Media presentation

Tshediso Matona

Chief Executive

15 January 2015

Introduction

On December 9 we said the following…

• We apologised to the nation for the inconvenience

of the past few weeks due to load shedding.

• We communicated that for an extended period the

power system is extremely constrained and

vulnerable.

• With the system being tight, any abnormal event

pushes us into load shedding

• With the reserve margin being low, we do not have

enough capacity to meet demand, necessitating

planned, controlled and rotational load shedding, to

protect the power system from a total country-wide

blackout

• We also said that over the last few months we have

seen a significant increase in unplanned

maintenance/breakdowns on our plant (between

5000MW to 9000 MW) that has had a compounding

negative effect on power system reliability

2

20 000

22 000

24 000

26 000

28 000

30 000

32 000

34 000

36 000

38 000

23:0002:0005:0008:0011:0014:0017:0020:0023:0002:00

MW Summer & Winter load profiles

Typical Winter Day

- Typical Summer Day

In summer, the system is tight

all day up to 10pm, due to the

flat “Table Mountain” profile

Introduction

• We were able to avoid load shedding during the Festive Season

• As many businesses and industries reopened last week after the festive season, electricity demand increased. That coupled with the unavailability of some of our generating units meant that we had to go into load shedding on 9th January for the first time this year.

• The power system remains vulnerable, meaning that any extra load or faults in the system may necessitate load shedding.

• New generating capacity and other levers are needed in order to ease the pressure on the system.

• This summer has seen increased use of open cycle gas turbines (OCGTs) and other reserves to balance supply and demand. However there are constrains to the increased use.

• Summer is maintenance season at Eskom. We do planned maintenance in summer, when

demand is lower, so that maximum capacity is available in winter. Maintenance season is

usually from September to around mid-May, but some maintenance is done during winter

• On the financial side, the liquidity situation is under pressure not just because of the diesel,

but also lower sales, building new capacity and the lack of cost-reflective tariffs

2015/01/15 3

Executive summary (1/2)

• Eskom has an elaborate maintenance regime that should maintain the health of our generation

fleet

‒ Eskom has a codified maintenance philosophy in place

‒ This philosophy is translated into a detailed plant specific plan (down to turbine, auxiliary

etc.)

‒ The required resources are matched with the plan

‒ This results into a maintenance schedule that is asking for 2000MW of diesel capacity and

an additional 3000MW more capacity than we have

• Our philosophy of keeping the lights on at all costs superseded the maintenance philosophy and

has put us into a very difficult position

‒ Keeping the lights on program has avoided load shedding in the last 7 years against all the

odds managing an extremely low operating margin

‒ There is a severe maintenance backlog

‒ Increasingly leading to unplanned outages (load losses)

‒ Which accelerates the problem of not being able to recover on the maintenance backlog

‒ Some of our running plants have partial load losses, because parts are worn out, and we do

not have an time window to replace/ fix

‒ There is a further risk of enduring load losses on the remaining units

‒ Keep the lights on philosophy has created a culture where proactive maintenance is less

important

4

Executive summary (2/2)

• We have arrived at a point that does not allow us to ignore the health of our plants. Our reserve margin is

so thin, that every incident creates a major systems issue and could also have safety implications for the

plant. The massive usage of diesel helps to bridge the problem somewhat, but can’t help the systemic

healing and a shortage of capacity for the coming 3 years appears to be unavoidable

• Eskom is preparing to minimise the effects of load-shedding

‒ Generation will focus on improving 5 KPIs (PCLF, Post Outage liability, UCLF, Slips and Trips)

‒ We will a create a mechanism to transfer the capabilities of our best in class operators (Koeberg

and Matimba) across the rest of the fleet

‒ We will use Koeberg and Matimba as a blueprint to develop the required skills at a station level

‒ We will bring our suppliers on board to deliver the required maintenance at the best possible quality

‒ We will create transparency on what additional spend on diesel will do to the country

