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INTEGRATED DEMAND MANAGEMENT (IDM) OFFERINGS FROM ESKOM
INTEGRATED DEMAND MANAGEMENT (IDM) OFFERINGS FROM ESKOM
INTEGRATED DEMAND MANAGEMENT (IDM) OFFERINGS FROM ESKOM
INTEGRATED DEMAND MANAGEMENT (IDM) OFFERINGS FROM ESKOM
INTEGRATED DEMAND MANAGEMENT (IDM) OFFERINGS FROM ESKOM
INTEGRATED DEMAND MANAGEMENT (IDM) OFFERINGS FROM ESKOM
INTEGRATED DEMAND MANAGEMENT (IDM) OFFERINGS FROM ESKOM
INTEGRATED DEMAND MANAGEMENT (IDM) OFFERINGS FROM ESKOM
INTEGRATED DEMAND MANAGEMENT (IDM) OFFERINGS FROM ESKOM
INTEGRATED DEMAND MANAGEMENT (IDM) OFFERINGS FROM ESKOM
INTEGRATED DEMAND MANAGEMENT (IDM) OFFERINGS FROM ESKOM
INTEGRATED DEMAND MANAGEMENT (IDM) OFFERINGS FROM ESKOM
INTEGRATED DEMAND MANAGEMENT (IDM) OFFERINGS FROM ESKOM
INTEGRATED DEMAND MANAGEMENT (IDM) OFFERINGS FROM ESKOM
INTEGRATED DEMAND MANAGEMENT (IDM) OFFERINGS FROM ESKOM
INTEGRATED DEMAND MANAGEMENT (IDM) OFFERINGS FROM ESKOM
INTEGRATED DEMAND MANAGEMENT (IDM) OFFERINGS FROM ESKOM
INTEGRATED DEMAND MANAGEMENT (IDM) OFFERINGS FROM ESKOM
INTEGRATED DEMAND MANAGEMENT (IDM) OFFERINGS FROM ESKOM
INTEGRATED DEMAND MANAGEMENT (IDM) OFFERINGS FROM ESKOM
INTEGRATED DEMAND MANAGEMENT (IDM) OFFERINGS FROM ESKOM
INTEGRATED DEMAND MANAGEMENT (IDM) OFFERINGS FROM ESKOM
INTEGRATED DEMAND MANAGEMENT (IDM) OFFERINGS FROM ESKOM
INTEGRATED DEMAND MANAGEMENT (IDM) OFFERINGS FROM ESKOM
INTEGRATED DEMAND MANAGEMENT (IDM) OFFERINGS FROM ESKOM
INTEGRATED DEMAND MANAGEMENT (IDM) OFFERINGS FROM ESKOM
INTEGRATED DEMAND MANAGEMENT (IDM) OFFERINGS FROM ESKOM
INTEGRATED DEMAND MANAGEMENT (IDM) OFFERINGS FROM ESKOM
INTEGRATED DEMAND MANAGEMENT (IDM) OFFERINGS FROM ESKOM
INTEGRATED DEMAND MANAGEMENT (IDM) OFFERINGS FROM ESKOM
INTEGRATED DEMAND MANAGEMENT (IDM) OFFERINGS FROM ESKOM
INTEGRATED DEMAND MANAGEMENT (IDM) OFFERINGS FROM ESKOM
INTEGRATED DEMAND MANAGEMENT (IDM) OFFERINGS FROM ESKOM
INTEGRATED DEMAND MANAGEMENT (IDM) OFFERINGS FROM ESKOM
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INTEGRATED DEMAND MANAGEMENT (IDM) OFFERINGS FROM ESKOM

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“INTEGRATED DEMAND MANAGEMENT (IDM) OFFERINGS FROM ESKOM” …

“INTEGRATED DEMAND MANAGEMENT (IDM) OFFERINGS FROM ESKOM”

by Stephen Koopman of ESKOM

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  • 1. IDM / EEDSMSouth African Institute of Foundrymen 25 January 2011 Stephen Koopman Energy Services Manager
  • 2. Contents• Balancing demand and supply• Case for EE• Programmes• Benchmarks• Standard Offer• Implementation Methodology and Channels• Q&A Together we have the power to save 2
  • 3. Quarterly Update: State of the power system; 6 January2011• Keeping you informed • Transparent communication • Sharing concerns about the state of the system • Quarterly system status updates system for the next two years• Risks have increased • Unexpected heavy rains • Summer most challenging season • Unplanned shutdown at Koeberg • Uncertainty around how fast demand will ramp up • Our resolve to keep the lights on will be tested.• Support is important • Eskom cannot do it alone • We need cooperation to keep lights on • Anticipated increased demand as we all return to work Together we have the power to save 3
  • 4. Ensuring security of supply in the next 3 years• Eskom’s generation plant performance and new build programme • Ensure critical plant maintenance is done to ensure sustainable plant performance. • Target to improve generation output by between 1% and 2%.• • Energy efficiency initiatives • Eskom will need to execute its 4TWh demand-side management programme and do more with its funding and internal energy efficiency programme (target is 1 billion kWh). • Enabling the 1 million solar water geyser programme run by Government.• Own and co-generation • Sign up about 400MW of co-generation and own generation by April 2011. • Procurement process for 1 025MW of renewable energy technologies, to be commissioned in the next 3 to 4 years, should start as soon as possible. Eskom is ready to connect and pay the IPPs. • Investigating mechanisms with NERSA and Government to ensure already commissioned municipality generators produce and further co-generation options are secured. • Working with industry and NERSA to finalise a grid access framework to enable wheeling and own generation. Together we have the power to save 4
