer of 2011 has seen
risks to the system increase
• Eskom is on alert and its
leadership is taking action to
keep the lights on
• We cannot do it alone – we seek
to partner with stakeholders
• We will communicate with our
stakeholders and the public
every quarter on the state of the
system
5349M Campaign
Chose Choeu
Divisional Executive: Corporate Affairs
5449M is an Eskom initiative,
supported by government,
spurring an urgent need for the
more than 49 million South
Africans to embrace energy
saving as a national culture,
joining the global journey
towards a sustainable future
55The value proposition
49M desires a better future for all South
Africans
•economically,
•socially and
•environmentally
49M asks that we look for a sustainable future
and a better tomorrow for all
Energy efficiency is not only a national
concern, it is a global concern.
56By saving, South Africans will be
contributing to ensuring continued
economic growth by taking the
pressure off the ‘grid’, while Eskom
builds the power stations to ensure
electricity sustainability for the future of all South
Africans
57Thank you
You can also read