‒ We will create a load-shedding schedule that supports our people and economy to the best of our

ability

‒ We will prepare our customers and our interfaces to deal with load shedding

‒ We will continue to keep the public informed on the progress of our new build program and the

implication on our system load

‒ We will continue to pull all possible demand side levers in collaboration with our customers and

government

‒ We will develop a health recovery plan and share progress as we go

‒ We will develop together with NERSA and government a diesel burn policy

5

Eskom has a codified maintenance philosophy in place

Typical Mean Time Between Outages (Main focus of scope)

IR - 18 to 36 months (Boiler work)

MGO - 6 years (LP turbines because they can’t make 9 – 12 years)

GO’s - 9 to 12 years depending on the station (4 cylinders of the turbines)

6

Inspection General

Overhaul

Inspection Mini-General

Overhaul

General

Overhaul

Inspection

GO IR MGO IR GO IR

Example – Turbine

A plant specific plan exists

Category B outage

Category C outage

Outage cancelled

Outage as originally planned

Secondary start date

Small outage- to be dealt with frontline maintenance staff

Category A outage

Breakdowns

Scope of work not finalised

Scope of work received and finalised

On the LHS – plan and quality plan complete

On the RHS – plans submitted to outage manager

7

Resource requirements and availability are matched

8

Maintenance backlog has led to increased breakdowns

3.68

4.634.34

5.13

4.38

5.10

6.14

7.97

12.1212.61

14.85

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

F2005 F2006 F2007 F2008 F2009 F2010 F2011 F2012 F2013 F2014 (Dec14)F2015

UCL

F %

• Load shedding in 2008

• Deferral of maintenance

9

• The past

practice of

postponing

outages

become

unsustainable

• Additional

capacity of

3000 MW on

top of 2000 MW

of diesel

required

The unexpected outages at Majuba, Duvha and the diesel situation creates an unfavorable capacity outlook

DB04 RTS

19/02

AL41 RTS

18/02

GV06 RTS

17/02

HD10 GO for 82 days 13/02

Category C

KR04 RTS

16/02

AL32 RTS

11/02

AL32 Minor Inspection for

6.75 days 04/02 Category A

AL31 RTS

04/02

KB01 Refuel 121 for 98

days 09/02 Category A

AL41 Minor Inspection for

6.75 days 11/02 Category A

AL42 Minor Inspection for

6.75 days 18/02

Category A

AL43 Minor Inspection for

6.75 days 25/02 Category A

AL42 RTS

25/02

LT04 RTS

05/02

LT01 GO for 100 days

13/02 Category A

HD2 IN for 14 days 20/02

Category C

HD01RTS

14/02

KM01RTS

10/02

HD08 IR for 37 days 01/02

Category C

MJ04 RTS

17/02

10

Tech Gov Outage

Inflexible Outage

Flexible Outage

RTS units

We are likely to load shed on most days in the near future

11

Jan-15

Sun Mon Tue Wed Thu Fri Sat

1 2 3

4 5 6 7 8 9 10

11 12 13 14 15 16 17

18 19 20 21 22 23 24

25 26 27 28 29 30 31

Feb-15

Sun Mon Tue Wed Thu Fri Sat

5 6 7

8 9 10 11 12 13 14

15 16 17 18 19 20 21

22 23 24 25 26 27 28

1 2 3 4

Mar-15

Sun Mon Tue Wed Thu Fri Sat

Apr-15

Sun Mon Tue Wed Thu Fri Sat

5 6 7

8 9 10 11 12 13 14

15 16 17 18 19 20 21

22 23 24 25 26 27 28

1 2 3 4

29 30 31

2 3 4

5 6 7 8 9 10 11

12 13 14 15 16 17 18

19 20 21 22 23 24 25

26 27 28 29 30

1

Adequate generation capacity available to meet demand and reserves

Constrained generation capacity with sufficient supply to meet demand and reserves. Medium probability of load shedding

Insufficient generation capacity unable to meet demand and reserves. High probability of load shedding