  • 5. SA can prevent load shedding by workingtogether• There are risks to the successful execution of some of the levers identified.• In the next two years, there is an energy gap and therefore an immediate focus is needed on implementing the identified actions and establishing a “safety net”• This can only be done through a national effort involving all stakeholders and the people of South Africa• Eskom will play its part in leading and partnering Together we have the power to save 5
  • 6. Signing up non-Eskom generation• Municipalities: Coal-fired stations • Eskom is engaging with the Johannesburg and Tshwane municipalities to support the operation of the stations (at least 200 MW)• Municipalities: Open cycle gas turbine stations • Eskom is engaging with the Cape Town, Nelson Mandela and Johannesburg municipalities to have the turbines on standby if needed (up to 100 MW)• “Embedded generation” • We are looking to contract with large shopping malls and other businesses that have substantial backup generators (up to 20 MW in some cases)• Co-generation/ MTPPP • Have signed four contracts for 287MW (Sasol, Ipsa and two Sappi contracts). Waiting for approvals on two more (88 MW) . Together we have the power to save 6
  • 7. What can SA do to help?• In the next two years, there is an energy gap and therefore an immediate focus is needed on energy efficiency• This can only be done through a national effort involving all stakeholders and the people of South Africa• A voluntary, incentive-based demand response programme is in place for our largest customers• If needed, a mandatory Energy Conservation scheme aimed at the largest 500 customers may be implemented• Eskom will play its part in leading and partnering Together we have the power to save 7
  • 8. Action needed from households• “If you’re not using it, switch it off.”• Geyser: Switch off geysers between 06:00 and 22:00, reduce thermostat to 60 degrees, insulate geyser and water pipes and replace geysers with solar waterheaters using Eskom’s rebate programme• Lighting: Replace incandescent light bulbs with energy savers, and switch off lights in unoccupied rooms• Bathing: Shower rather than bath as less hot water is used, and install an energy efficient shower head• Climate control: Minimise use of air conditioners by first opening windows to allow cool air to circulate• When using an air-conditioner keep the temperature setting between 18 – 22 degrees C• Insulate ceilings to keep home cool in summer and warm in winter• Pool pumps: Reduce the operating time to limit water circulation to twice a day and set the pool pump to operate between 24:00 and 05:00• Vampire appliance usage - Don’t leave appliances in standby mode. Unplug cell phone charger• Participate in the Power Alert programme on national TV (SABC and etv) Together we have the power to save 8
  • 9. Action needed from commercial offices• “If you’re not using it, switch it off.”• Standby electricity: • At the end of the day, don’t leave your computer, copier, printers and fax machines on standby mode• Lighting: • Replace inefficient systems - Eskom incentives available • Motion sensors for meeting rooms and security lighting, • Reduce lighting levels in parking areas to the minimum legal requirement during the day, and turn it off at night after the building lights have been turned off• Climate control: • Replace inefficient systems - Eskom incentives available • Maintain a difference of not more than 10 degrees Celsius between inside and outside a building, • Extraction fans can be turned on at around 04:00 to draw cold outside air through the building to cool down the structure, • Close window blinds to shade your rooms from direct sunlight, allow your workers to wear light, comfortable clothing during hot weather.• Appoint an Energy Manager for each building to monitor usage and identify savings opportunities Together we have the power to save 9
