Effective management of energy demand

April 2016

Introduction

The IDM programme consists of several incentive

based mechanisms, aimed at achieving demand

reduction in the Residential, Commercial and

Industrial sectors.

Reasons for pursuing IDM include:

• Reduction / elimination of load shedding

• Reduction of Eskom operating costs (diesel)

• Economic growth (make capacity available

for economic growth and assist customers to

keep operating costs low)

• To date significant demand reduction

achieved of approximately 4000 MW (audited)

• Enhanced Eskom reputation amongst public

and investors

• Mitigation of Eskom’s environmental impact

Introduction (…continued)

IDM The IDM programme was placed on hold in 2014

due to Eskom’s prevailing financial constraints

The IDM programme was revived in February 2015

to pursue projects:

Industrial projects

(Rapid implementation at low cost)

Residential lighting

(Mass roll-out, partial funding through

carbon credit programme)

3

Typical 24 hour electricity demand profile (South Africa)

Higher power use in winter and high am and pm

demand peaks put strain on the power system

20 000

22 000

24 000

26 000

28 000

30 000

32 000

34 000

36 000

38 000

23:00 02:00 05:00 08:00 11:00 14:00 17:00 20:00 23:00 02:00

Typical Winter Day Typical Summer Day

4

MW

Summer: Table Mountain Profile.

The average load is lower (32 – 33

GW), but more constant. During

periods of constraint, the system is

constrained for the entire day.

Winter : A peak profile. Peaks

are higher (~36.5 GW), but for

shorter durations.

In winter the demand increases significantly during the evening peak (5pm to 9pm), requiring additional

generation capacity to supply these peak power requirements. In comparison, the demand profile during

summer is much flatter with an increased demand profile throughout the day.

90

162

432

1016

1933

2306

2651

2994 3

581

3978

4125

0

500

1000

1500

2000

2500

3000

3500

4000

4500

2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15

DSM measures have proven to be key for reducing pressure on the power system

5

Cumulative demand savings (MW) Cumulative energy savings (GWh/a)

2012/13

1 Power Station (6 x 600MW units)

Once implemented, energy efficiency interventions are in place for the duration of the technology life,

allowing savings ‘capacity’ to be built over time. Since inception, IDM (DSM) initiatives have effectively

displaced the equivalent capacity of an average power station in SA.

Note 1: Pending external auditor verification.

IDM cumulative performance over time (Measured and Verified savings provided for annual report 2013/14, 2014/15

data is prelimary1 and excludes DOE SWH results)

megaw

atts

Electricity savings also reduce the impact on our natural resources and environment

6

Since inception, the cumulative electrical energy saved over the period to date, amounts to

58 935 GWh resulting also in significant savings of natural resources and contributing to reduced

carbon emissions

90 162

432

1016

1933

2306

2651

2994

3581 3978 4125

0

500

1000

1500

2000

2500

3000

3500

4000

4500

2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15

58 935 gigawatthours

gig

aw

atthours

Cumulative energy savings (GWh/a)

Note 1. Calculated using the annually reported water usage factor. Note 2. Calculated using the annual reported grid

emissions factor. Note 3. Calculated using the coal use factor (total energy sold) for 2013/14 annual report.

displacing the need to burn

33 million tons of coal3

59 million kg reduced CO2 emissions2

79 million liters less water1

Demand

response

IDM’s new portfolio consists of six programmes

The IDM programme again has funds available (R 1.7 billion) to achieve 975 MW demand savings. The focus will be on large-scale efficiency projects (ESCo model) and mass residential efficient lighting projects.

7

Power Alert Advisory

services

Residential

lighting

Target

455MW

ESCO

model

Target

>500MW

01. 02. 03. 04. 05.

Marketing and communication support 06.

Additional funding

available

ESCO Performance

contracting

Standard

Offer / SOP

Flex

Standard

Offer /

Aggregated

SPP

Residential

mass roll out

SWH / HP

Rebate

Other mass

roll out

“Old” IDM portfolio of programmes

“New” portfolio of IDM programmes

01. Demand Response – customers reducing demand on request for a limited period of time

1 406MW

Contracted Supplemental

and Instantaneous DR

as at May 2015

Three categories of demand response (DR) i.e. Supplemental DR, Instantaneous

DR and Self Generation DR

Market focus: large and very large energy users (mostly Industrial))??