• Required reserve margin is directly linked to the system reliability you are trying to

achieve for your system, and the various risks implicit in your system

• NERSA have recommended a 19% NRM and Eskom’s internal requirements are

between 15 and 18% NRM. There have been no expectation set for Expected Energy

Not Served (EENS) and Loss of Load Probability (LOLP)

Loss of Load Probability (LOLP) Curve

0

24

48

72

96

120

144

168

192

8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 21% 22% 23% 24%

Reserve Margin

Lo

ss o

f L

oa

d H

ou

rs (

LO

LH

)

48 hours in 1 Year

Standard @ ~12.5%

24 hours in 1 Year

Standard @ ~ 14.3% US Standard (24 hours in

10 Years) @ ~ 19%

Eskom at times has managed a

reserve margin of less than 8%

12

Eskom has kept the lights on over the last 7-years by managing an extremely small reserve margin

Keeping the lights on has created a backlog of maintenance

Backlog of outages

13

Which accelerates the problem of not being able to recover on our maintenance backlog

Unit

Load Loss

description Action Plan

Expected

Gain (MW)

Outage

Duration

Outage

Readiness Expected Completion date

KR1 HP Heaters not

available

3 way valve repair 25 4 Awaiting opportunity

(Jan 2015)

HD 5 Back end temps

high

Do a smoke test to detect

all casing leaks 30 5 Awaiting opportunity

(Jan 2015)

HD 9 Stator coolant

temps high

Replace change over

valves 25 3.3 Awaiting opportunity

(Jan 2015)

KM 7 Primary Air Fan

Drive End Bearing

running hot

Quick close the air

damper 45 2 Awaiting opportunity

(Jan 2015)

KM 3 RH FD Fan faulty Repair the fan 18 3 Awaiting opportunity

(Feb 2015)

TOTAL 143

Deferred maintance causes partial load losses

14

Some of our running plants have partial load losses because parts have worn out and there is no time to repair

Station PLL as at

01/04/14

PLL as at

05/01/15

Monthly Target Liberation Total

Jan Feb Mar

AN 220 216 0 96 0 96

CM 53 70 0 0 5 5

DV 890 360 90 100 40 230

GV 120 80 50 0 0 50

HN 132 105 55 30 0 85

KD 90 260 60 0 100 160

KM 130 86 68 18 0 86

KR 490 190 145 0 0 145

LT 170 96 68 0 0 68

MJ 574 160 0 0 100 100

ML 100 0 0 0 0 0

TT 20 0 0 0 0 0

TotaL MW 2989 1623 536 244 245 1025

Plan 1087 843 598 598

Remain mw

Summary of partial load loss plan (Jan 15 – Mar 15)

15

Unit MW Latest Philosophy Outage Last Opportunity Reason Duration Date

reported Risk Rating

HD 8 190 MGO - May 2013 (52d) MGO – July 2013 BTL (Boiler Tube Leak) 6hrs 22-Dec 1

KR 3 475 LPT 1 & 2 inspections Sept

2012 (61d)

Refurbishment outage completed in March 2014(222d)

EFP A booster pump impulse line leak, Unit transformer installed, Clinker removal and Precips repairs

4days 08-Jan 1

ML4 575 HP Piping and LP Blade

Inspection Nov 2013

Generator H2 seal inspection and repairs. Mar 2014(21d)

BTL 3 days 08-Jan 1

AN2 380 IR Apr 2013 (85d) GO in execution till Sept 2014 (90)

Bearing temps high, trip risk 3 days 08-Jan 1

DV5 575 GO Dec 2013 (159.39) Completed outage – Dec 2013

Running BTL 3 days 08-Jan 1

HD 6 190 IR- Oct 2013(25d) IR- Oct 2013 Turbine condenser HP cleaning and H2 leak repairs 6.3 days 20-Oct 2

MT 4 615 B.4 I.R Oct 2010 (34d) GO completed in Apr 2014

Steam feed pump turbine and Turbine air ingress, acid clean stubs, Circ pump reg valve