  • 10. Action needed from industry• Electricity usage optimisation needs to be driven by top management• Participate in a voluntary 10% energy reduction programme – some SA companies have already reduced by 10%• Identify opportunities for improved energy utilisation• Process optimisation• Technology improvements• Shift usage to off-peak periods• Participate in Eskom’s demand saving programme• Incentives available for energy savings projects• Approval lead times improved considerably• Participation in Demand Market Participation Programme• Incentives for hourly load reduction when tight system conditions prevail Together we have the power to save 10
  • 11. Chief Executive’s (and therefore our) Priorities Priorities• Regaining the confidence of all South • Relationship with Labour Africans and markets in Eskom – our reputation • Strong Engineering governance• Keeping the lights burning • Energy efficiency movement in South Africa• Find and implement a funding solution that • Develop competencies for execution strengthen the Eskom balance sheet and • Safety retain current investment grading for BBB+ • Operational excellence “back to basics”• Become customer centric • Southern African strategy• Deliver the build • Transforming our supply chain• Lean and mean – cost efficiencies • Efficient management of Capital• Comprehensive response to climate change • Introduction of private generators in the• Universal access South African Market• Employee value proposition • Management of bad debt Together we have the power to save 11 11
  • 12. Defining the Problem Nature of the problem: Energy vs Demand Energy 55 Capacity300290 50 51.45 279.75280 ve ser 273.17 47.17 Energy Required 46.50 Re GW 45 45.58 Ga p it y pac270 45.01 gy 265.44 Ca 44.78 258.58 E ner 270.31 Capacity Required 42.83260 41.36 250.42 40 258.63 Additional Buffer 40.23 38.84250 252.25 250.86 249.69 Supply Available Supply Available 35240 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 Initial 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 Gap -1.7% 0.5% 3.6% 3.5% 1.6% Gap 15.9% 13.3% 12.4% 10.1% 14.9%+Buffer 0.3% 2.4% 5.5% 5.3% 3.4% (Reserve) Energy Availability rather than Capacity is the challenge! 12
  • 13. Implications if the Gap is not closedNational Implications• The electricity supply system will be under severe pressure, posing a risk to Security of Supply• Using open cycle gas turbines to mitigate the risk is expensive, ultimately increasing the price of electricity• It will not be possible to connect large customers, negatively affecting economic development• South Africa’s sustainability, reputation and competitiveness will be negatively affected• Pressure to reduce supply to neighbouring countries could have negative political implications• Further reputational damage to government and the electricity industry• Lost opportunity to unlock economic efficiencies through more efficient use of electricity• Emergency and short term solutions to conserve energy could have unintended consequences. 13
  • 14. Decisive actions are required to secure supply in each of the four time periods 2021 onwardsTime period 2018-2020 2014-2017 2010-2013Capacity 10GW 9GW 5GW 26GW2addition ▪ DSM and ▪ DSM ▪ Baseload IPP ▪ Majority of Base case energy base load efficiency ▪ Kusile fleet: Nuclear ▪ Committed ▪ IPP/imports ▪ Other projects1 capacity: (promulgated CSP, gas, IRP) imports, coal1 Medupi, Ingula, REFIT, MTPPP, DoE OCGT IPP, Sere. Return to service (RTS) capacity not included2 16GW incremental plus 10GW replacement for decommissioning by 2028 in the proposed scenarioSOURCE: Team analysis 1414
