1. New Capacity and EnergyManagement9 May 2013

2. Overview of presentation The state of the Eskom system The future trends in electricity pricing IDM funding mechanisms and programmes Savings and future design considerations for retail sites2012/05/12 2 3. The State of the Electricity Systemneed for new capacity and energy management 4. 4South Africas power system is constrained and will be for next few yearsEskom, together with stakeholders, have kept the lights on since 2008Most power stations are in their mid-life and require increased maintenanceStrategy of shifting maintenance outages can no longer be sustained.Significant maintenance is required to address backlogsInitiatives are in place to keep the lights onIntroduction 5. Demand profiles in Summer andWinter 6. The national power system is under strain6 With themaintenance thatneeds to be done,and the availablecapacity, thesystem will remaintight The identifiedsupply and demandside initiatives willhelp to improve thepicture Actualmaintenanceschedule will needto be revised basedon the state of thesystem 7. The future for electricity pricing7 8. Electricity Pricing Eskom has been granted an 8% price increase by NERSA for the nextfive years as part of MYPD3 this is unsustainable and will need to berevisited. The municipalities tariff increases are not as strictly regulated asEskoms. NERSA has indicated that they will do more to regulatemunicipal tariffs in future. Municipal tariff hikes are a big risk tobusiness. Electricity is still fairly cheap in South Africa but will become relativelymore expensive over the years due to:- Capital costs for new capacity Escalating coal costs Environmental pressures and commitments8 9. The role of IDM IntegratedDemand Management 10. Eskom annual achievements02004006008001000FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012PeakDemandSavings(MW)* Includes DMP & Non Funded ProjectsSavings as per year claimedEskom Target Demand Savings Achieved NERSA TargetEskom has consistently over-achieved on the NERSA targets 11. Eskoms demand savings performance to date11Demand SavingsDemand Savings3073 MW3073 MW1 power station generator is approximately600MW therefore over 5 generators freed up 12. Eskom compares favourably with the rest ofthe world13/05/14 12Eskoms innovative Power Alert tool has won prestigious international awardsin both marketing and engineering fields.54 million CFLs distributed across South Africa to date, representing one ofthe largest CFL roll outs in the world.Amongst the lowest cost programmes in the world as measured by $/MWdemand reduction.Recognised by the World Bank as one of the most comprehensive utilityenergy efficiency and demand side management programmes, certainlyamongst the BRICS countries.Aligned with best practices for energy efficiency implementationprogrammes as developed by the EU Energy Efficiency Watch survey of theNational Energy Efficiency Action Plans from 26 EU Member States. 13. IDM PROGRAMMES 14. ESCo ModelDemand-based payments for verified savings.Process Optimisation, Lighting, Heat Pumps, HVAC, etc.Individual Projects with uniquerequirementsSize: > 500 kWMarket focus: IndustrialPayments based on technologycost benchmarks averagingR5.25m/MWESCO projects claimed since inception (cumulative)450 projects869 MWdemand savings2,727 GWhenergy savingsIssues with ESCo model:1)Individual project approvals and long lead times2)Not applicable to mass market3)Inconsistent evaluation criteria4)Cumbersome governance processes5)Complex and onerous contracts9 20 3796166237291340400050010001500200025000100200300400500FY2003FY2004FY2006FY2007FY2008FY2009FY2010FY2011FY2012Demand(MW)&Energy(GWh)SavingsNo.ofprojectsNo. Of Projects Demand Savings (MW) Energy Savings (GWh) 15. Total Mining sector Savings = 287MW @ R613 millionCompressor ManagementDemand Savings = 76MWEg. Cooke MinePumping Demand Savings = 143MW Eg. Union MineFridge PlantsDemand Savings = 35MWEg. Harmony MineWinders & VSD & OtherDemand Savings = 34MWEg. Bambanani MineIndustrial and Commercial SectorsTypical energy savings projects undertaken 16. Standard OfferReplace inefficient technologies with apre-approved suite of energy efficientproductsSize: 10kW-5MW (Mon-Fri 6:00-22:00)Market focus: Industrial / CommercialStandard rate per kWh per technology42 120 c/kWh (Peak Hours)Sustainability ensured by procuringenergy savings over a 3 year period(70% on completion and 10% pathereafter)Energy Efficiency payments at a fixed rate for a fixed period (16 hours)Lighting, LEDs, Hot Water Systems, Solar, Industrial ProcessOptimisation and RenewablesSOP projects registered (cumulative progress since Apr 2011)225 projects113.25 MWdemand savings609.6 GWhenergy savings3 59 12172227 30364761667480050100150200250020406080100AprMayJunJulAugSepOctNovDecJanFebMarAprMayDemand(MW)&Energy(GWh)SavingsNo.ofprojectsNo. Of Projects Demand Savings (MW) Energy Savings (GWh) 17. Standard ProductSmall to medium projectsSize: