PRESENTATION AT THE ERB RENEWABLE ENERGY FORUM

SOLAR WATER GEYSER PROJECTIMPACTS ON THE CONSUMPTION PROFILE OF ELECTRICITY

PRESENTED BY:MR KELVIS KASONKOMONA AND MR MELLON CHINJILA

ON BEHALF OFTHE ZESCO MANAGING DIRECTOR

24-25 AUGUST 2011

PRESENTATION OUTLINE1. INTRODUCTION2. REHABILITATION OF EXISTING POWERSTATIONS

3. BUILDING NEW POWER PLANTS4. DEMAND SIDE MANAGEMENT5. SOLAR GEYSER PROJECT-CASE STUDY 26. OTHER SOLAR ENERGY INITIATIVES UNDERCONSIDERATION

7. CONCLUSION

1. INTRODUCTIONRENEWABLE ENERGY SOURCES HYDRO ENERGY SOLAR ENERGY WIND ENERGY GEOTHERMAL AND BIOMASS ENERGIES ETC

SOLAR ENERGY MOST ABUNDANT OF ALL ENERGYSOURCESSOLAR ENERGY TECHNOLOGIES CAN BE USEDFOR HEATING COOLING AGRICULTURE APPLICATIONS ELECTRICITY AND NATURAL LIGHTING

1. INTRODUCTION SOUTHERN AFRICA SOLAR ENERGY POTENTIAL ESTIMATED AT

BETWEEN 25,000 - 30,000 TWh/YEAR (Tera Watt Hour/Year) GLOBAL SOLAR IRRADIATION OF 2300 KWH/M2/YEAR

IDENTIFIED IN NORTHERN ZAMBIA

SOLAR ENERGY HAS NOT BEEN UTILISED FULLY

ZAMBIAS ELECTRICAL ENERGY LARGELY BASEDON HYDRO ENERGY 99% HYDRO ENERGY 1% THERMAL ENERGY (NON-RENEWABLE)

1. INTRODUCTIONAS EARLY AS 2000 ZAMBIA AND THE REGION

FORECASTED A POWER DEFICIT TO OCCUR BY 2011

HOWEVER THE DEFICIT OCCURRED EARLIER DUE TO THEUNPRECEDENTED ECONOMIC GROWTH IN ZAMBIA AS WELLAS THE REGION (ZAMBIA 7.1%, REGION 5.2% IN 2010)

ZESCO HOWEVER HAD FORESEEN THIS CHALLENGE AND HADFORMULATED A BUSINESS PLAN THAT INCLUDED

REHABILITATION OF EXISTING POWER STATIONS BUILDING OF NEW POWER PLANTS DEMAND SIDE MANAGEMENT TO INCLUDE RENEWABLE ENERGY

1. INTRODUCTION

SAPP PROJECTED ENERGY DEFICIT BY 2007

IN S T A L L ED C A PA C IT Y v s A N N U A LM A X IM U M D EM A N D

01 0 ,0 0 02 0 ,0 0 03 0 ,0 0 04 0 ,0 0 05 0 ,0 0 06 0 ,0 0 0

1998

2000

2002

2004

2 00 6

2 00 8

2 01 0

2 01 2

Y E AR

MW

IN S T A L L E DC A P A C IT YMW

Rapid Load Growth

Available Capacity

2. REHABILITATION OF EXISTING POWER STATIONSS/N POWER STATION CAPACITY BEFORE

REHABILITATIONCAPACITY AFTERREHABILITATION

1 KAFUE GORGE POWER STATION 900MW 990MW

2 KARIBA NORTH BANK POWERSTATION

600MW 720MW(LAST MACHINE TOBE COMPLETED BYMID 2012)

3 VICTORIA FALLS POWER STATION 108MW 108MW

4 SMALL HYDROS 24MW 24MW

TOTAL 1,632MW 1,842MWADDITIONAL210MW

OVER USD 300 MILLION HAS BEEN SPENT SO FAR ON REHAB

3. BUILDING NEW POWER PLANTS THE PROJECTS TO BUILD NEW GENERATION PLANTS ARE IN

PROGRESS AND THEY TAKE LONG TO COMPLETE (4 TO 5 YEARS) THE EARLIEST ADDITIONAL CAPACITY IS ONLY EXPECTED IN 2013

(360 MW KARIBA NORTH BANK EXTENSION PROJECT)