  • 15. The role of Eskom and stakeholdersIndependent • Commission the capacity indicated in the medium-term power purchasePower programme and the first phase of the renewable energy feed-in tariff programmeProducers • Commission the required capacity on time, based on the country plan • Ensure 86% energy availability is achieved for current power stations (excluding Ensure 84% energy RTS) RTS) • Commission return to service plants as plannedEskom • Finalise power purchase agreements for IPPs (subject to cost recovery mechanisms and tariff level) • Implement DSM programmes • Support customers with education on energy efficiency • Large industrial and commercial customers to confirm their energy base-line and targeted savings to provide greater demand certaintyCustomers • Make changes in behaviour and technology to bring down electricity utilisation • Consider an overall target of 8 - 15% energy efficiency improvements for the country over five years 15 21
  • 16. Voice of the Customer• “Let’s work together to find a solution that will bring the best economic return to the country”• “The incident of the 24th January 2008 taught us all the difference between the value of electricity vs the cost of electricity”• “The key customers should be considered partners to Eskom in resolving the countries energy challenges”• “Load shedding is not an acceptable solution to safeguard the integrity of the system”• “Load shedding to Mining Operations & Industrial customers is like depriving a human of oxygen” 16
  • 17. The Business Case for Energy EfficiencyIssues Supply DemandCost (R/MWh) ±R4000/MWh (OCGT’s) ±R1000/MWh (DSM)Responsible for Funding Eskom Eskom + end consumerDelivery Timeframes Long Term (3 years +) Short Term (1-3 years)Country Objective : Climate Negative PositiveCountry Objective : National - PositiveProductivity The financial advantages of a fundamental shift towards demand management are compelling. The benefits in terms of security of supply drives the urgency of our 17 interventions here.
  • 18. The Case for Energy Efficiency South Africa vs. the Rest of the WorldPer Capita Electricity Consumption for Countries with similar GDP per capita (± 20%) relative to South Africa* 1.20 Gabon 1.15 (1,128 kWh pa)GDP per capita x South Africa GDP per capita 1.10 Venezuela (Bolivarian Republic of) 1.05 (3,770 kWh pa) Russian Federation Compared to other (6,425 kWh pa) South Africa 1.00 Mauritius Turkey Malaysia countries with a similar (1,775 kWh pa) (2,122 kWh pa) (3,196 kWh pa) (4,818 kWh pa) Saint Lucia Uruguay per capita GDP (15% 0.95 (1,879 kWh pa) (2,408 kWh pa) variance), SA is more Panama (1,807 kWh pa) Argentina (2,714 kWh pa) electricity intensive by Costa Rica 0.90 (1,876 kWh pa) Romania factor of 35-65% (2,548 kWh pa) Grenada (1,963 kWh pa) 0.85 Brazil (2,340 kWh pa) 0.80 - 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 Electricity consumption per capita x South Africa Electricity consumption per capita Source: UN (United Nations). 2007d. The 2004 Energy Statistics Yearbook. Department of Economic and Social Affairs, Statistics Division. New York. 18*Situation as in 2004, beneficiation policy and co-generation will alter the above picture
  • 19. The Integrated Resource Plan for Electricity 2010 (IRP2010) Revision 2 VERSION 8 8 OCTOBER 20102011/01/26 19
  • 20. Additional essential reading ….• The IRP 2010 should be read together with a document titled: • “Medium Term Risk Mitigation Project Phase 1” dated 17 September 2010. • As part of the IRP development process an Executive Medium Term Risk Management Plan was developed to address the short to medium terms risks of the current electricity supply shortage. • This plan aims to quantify and clarify the nature and the extent of the short- term supply risks and provide a quantum for immediate interventions to avoid load shedding’. 20