Supplemental DR (>1MW load)

: min 2 hours per event, 150/a (30 min notice)

Incentives: capacity payment for standby

and energy payment ~R1.20/ kWh

Instantaneous DR

: 2 x 10 min/d, max 200/a (response within 6 seconds)

Incentives: capacity payment for standby,

no energy payment

Self Generation DR

: 2 hours/event, 2 – 16 hours/d, 100/a

Incentives: R18.75/MW/h scheduled,

R3000/MWh energy payment

8

02. Through Power Alert, South Africans actively contribute to keeping the lights on

Power Alert, for which energy savings and, as a result, behaviour change impact can be measured, demonstrates that significant reach is required to translate into meaningful behaviour change.

Power Alert and its supporting campaigns deliver proven savings, cost effectively at times

that are critical to the power system – but, requires CONTINUED focus and spend

9

3.51 million people

273 MW & 1,644

MWh (June 2014)

Aware Motivational

Intentions Relevance Relevance Knowledge Behavior

Energy

savings

Targeted messaging

Fresh creative

Frequency (high)

1

2

3

Critical inputs2 Ongoing refinement to sustain participation

Note 1. The measured MW impact suggests for every 100 people reached, ~8 responds by changing behaviour saving energy. This compares very well

with international benchmarks for effecting positive behaviour change.

It has however consistently delivered demand and energy savings, strategically

timed at very competitive costs compared to the available alternatives

03. Advisory Services are offered by Eskom Energy Services Managers

Energy services managers offer a wealth of knowledge and experience to

businesses, relating to a wide range of energy efficiency measures and

interventions to support consumer led energy efficiency initiatives

Market focus: Commercial, industrial,

mining and agricultural sectors

Equipped with a 7 module Energy

Management Information Pack to

guide the development and

implementation of an energy

management plan and measures

Cost: available at no charge

10

03. Sixty eight energy advisors are available across the country to provide support

Location # of advisors

Braamfontein 4

Bothaville 1

Buffalo City (East London) 1

City of Mtlosana (Klerksdorp) 3

City of Tshwane (Pretoria) 3

Edgemead (Cape Town) 6

Ekurhuleni (Boksburg) 4

eMalahleni (Witbank) 1

Emfuleni (Vereeniging) 1

Emnambithi - Ladysmith 1

George 1

Madibeng (Brits) 1

Mangaung (Bloemfontein) 8

Mbombela (Nelspruit) 1

Mkondeni 4

Msunduzi (Pietermaritzburg) 4

Nelson Mandela Bay (Port Elizabeth) 2

Oudtshoorn 1

Shelley beach / Margate 3

Simmerpan 1

Sol Plaatje (Kimberley) 2

Stanger 1

Swellendam 1

Thabazimbi 1

Tzaneen 1

Upington 1

Vredenburg 1

Westville 5

Worcester 2

eMalahleni

Thabazimbi

Tshwane

City of Matlosana

Mangaung

Tzaneen

Madibeng

Bothaville

Edgemead

Vredenburg

Upington

Worcester Oudtshoorn

George

Westville

Msunduzi

Nelson Mandela Bay

Buffalo City

Shelly Beach

Stanger

Emnambithi - Ladysmith Sol Plaatje

Mbombela

Mkondeni

Emfuleni

Braamfontein, Simmerpan and Ekurhuleni

Note: Indicative map locations, not positioned with a GIS system

Swellendam

11

04. Residential lighting implemented through mass rollouts

Bulk purchase and issuing of free energy efficient lamps (compact

Fluorescent Lamps (CFL) and Light Emitting Diode (LED) lamps to

households that are distributed door-to-door or at exchange points.

Replace inefficient lighting with

CFLs, progressively moving

towards LED solutions in future1

Market focus: Residential

Mass2 bulb replacement to start

November 2015

Cost: ~R2 million per MW saved

Note 1. Piloting LED lamps to test customer acceptance, quality and longevity under a range of conditions.

Note 2. Aiming to increase local content levels for LEDs as scale of deployment increases. Using, where possible,

installers from the communities in which the lights are being installed

12

05. Participation opportunity via the ESCo model includes:

PEAK CLIPPING PEAK SHIFTING CONSERVATION

Achieve demand savings

greater or equal to

500kW per single site

Greater or equal to

250kW per proposal.

A minimum of 50kW per

site must be achieved

with a maximum of

5 sites per proposal.

Is implementable within a maximum of six-month period.

Sustain the proposed demand reduction over a period of three years (36 months).

Provided they meet the following criteria:

13

OR

05. Participation under the ESCo model is subject to a prescribed process

Energy Services Companies

or Project Developers compile

and submit proposals

Emerging Black Owned Energy

Services Companies may

compile and submit proposals.

Eskom reviews the technical and financial merits of the proposals.