ZAMBIA/ZESC0 GENERATION PROJECTS NEW PROJECTS TO INCREASE GENERATION CAPACITY INCLUDE

ITEM NO. PROJECT NAME CAPACITY(MW)COST(US$) EXP. COMM. DATE

1 KNBE (Zesco) 360 420m 20132 ITT(Zesco/TATA) 120 240m 20143 Kalungwishi(IPP) 218 500m 2015

4Maamba Coal FiredStation (IPP) (NAVABHARAT)

300 750m 2013

5 EMCO COAL FIRED 300 TBA 20146 KGLHEPS(IPP) 750 2bn 20177 Lusiwasi (Zesco) 86 164m 20158 Lunzua (Zesco) 14.4 52m 2013

4. DEMAND SIDE MANAGEMENT BUILDING POWER PLANTS IS BEING SUPPLEMENTED BY IMPLEMENTATION

OF DEMAND SIDE MANAGEMENT AIMED AT SAVING POWER, INCREASINGCUSTOMER BASE AND ENHANCING REVENUE FOR THE COMPANY

ZESCO HAS IN THIS VEIN EMBARKED ON WORLD WIDE PROVEN DEMAND SIDEMANAGEMENT STRATEGIES WHICH INCLUDE;

PREPAYMENT METERINGCUSTOMER IS IN CONTROL OF THE ELECTRICITY CONSUMPTION & BILL

COMPACT FLUORESCENT LAMPS (CFLs)-UP TO 80% SAVINGSAVES POWER ON ACCOUNT OF HIGH EFFICIENCY (EXPECTING 150MWSAVING FROM DISTRIBUTION OF CFLs)

AND PROVISION OF TECHNICAL ADVISORY SERVICES TO CUSTOMERS ONTHE EFFICIENT USE OF ELECTRICITY.

4. DEMAND SIDE MANAGEMENTTHE OTHER INITIATIVE ZESCO HAS RECENTLY EMBARKED ONIN DEMAND SIDE MANAGEMENT WORLD PROVENSTRATEGIES IS THE INSTALLATION OF SOLAR GEYSERSENERGY SAVED THROUGH SOLAR GEYSERS AND THE OTHERAPPROACHES BECOMES AVAILABLE FORMITIGATING POWER DEFICITS THAT CAN LEAD TO LOAD SHEDDING AVOID EXPENSIVE POWER IMPORTS ELECTRIFYING NEW DEVELOPMENTS, AND HENCE INCREASECUSTOMER BASE AND REVENUE

5. SOLAR GEYSER PROJECT-CASE STUDY 2 ZESCO LAUNCHED THE SOLAR GEYSER PROJECT IN MAY2011UP TO 40% OF DOMESTIC ELECTRICITY CONSUMPTIONATTRIBUTED TO AVERAGE HOUSEHOLD GEYSERZESCO TO INSTALL 350 000 SOLAR GEYSERS IN 3 YEARSFREE OF COST TO THE CUSTOMERSINITIAL PHASE 100,000 GEYSERS WILL BE INSTALLED(PROCUREMENT PROCESS THROUGH ZPPA INPROGRESS). SOME GEYSERS ALREADY INSTALLED AS APILOT SCHEME.

5.1 IMPACT ON THE CONSUMPTION PROFILE OFELECTRICITY

1000

1100

1200

1300

1400

1500

1600

17000:0

1:00

0:38:0

01:1

5:00

1:52:0

02:2

9:00

3:06:0

03:4

3:00

4:20:0

04:5

7:00

5:34:0

06:1

1:00

6:48:0

07:2

5:00

8:02:0

08:3

9:00

9:16:0

09:5

3:00

10:30

:0011

:07:00

11:44

:0012

:21:00

12:58

:0013

:35:00

14:12

:0014

:49:00

15:26

:0016

:03:00

16:40

:0017

:17:00

17:54

:0018

:31:00

19:08

:0019

:45:00

20:22

:0020

:59:00

21:36

:0022

:13:00

22:50

:0023

:27:00

MW

TIME OF DAYDAILY LOAD PROFILE 150MW SAVING-SOLAR

GEYSERS300MW SAVING

SOLAR GEYSERS & CFLs

MORNINGPEAK;

BATHING ANDPREPARINGBREAKFAST

LUNCHTIMEPEAK

EVENINGPEAK;

BATHING ANDCOOKING

5.1. IMPACT ON THE CONSUMPTIONPROFILE OF ELECTRICITY

REDUCED ELECTRICITY DEMAND BY RESIDENTIALCUSTOMERS WHICH TRANSLATES TO FINANCIAL GAIN /SAVING OF UP TO 40%

150MW IS EXPECTED TO BE SAVEDTHIS WILL ASSIST ELIMINATE LOAD SHEDDING THAT ISCURRENTLY COSTING THE COMPANY US$6.1MILLION PERYEAR (COST OF LOST REVENUE AS A RESULT OF LOADSHEDDING)

ADDITIONALLY ZESCO WOULD SPEND ZMK 14.1 BILLIONTO IMPORT POWER DURING PEAK HOURS EXCLUDING THENON-CASH POWER BANKING

5.2 PROJECT BUSINESS CASETHE EXPECTED ANNUAL SAVINGS AS A RESULT OF INSTALLINGTHE INITIAL 100,000 GEYSERS IS US$12 MILLION COMPOSED OFGAINS DUE TO ELIMINATION OF LOAD SHEDDING (US$6.1MILLION) AND EARNINGS FROM CARBON CREDITS (US$5.9MILLION).

SOLAR GEYSER LIFE SPAN IS ABOUT 15 YEARS, THE PERIOD OVERWHICH ZESCO WOULD SAVE A TOTAL OF US $180 MILLION FOR100,000 SOLAR GEYSERS INSTALLED AGAINST AN INITIALINVESTMENT OF US $40 MILLION.

THE SOLAR GEYSER PROJECT IS BANKABLE BECAUSE THE PAYBACKPERIOD IS ONLY THREE (3) YEARS.

5.2 PROJECT BUSINESS CASEREDUCED ELECTRICITY CONSUMPTION BY THECUSTOMER WITH FINANCIAL SAVINGS AND IMPROVEDAFFORDABILITY.ACCESS TO HOT WATER AND IMPROVEMENT OF THEQUALITY OF LIFE FOR THE CUSTOMER.SAVED ENERGY WILL SUPPORT INCREASED ACCESS TOELECTRICITY.REDUCED LOAD SHEDDING

6. OTHER SOLAR ENERGY SAVING INITIATIVEPROJECTS UNDER CONSIDERATION

ZESCO IS ENCOURAGING OTHER STAKEHOLDERS SUCHAS; LOCAL AUTHORITIES TO INTRODUCE ADDITIONALSUSTAINABLE USE OF SOLAR ENERGY TO COVERSTREET LIGHTING, TRAFFIC LIGHTS (CASE STUDY 3 TOBE PRESENTED)

CUSTOMERS ON OFF GRID TO USE SOLAR LANTERNSAND ANY OTHER ENERGY EFFICIENT TECHNOLOGIESAND INITIATIVES TO SAVE ENERGY. DIESELGENERATORS THE SOURCE FOR OFF GRID ISEXPENSIVE TO RUN.

7. CONCLUSIONSOLAR GEYSERS & CFLS TO RESULT IN SAVINGSOF ABOUT 300MW IN THE INITIAL PHASE THIS IS ALMOST 3 TIMES INSTALLED

CAPACITY AT VICTORIA FALLS POWERSTATION OF 108MW

TO CONSTRUCT A 300MW HYDRO POWERPLANT WOULD COST USD 600 MILLION ANDWOULD TAKE 4 TO 5 YEARS TO COMPLETE

7. CONCLUSIONTHE INITIAL POWER SAVING OF 300MW WILLMITIGATE LOAD SHEDDING (POWER DEFICIT)& ALLOW MORE CUSTOMERS TO BECONNECTED

THE ELECTRICITY CONSUMPTION PROFILEWILL BECOME MUCH SMOOTHER, RESULTINGIN MORE EFFICIENT USE OF GENERATION ANDTRANSMISSION INFRASTRUCTURE

7. CONCLUSIONTHE SOLAR GEYSER PROJECT IS PART OF STRATEGICBUSINESS PLAN TO COMPLIMENT THE BUILDING OFNEW POWER PLANTS AND GROWING THECUSTOMER BASE.THE PROJECT IS COMMERCIALLY VIABLE AND HASSIGNIFICANT BENEFITS TO CUSTOMERS.THE SAVED CLEAN ENERGY WILL GO A LONG WAY INENHANCING ECONOMIC DEVELOPMENT ANDENVIRONMENTAL PROTECTION.

SOLAR GEYSER INSTALLATION

SOLAR GEYSER INSTALLATION

THANK YOU!

Slide1Slide4Slide3Slide18Slide17Slide21Slide2Slide19Slide5Slide20Slide155. SOLAR GEYSER PROJECT-CASE STUDY 2Slide65.1. IMPACT ON THE CONSUMPTION PROFILE OF ELECTRICITY5.2 PROJECT BUSINESS CASE 5.2 PROJECT BUSINESS CASE Slide8Slide97. CONCLUSION7. CONCLUSIONSOLAR GEYSER INSTALLATIONSlide16Slide22