  • 21. IRP2010 definitions• “Demand Side” refers to the demand for, or consumption of, electricity.• “Demand Side Management” refers to interventions to reduce energy consumption• “Energy efficiency” refers to the effective use of energy to produce a given output (in a • production environment) or service (from a consumer point of view), i.e. a more energy-efficient • technology is one that produces the same service or output with less energy input. 21
  • 22. IRP2010• In summary the plan includes:• The continuation of Eskom’s committed build programme (including the return to service of Grootvlei and Komati power stations, and the construction of Medupi (4332 MW), Kusile (4338 MW) and Ingula (1332 60MW) power stations).• The construction of the Sere power station (100 MW wind farm).• Phase 1 of the Renewable Energy power purchase programme linked to the National Energy Regulator of South Africa (NERSA) Renewable Energy Feed-In Tariff (REFIT1) programme amounting to 1025 MW (made up from wind, concentrated solar power(CSP), landfill and small hydro options).• Phase 1 of the Medium Term Power Purchase programme of 390 MW (made up from cogeneration and own build options).• The Open Cycle Gas Turbine (OCGT) Independent Power Producer (IPP) programme of the Department of Energy (DoE) of 1020 MW.• A nuclear fleet strategy, commencing in 2023, contributing at least 9,6 GW by 2030. The nuclear costs included in the IRP are generic values as for the other technologies and are not intended to tie the IRP to a specific technology.• A wind programme in addition to the REFIT1 wind capacity, commencing in 2014, of a minimum 3,8 GW.• A solar programme in addition to the REFIT1 solar capacity, commencing in 2016, of a minimum 400 MW. This does not include solar water heating, which is included in the DSM programme (to the extent of 1617 MW).• A renewable programme from 2020, incorporating all renewable options, inclusive of wind, concentrating solar power (CSP), solar photo-voltaic, landfill, and hydro, amongst others) of an additional 7,2 GW. 22
  • 23. IRP2010 (continued)• Imported hydro options from the region totalling 3349 MW from 2020 to 2023.• CCGT capacity, fuelled with imported LNG, totalling 1896 MW from 2019 to 2021.• Own generation or co-generation options of 1253 MW as identified in the Medium Term Risk Assessment study.• Up to 5 GW of generic coal-based power generation from 2027 to 2030 (in addition to Medupi and Kusile). The choice of technology could be traditional pulverised fuel or clean coal technologies. The builder of the capacity could be Eskom, South African IPPs or regional IPPs. The choice of technology will be based on current assessments of carbon capture and storage sites and the impact of climate change mitigation targets.• With the commercialisation of carbon sequestration technologies, additional coal options INTEGRATED RESOURCE PLAN (2010 Rev 2) DRAFT Report October 2010 viii could become viable. However for this IRP it was assumed that such technologies arenot sufficiently developed to be included. Further iterations of the IRP could revisit this.• Up to 5750 MW of peaking OCGT. This option could also be provided by demand response programmes.• Eskom’s DSM programme as stipulated in the multi-year price determination (MYPD) application has been incorporated. The breakdown of associated technologies for DSM is included in Appendix B, indicating the expected savings from the various constituent programmes. 23
  • 24. Together we have the power to save 24
  • 25. Programmes and Forward Plan Total Year 1 Year 2 Year 3Programme MW GWh Costs MW GWh Costs MW GWh Costs MW GWh CostsLighting &HVAC 88 554 403 24 131 131 32 213 156 32 210 136Hot Water 382 1,244 2,006 92 303 654 104 347 531 186 595 864DemandResponse 261 0 785 47 0 51 71 0 238 144 0 489Compressed Air 118 464 511 42 166 120 37 146 165 39 153 174Ind Process Opt 225 1,464 955 96 396 200 70 583 385 59 486 367Other & NewInitiatives 0 0 631 0 0 83 0 0 100 0 0 448Total 1,074 3,727 5,292 301 995 1,239 313 1,288 1,576 459 1,444 2,477 Together we have the power to save 25
