The role of energy savings in solving

the current electricity supply

constraints

25 March 2015

THE MATHEMATICS …of demand shortages

Load shedding schedules

Stage Type Reduction obtained by interrupting supply -

load shedding

Reduction obtained by instructing reduction -

curtailment (pre-agreed)

Stage 070-100 MW

Unscheduled(pre-agreed)

Ad hoc Load offered by customers under the immediate curtailment option

(min 25% for 2 hrs)

Stage 1800-1300 MW

Scheduled / Notified

Shed 5% of national non-curtailment load at peak

Curtail 10% of normal demand within 2h of notification

Stage 21600-2100 MW

Scheduled / Notified

Shed 10% of national non-curtailment load at peak

Stage 33200-4400 MW

Scheduled / Notified

Shed 20% of national non-curtailment load at peak

Curtail 20% of normal demand within 2hrs of notification

Stage 4 Unscheduled(instructed)

Shed >20% of national non-curtailment load at peak

As instructed by the National System Operator at the time.

Research has been undertaken into the market potential for energy savings per technology

Technology Resid Comm Indus Total

Efficient Lighting 939 115 116 1,170Solar Water Heating 3,713 3,713

Domestic Cooking Conversion

2,144 2,144

Infra red heating 766 766Heat Pumps 960 224 569 1,753Showerheads & Restrictors

240 160 400

Load Management 9 200 209Heating, Ventilation & (HVAC)

14 70 84

Agricultural Initiatives 144 144Efficient Compressed Air 1,255 1,255Motor Efficiency 408 408Variable Speed Drivers 417 417Fan / Pumps 530 530

TOTAL 8,762 666 3,565 12,933

• The market’s total potential is the estimated maximum amount of demand savings that can be achieved in each technology class.

• The market potential was estimated in a recent research study conducted by EEDSM.

• In setting targets, the market penetration in any of the technology classes did not exceed 50% of the research finding’s maximum market potential.

• The above conservative target settings approach allows for market estimation accuracy, customer own projects and supply chain constraints.

EEDSM “WORKS”EEDSM is making a tangible contribution

EEDSM track record : verified average weekday energy savings impact for June 2006

Average Weekday Total and DSM Impact (MW): June 2006

-

100.0

200.0

300.0

400.0

500.0

600.0

700.0

800.000

:00

01:3

0

03:0

0

04:3

0

06:0

0

07:3

0

09:0

0

10:3

0

12:0

0

13:3

0

15:0

0

16:3

0

18:0

0

19:3

0

21:0

0

22:3

0

Time

MW

Total Impact DSM Impact

700

500

EEDSM efforts have displaced the equivalent capacity of a full power station

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

90 162 43

2 1082

1999 23

71 2725 30

72 3531 39

41

126

285

1004

2656

4343 49

06

6240

7590

9417

1078

0

0

2000

4000

6000

8000

10000

12000

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

EE has permanency / longevity - once implemented, the energy efficient solution is in place for the duration of the technology life.

Power Alert and supporting communication initiatives demonstrate justifiable, measureable and strategically timed energy savings

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

October 2014 8

3.51

million people273 MW & 1,644MWh (June 2014)

Aware Motivational IntentionsRelevanceRelevanceKnowledge 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

9

Through the Power Alert, South Africans have contributed to keeping the lights on

Impa

ct –

MW

redu

ctio

n

Since its introduction in 2006, the Power Alert has consistently kept the South African public informed about the electricity supply situation and have effectively reduced the peak demand during weekday evenings by between 150 to 350 MWs (delivering as much as 450MWs peak demand reduction on occasion)

Average impact of Power Alert signals: April 20 – Dec 2014

64

143221

350

Demand Response

900MW reductionContracted for current DMP

Up to 2500MW reduction potential = DRAPP

Payment of a fixed rate for load reduction at fixed predetermined times.

Demand Market Participation (DMP) programme; Demand Response Aggregated Pilot (DRAPP) programme

DMPSize: Customers with 20-80MW demand reduction potentialMarket focus: Industrial

DRAPPSize: Customers with <10MW demand reduction potentialMarket focus: Small industrial and commercial

Multiple fixed rate per MWhR800/MWh – R1000/MWh.