3 days 09-Jan 2

MJ 6 669 IR – Sept 2013(64d) IR – Sept 2013 Replace Non-Return Valve on both Condensate Extraction Pumps 3 days 09-Jan 2

KD 5 640 GO Mar 2010 (64d) I.R Feb 2014 Generator Hydrogen leak worsening , cooler to be replaced. Primary Air

leakges repairs. SSC (Submersible Scraper Conveyor) 7days 10-Nov 2

KM 7 114 MGO – Aug 2013 (80d) Midterm Outage Aug 2013(80d)

C PA fan quick close damper repairs & rec-commissioning 2days 08-Jan 2

KD0 3 640 IR Jan 2011 (55d) IR Jan 2011 (Extended duration due to Turbine)

Bearing temps high, trip risk 3 days 09-Jan 2

KD 6 640 GO Mar 2012 (86d) GO Mar 2012 Left-Hand Induced fan balancing, Gen H2 Cooler & Air heater 3 days 09-Jan 3

ML 1 575 MGO May 2013 (109d) MGO Aug 2013(109d) U1 and U2 T1 & T2 CW valves actuators faulty. South side risk of trip 3days 27-Oct 3

LT 1 593 IR Nov 2010 (57d) IR Jan 2011 (57d) . Gen rotor swop for (21d) in June 2014

Boiler dipper plate fell into SSC( Shut down risk). Steam leak on hot reheat manifold vent line. Boiler Feed Pump Turbine on ptw to repair mechanical

seals. 1 day 19-Dec 5

Total 6871 `

Further potential Risk of UCLF Increase on remaining units

As of 9 Jan 2015

Keeping the lights on has also created a culture which

de-emphasises maintenance 16

Eskom is committed to minimising the effects of necessary load shedding

• We have arrived at a point that does not allow us to ignore the health of our plants. Our reserve margin is so thin, that every incident creates a major systems issue and could also have safety implications for the plant. The massive usage of diesel helps to bridge the problem somewhat, but can’t help the systemic healing and a shortage of capacity for the coming 3 years appears to be unavoidable

• Eskom is preparing to minimise the effects of load-shedding

‒ Generation will focus on improving 5 KPIs (PCLF, Post Outage liability, UCLF, Slips and Trips)

‒ We will a create a mechanism to transfer the capabilities of our best in class operators (Koeberg

and Matimba) across the rest of the fleet

‒ We will use Koeberg and Matimba as a blueprint to develop the required skills at a station level

‒ We will bring our suppliers on board to deliver the required maintenance at the best possible quality

‒ We will create transparency on what additional spend on diesel will do to the country

‒ We will create a load-shedding schedule that supports our people and economy to the best of our

ability

‒ We will prepare our customers and our interfaces to deal with load shedding

‒ We will continue to keep the public informed on the progress of our new build program and the

implication on our system load

‒ We will continue to pull all possible demand side levers in collaboration with our customers and

government

‒ We will develop a health recovery plan and share progress as we go

‒ We will develop together with NERSA and government a diesel burn policy

17

0 290 1 351.0 1 043

1 770 453 315 535 261 120

0

6 137

17 384

659 237 430 480 418

600 443 631.3

787 811 162

5 659

9 756

5 280 1 090 1 000 1 355 1 375 1 630

5 940 2 525 3 580

3 790 90 0

27 655

42 470

2004/5 2005/6 2006/7 2007/8 2008/9 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 Total Target

18

Capacity expansion programme overview

Km lines Transmission

MVAs Substations

MW of capacity Megawatts

To date, the construction work that has been completed has added

~ 6 137MW of capacity, ~ 5 659km of transmission network and ~ 27 655 of MVAs

1. Refers to the target of the total capacity expansion

programme

1

Build-Programme Dates

Medupi Power Station Project (6 x 794MW) ▪ 1st Unit (Unit 6) Synchronization Date – 1st half 2015

▪ 1st Unit Commercial Operations Date – June 2015

Kusile Power Station Project (6 x 800MW) ▪ 1st Unit (Unit 1) Synchronization Date – 1st Half 2017