  • 26. Benchmarks Programmes OfferLighting & HVAC Up to 5.2m/MWSolar water heating (SWH) Up to 6.3m/MWHeat pumps Up to 5.2m/MWDemand Response Up to 3.5m/MWCompressed Air Up to 4.4m/MWProcess Optimisation Up to 5.2m/MWShower Heads Up to 2.8m/MW Together we have the power to save 26
  • 27. Processes of ImplementationESCo Programme ESCo submitting proposals and executeStandard offer/Customer Paying for savings at predetermined rateOffer Funded programs to encourage energy efficiency inStandard Product communities – e.g. CFL’s Incentives given to encourage energy saving e.g. Solar waterRebate Programmes heating Customers encouraged to fund own energy efficiency projectsEnergy Advisory Services through self funding schemes but savings claimable by Eskom Together we have the power to save 27
  • 28. ESCO Implementation Model Eskom DSM • Evaluation DSM Customer • Financier Agreement • Sustainability ESCo ESCo Maintenance or New Engineering • Audit Performance Contract • Proposal agreement • Installation Together we have the power to save 28
  • 29. ESCO process flow 29
  • 30. What is the standard offer?• The Standard Offer is a mechanism used by Eskom for acquiring EE savings under which Eskom shall pay for verified energy savings using a pre- determined and pre-published rate in c/kWh for the implementation of an approved technology.• Any energy user (customer) or energy service company (ESCO) that can deliver verifiable energy savings shall be paid the fixed amount per kWh over a period of four-years.• Achieved savings will be verified by an authorized measurement and verification (M&V) organization.• It should be noted that the Standard Offer does not replace the existing Eskom EEDSM application process. 30 30
  • 31. Standard offer 31
  • 32. Funding•Eskom has a total budget of R30 million for this Pilot Program over the next fouryears. Eskom may increase this amount subject to certain conditions if the responseto the Pilot Program in the first six months exceeds expectations. 34c/kWh•The standard offer price = 26c/kwh•The project developer is limited to receiving no more than R 4 326 400 for a project orgroup of projects subject to measurement and verification under the Pilot programme.•In no case will Eskom provide more than the Initial Purchase Price per project for thePilot Program purposes.•Initial Payment Price = Estimated Annual Energy Savings (kWh/pa) x Fixed rate(c/kWh) ÷ 100 x 4 years 32 32
  • 33. Operational Process RequirementsIDM Delivery Channels Standard Product Standard Offer ESCO Process (incl rebate) (being Mass Roll-out (Pilot) developed) Size Projects > 1MW 100kW<Project<1MW Projects <100kW Large Scale Roll-outs Eskom Standard value per Standard value per item Based on individual In line with MYPD kWh saved per calculated based on Payment Value project calculation technology savings potential benchmarks Customer and Eskom Market price per Market price per Funding (up to NERSA technology (up to 85% technology (up to Eskom or Fiscus benchmark) of NERSA benchmark) NERSA benchmark) 40% on Progress payments to 100% on installation, Payment ESCO implementation, 20% based on M&V Progress payments p/a based on M&V Risk Eskom risk Limited Eskom risk Limited Eskom risk Low risk Investment Individual Investment Bulk Investment Bulk Investment Individual Investment Decision approval approval per technology approval per technology approval Procurement Price evaluation based Streamline individual Streamline individual Individual tender Decision on submitted approval project approvals project approvals processes 33
  • 34. Thank You Together we have the power to save 34

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