Requires update

The IDM programme produces benefits at all levels of the economy and society…

Developmental contributions

Education and training

1,778

The IDM programme initiated a cultural and behavioural change amongst South Africans

85

33

The number of teachers reached via workshops since 2004

The number of learners receiving ESCO Development Programme Certificates

The number of building energy auditors certified through the Building Energy Auditors Training programme (BEAT)

Access to lighting

62 million The number of CFLs replaced since inception

Access to hot water

382,542 The number of SWH installed since inception

19,354The number of heat pumps installed since inception

Industrial Commercial / Agricultural

Residential

ESCO

PerformanceContracting

Standard Offer / SOP FLEX

Standard Product / Aggregated SPP

Residential Mass Roll-out

SWH / HP Rebate

Other Mass Rollout

IDM solutions sector coverageTECHNOLOGYKEY:

PRIORITY 1PRIORITY 2Priority 3

Industrial Process Optimisation, Fans Compressed Air, Shower Heads, Lighting

Process Optimisation, Lighting Heat Pumps, HVAC etc.

Energy SolutionsDemand

Solutions

Lighting, Hot Water Systems, Solar , Process Optimisation, Renewables

Lighting, Shower Heads, Industrial Heat Pumps

HP & LP Solar Water Heaters, Heat Pumps

CFL Sustainability and Fill-ins

“Mixed bag” of technologies

12

RECENT INDUSTRY CHANGESSince 2008, EEDSM became a national imperative

As national priority, multiple roleplayers are now promoting and participating in EEDSM initiatives

12 I Tax incentive + SANEDI and the dti

12 L Tax incentive + SANEDI and the DoE

Private Sector Energy Efficiency (PSEE) Initiative

+ National Business Initiaitive

Industrial Energy Efficiency Programme +

National Cleaner Production centre (NCPC)

Solar Water Heating (SWH) rebate +

Department of Energy

AfD Green Loan and Technical Assistance

Facility

Green Energy Efficiency Fund + IDC and kfW

DR and EEDSM + Department of Energy IPP

Procurement Office

Distributed and/or own generation increasingly part of the energy solution

Solar PV developments

The unofficial IRP 2013 update suggested that 22.5 GW solar PV from rooftop installations may be possible by 2030.

“Other” alternatives (incl. gas and cogen)

Note 1. Source: spheralsolar.com; Note 2. Fully indexed price in 2013 Rands; 15

Technology advancements and price trends are empowering the “Prosumer”

Capacity installed (kWp) – Feb 2015PV capacity that has been voluntarily reported and registered

National 25.8MW(excluding REIPPPP)

R2/kWh 3.10 1.85 0.99

BW 1 BW 2 BW 3

Price trends

Large scale Solar PV trends reported by the REIPPPP has shown a 68% drop in price from bid window (BW) 1 to bid window 3 (i.e. three consecutive years):

- 68%

Cellular major MTN South Africa has approved two gas-powered generation developments for its Doornfontein (1 MW) and Newlands (6 MW) sites, in Gauteng, based on the success of its 2 MW trigeneration plant at its Roodepoort headquarters.MTN will expand this methane-powered plant by another 5 MW within the next two years, which will meet all its baseload heating, cooling and electricity requirements of its head offices.

“MTN reduces power-price exposure with innovative self-generation schemes”3

Note 3. http://www.engineeringnews.co.za/article/mtn-reduces-power-price-exposure-with-innovative-self-generation-schemes-2014-09-26-1

EXAMPLE

Global(capacity cost):

$1/watt 1784 1.30 0.70

year 1953 2012 2015

- 99.9%International and local

Demand side levers: Funding and MW savings shortfall

16

Funding Shortfall

2013/14 2014/15 2015/16 2016/17 2017/18 TotalRequired Funding (Rm) 5,684 4,972 2,614 2,763 4,456 20,489 - Demand Response 1,168 688 752 797 844 4,249 - Base IDM 2,941 2,709 1,862 1,966 3,612 13,090 - RMR (not in NERSA submission) 1,575 1,575 0 0 0 3,150

NERSA Approved (Rm) 2,623 1,641 819 712 1,244 7,039 - Demand Response 1,168 688 0 0 0 1,856 - Base IDM 1,455 953 819 712 1,244 5,183

Shortfall (Rm) 3,061 3,331 1,795 2,051 3,212 13,450 - Demand Response 0 0 752 797 844 2,393 - Base IDM 1,486 1,756 1,043 1,254 2,368 7,907 - RMR 1,575 1,575 0 0 0 3,150