▪ 1st Unit Commercial Operations Date – 2nd Half 2017

Ingula Pumped Storage Scheme Project (4 x 333MW) ▪ 1st Unit (Unit 3) Synchronization Date – 1st Half 2016

▪ 1st Unit Commercial Operations Date – 1st Half 2016

Project Sere (100MW) ▪ Full Commercial Operations Date – 1st Half 2015

19

First unit – Medupi Unit 6 progress

Source: Eskom

1. Statutory

hydro

15/05

2. Boiler

chemical

cleaning

21/08

3. Turbine

on barring

30/08

4. Draught

group test

run

10/10

5. First Oil

Fire 17/10

First Coal

Fire 27/11

6. Boiler

blow

through

31/12

7. Steam to

Set (Turn

on Steam)

8. 1st

Sync

Text

Complete

Current milestone in progress

Target

Significant

milestones have

been reached

towards

synchronisation

of Unit 6

Erratic power

will flow to grid

before full power

is achieved

during the first

half of 2015

While the progress towards synchronisation

is proceeding very well Eskom has

previously indicated that the first unit

would be synchronised later than

24 December 2014

This is to ensure

that all systems

are fully tested,

safety-cleared and

ready for con-

tinuous operation,

and that no

additional risks

impact the good

progress made

to date.

20

Our build programme compares well with global build programmes…

South

Africa

Medupi Eskom Lephalale 6 800 4800 HC 570/5

90

Feb

07

2015 3

21

Conclusion

• The power system will be severely constrained and will begin to ease once new

generating capacity comes online and other levers materialise

• The system will remain tight in Summer. Risks of extreme weather related

outages such as wet coal, unplanned outage extensions and unavailability of

primary energy may worsen the situation

• The country needs to be prepared for load shedding.

• Load shedding is a painful yet necessary decision to protect the electricity power

system from a total black-out. A total black-out would have significant

consequences on the South African economy

• It remains important for all customers to maintain or achieve 10%

electricity savings especially in the commercial, industrial and residential

sectors.

• We are committed to provide early warning, however at times the system status

changes rapidly. Please follow us on twitter @Eskom_SA and

@Eskom_MediaDesk for updates.

22

Communication on the power system

• Eskom communicates via the national, regional and local media including social media regarding its intention to load shed and during the process.

• Load shedding information and schedules are available on Eskom’s website for Eskom customers

• National and regional spokesmen continue to spread the message and share additional information to provide information and clarity

• Stakeholders and direct customers are informed predominantly via social media and text messages and are able to communicate via Eskom’s customer contact centre

• The Power Alert on SABC and DSTV channels continue to provide real-time information on the power system status and encourages customers to switch off. An average of 350MW reduction in demand is observed during this flighting

• Eskom issues a system power bulleting twice a week, and holds a Quarterly system status media briefing to provide regular updates

• Face to face stakeholder engagements provide an opportunity for further dialogue on the status

Electricity users are encouraged to follow Eskom on twitter and Facebook and to

download the free Eskom App ‘Myeskom’ from android and Apple stores. The App is

in process of being updated to provide load shedding information

We will collaborate with our customers to reduce demand- “Less is more − Live Lightly!”

Saving electricity reduces pressure on the grid, cuts your

electricity bill and reduces South Africa’s carbon emissions

The power system remains vulnerable all day during summer

1. Use air conditioning efficiently

o Set air conditioning to 23ºC

o Close windows and doors to optimise air conditioning

o Switch off 30 minutes before leaving the office

2. Switch off all geysers and pool pumps (all day until 9pm),

and invest in a timer

3. If you use the pool frequently, limit pool filtering cycles to

two cycles daily, and not between 5pm & 9pm

4. Switch off all non-essential lighting

5. Respond to Power Alert messages by switching off all

appliances that are not being used

“Live

Lightly”

“Know your

number”

24

Setting the context

Review of the last quarter of 2014

Outlook for 2015

New Build Update

Conclusion

25

Navigation Guide of

Load Shedding Website

27

Accessing Eskom’s Website

1. Log onto:

http://www.eskom.co.za

2. You will land on the Eskom

homepage

3. This is what you will see

4. Click here if you are an

Eskom Supplied Customer

5. Click here if you are an

Municipal Supplied

Customer.