Implementation will only be allowed to commence upon signing by both parties.

14

OR

05. Funding for large (>500kW) ESCo projects are structured into 12 performance payments

15

12 equal payment periods over the

three-year term of the contract.

Up to 30% of the contract value will be released

as a performance payment at the end of the first

three-month period.

Eskom can request a reimbursement for overpayment

if savings achieved in the first three-month period is

not sustained in subsequent three-month periods.

The balance of the contract value will be released

based on verified savings per three-month period.

All payments are performance based and

assessed at the end of each 3-month period.

05. …while small (250 - 500kW) ESCo projects will receive 4 performance payments

16

4 payment periods over the

three-year term of the contract

Up to 40% of the contract value will be released

as a performance payment at the end of the first

three-month period

Eskom can request a reimbursement for overpayment

if savings achieved in the first three-month period is not

sustained in 1st year of sustainability period.

The balance of the contract value will be released

based on verified savings per annum.

All payments are performance based

and assessed at the end of each year.

05. Compliance with Eskom’s SD&L Programme is dependent on project size

17

A retention of 10% in support of Eskom’s SD&L

Programme will be applicable per invoice submitted

for payment over the three-year term of the contract

The retention will be repaid on proof of compliance

with the SD&L programme requirements.

Due to BBBEE Act qualification criteria for

ESCo, there will be no SD&L retentions applied.

The BBBEE compliance will be

Verified by Eskom’ SD&L Department.

06. Marketing and communication have evolved into more streamlined, targeted support

18

2004 – 2006 FY 2007 – 2013 FY 2014 – 2015 FY

Focus: building general awareness,

instilling an efficient culture

Focus: introducing and educate on

energy efficiency

Focus: targeted communication &

support

2003/2004 2004/2005 2005/2006 2006/2007 2009/2010 2012/2013

Status: Initially low awareness, rising

over period

Status: low levels of efficiency Status: high levels of general

awareness

Approach: Call to action to effectively

manage constrained periods,

understanding consumption and peak

periods

Approach: mass communication,

wide reach, television adverts, bill

boards,

Approach: sustained behvioural AND

lifestyle changes targeted support,

social media, programme

communication with B2B a priority

Cost1: High and growing Cost1: Rapidly growing Cost1: Significantly reduced

150

100

50

Rand m

illio

n

2013/2014 2014/2015

Note 1. Excluding Power Alert costs

150

100

50

Rand m

illio

n

68%

Source: Ask Afrika general awareness survey 2004 –

2006, Nov 2004 results

85%

Source: Ask Afrika research 2012, awareness of electricity efficiency

campaigns (slide 31)

91%

Strategic repositioning keeps

communication effective in

spite of cost cuts

Source: Ask Afrika research 2014, awareness of electricity efficiency

campaigns (slide 18)

Industrial Commercial /

Agricultural

Residential

ESCO Model1

Residential efficient

lighting1

Advisory services

Power Alert

Demand Response

Marketing and

communication

IDM solutions sector coverage

Process Optimisation, Lighting

Heat Pumps, HVAC etc.

Energy

Solutions

Demand

Solutions

Advice relating to a variety of technologies and

applications

CFL Sustainability and Fill-

ins, LEDs

Dispatchable loads

“switch off”

Programme communication and targeted support

Note 1: Initiatives for which additional funding has been made available

19

Thank you

Conference Program

21

Time Topic Presenter

08:00 – 08:45 Registration

08:45 - 09:00 Welcome - Capital City Business Chamber Fanie Du Plessis

09:00 - 09:20 Eskom’s Advisory Service Victor Martins

09:20 - 09:40 How to build an energy management action plan for your business Frikkie Malan

09:40 - 10:00 Hot water – Energy Saving opportunities Paul vd Sandt

10:00 - 10:20 Lighting Jacques Venter

10:20 - 10:40 Building Management Systems Shaun Wilson

10:40 - 11:00 Heating Ventilation and Air Conditioning (HVAC) Rowan Sandison

11:00 - 11:40 Tea / coffee break & Networking with exhibitors

11:40 - 12:00 VSD’s & EE Motors Riaan Nel

12:00 - 12:20 PV and other Renewables Flip Opperman

12:20 - 12:40 Grid Tied & Regulations Valmon Muller

12:40 - 13:00 12 L TAX incentives and other funding options Karel Steyn

13:00 - 13:15 Energy Efficiency training Frikkie Malan

13:15 – 13:30 NCPC - National Cleaner Production Centre of South Africa Wynand vd Merwe

Closing

13:30 - 15:00 Lunch & Networking with exhibitors