MW Shortfall

2013/14 2014/15 2015/16 2016/17 2017/18 TotalRequired MW Savings 1,270 2,168 2,629 2,861 3,322 3,322 - Demand Response 512 752 992 992 992 992 - Base IDM 458 816 1,037 1,269 1,730 1,730 - RMR 300 600 600 600 600 600

NERSA Approved (MW) 891 1,425 860 1,056 1,471 1,471 - Demand Response 512 752 0 0 0 0 - Base IDM 379 673 860 1,056 1,471 1,471 - RMR 0 0 0 0 0 0

Shortfall (MW) 379 743 1,769 1,805 1,851 1,851 - Demand Response 0 0 992 992 992 992 - Base IDM 79 143 177 213 259 259 - RMR 300 600 600 600 600 600

• The reduction of funding allocation to IDM requires delivery of 85% of the submitted demand savings target (MW), with only 40% of the applied for funding being approved.

• Over and above IDM core funding, R3.15bn will be required over the next 2 years to fund the RMR Programme to deliver savings in support of Keeping the lights on.

EEDSM FUTUREEmerging and Future Focus

Expanding into social media

Our communication has necessarily expanded to include flash mobs, school programmes, social media - higher frequency, more platforms - more tv channels (linked to changing viewing patterns and pay for TV) and tools / apps.

Eskom Brand

46 696

70 356

Facebooklikes

Twitterfollowers

March 2015Facebook Fans/Twitter Followers

896 4566

Facebooklikes

Twitterfollowers

July 2013Facebook Fans/Twitter Followers

Experiments show consistent responsiveness to price

0%

10%

20%

30%

40%

50%

60%

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

Peak

Red

uctio

n

Peak to Off-Peak Price Ratio

Enabling Tech

Price Only

Source: Brattle Group

Objective of Critical Peak Day Pricing

• Critical peak day pricing is a dynamic tariff that will contribute to Eskom's efforts to keep the lights on • by providing customers with pricing signals that enables customers to

respond to system constrained periods,• empowers customers to become active participants in demand response, and • encourages electricity savings.

• The objectives of introducing Critical Peak Pricing1 generally are:1. To provide a pricing signal that enables customers to respond to system

constrained periods and empowers customers to become active participants in demand response,

2. To manage a capacity shortfall, 3. To manage a shortfall in energy supply, 4. To encourage the efficient use of electricity,5. To improve the financial viability of the utility, 6. To lower total (demand and supply) energy costs, creating economy

efficiency 7. To improve customer service by allowing for informed customer decision

making21

1World Bank Dynamic Pricing Primer

Features of the Critical Peak Day tariff

22

• The CPD tariff assumes that the existing tariff structures (Miniflex, Ruraflex and Nightsave Small and Nightsave Rural) will not change, except on critical peak days, where:

• For a limited number of days per year (capped to 20 system constrained days per year):

• the customer will be charged higher energy prices during the critical peak hours of the day (6am to 10pm i.e. standard and peak periods)

• the remaining non-critical days of the year, the corresponding hours will have a lower/adjusted energy prices

• This tariff design feature:• provides a significantly stronger pricing signal that better reflects the

higher cost of generation during system constrained days• encourages customer to reduce, forgo, substitute or load shift electricity usage

during system constrained times, thereby avoiding potential load shedding• provides a direct price incentives for customers to benefit from the adjusted energy

rates for the remaining non-critical days, which is lower than normal tariff rates.• Ensures revenue neutrality (set at the level where the customer does not

change the consumption behavior patterns).

•

Pilot Findings and Results – definite load reduction and no signs of comeback load

230

50000

100000

150000

200000

250000

6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

Perc

enta

ge lo

ad r

espo

nse

[kW

]

7 days after 1 day after CPD 1 day before 7 days before

• Average of 27% load reduction in pilot customer responses.

• 7 days BEFORE and AFTER plus 1 day before and after the event – no signs of load shifting after the Critical Peak Day event.

• Agrees with customer survey: customers indicated they did no shifting, and reduced their electricity usage.

0

4 000

8 000

12 000

16 000

20 000

2004

/05

2005

/06

2006

/07

2007

/08

2008

/09

2009

/10

2010

/11

2011

/12

2012

/13

2013

/14

2014

/15

2015

/16

2016

/17

2017

/18

27 Million tons of Coal

24

Closing Thought:GWh 47,340 GWh. The electrical energy that has been

saved since inception of the IDM programme

Amount of coal ‘not burnt’

• There is a cost associated with every kWh of electricity that can not be supplied when electricity supply is constrained

Thank you