28

Eskom Load Shedding Website

Look and Feel 1. You will land on the Load

Shedding page

http://loadshedding.eskom.co.za/

2. This is what you will see

3. You will be informed here

whether Load shedding has

been implemented.

If Load Shedding has been

implemented, the Stage of Load

Shedding is indicated.

4. You can also access the

Municipal Schedules that has

been provided to Eskom by

the Municipalities here.

29

Eskom Load Shedding Website

How to navigate 1. The menu bar can be used to

navigate and find out:

• What is Load Shedding

• How to interpret the Schedule

• The latest information

• Answers to Frequently asked

Questions

2. This is the search

functionality where as a

Customer you will be able to

search for you suburb and

view the schedule.

3. This is the advanced Search

Functionality – allows the

user to search by province

and Municipality.

30

Eskom Supplied (Direct) Customers

Searching for your Schedule Quick Search Functionality

1. Enter your suburb here

2. A list of matching areas will become

available.

3. Select the appropriate Area

4. A Schedule will reflect

5. Now select the Stage (1,2 or 3)

6. Your correct schedule will now

reflect.

Advanced Search Functionality

1. Select your Province

2. Select the Municipality that you are

serviced by

3. Select your suburb

4. A Schedule will reflect

5. Now select the Stage (1,2 or 3)

6. Your correct schedule will now

reflect.

Example: Midland Schedule – Stage 1

31

Eskom Supplied (Direct) Customers

Select your Schedule Stage Selecting the correct stage

1. Once your schedule appears it will

be defaulted to Stage 1

2. Scroll up until you see the menu

below.

3. Select the appropriate Stage (for

this exercise we have selected

Stage 2)

4. The schedule should have changed

accordingly.

Example: Midland Schedule – Stage 1 (default)

Example: Midland Schedule – Stage 2 Selected

32

Municipal Supplied (Direct) Customers

Searching for your Schedule Quick Search Functionality

1. Enter your suburb here

2. If you are not an Eskom Customer,

the following message will pop-up.

3. You can now either navigate to the

Municipal Schedule using this link,

or

4. You can log into the appropriate

Municipal Website

33

Municipal Schedules Link

1. If you select this link on the Eskom

website http://www.eskom.co.za or

the Eskom Load Shedding Website

http://loadshedding.eskom.co.za/

you will be directed to the following

link

http://www.eskom.co.za/Pages/load

sheddingmunic.aspx where you will

be able to view the Municipal

Schedules provided to Eskom by

the Municipalities.

2. Select the Municipality that Services

you

3. You will now be redirected to the

appropriate Municipal Site or a

download of the schedule will be

available.

34

Example:

Ekurhuleni Munic 1. Select the Municipality that Services

you

2. You will now be redirected to the

appropriate Municipal Site or a

download of the schedule will be

available.

3. Example: Ekurhuleni Munic

4. You will be redirected to the

Municipality’s Website

http://www.ekurhuleni.gov.za/yourse

rvices/energy/power-cuts/load-

shedding-schedules .

5. Navigate down the page and select

the Area you need.

6. The schedules are available to

download in PDF format.

35

1. Once you have selected you Area and downloaded your schedule, this is an example of what you will

see (Area selected Alberton)

Example:

Ekurhuleni Munic

36

Tips & Hints

• Quick Search - identify your Area or the Area closest are to you (Correct

spelling)

• Select the stage once the initial schedule appears

• Print or save to your Laptop / smart phone / desktop

• This schedule is applicable for a month - now request the schedules for

the remaining stages and do as above, as Stages may change.

For any queries and assistance on Load shedding, visit the Eskom Load

shedding Website http://loadshedding.eskom.co.za/ or call our Contact

Centers at 0860037566

Thank you

Thank you