Energy Supply Challenges in South Africa Thava Govender Group Executive: Generation Eskom Holdings SOC Limited

Background & Introduction Eskom has kept the lights on since 2008 by: • •

Initiatives to manage the tight system Lower than expected demand

Maintenance must be undertaken: •

But the risk to the system increases as units are taken out of service for maintenance

Eskom is resolved to keep the lights on: •

But we cannot do it alone

Energy efficiency and conservation is crucial to reduce demand to provide: •

•

The reserve margin needed to protect the electricity supply system The opportunity to undertake maintenance

Timeline

2009

2011 Balancing

Consolidation

2008

2010

Recovery

Challenges

2012/13 KLO

2008 RECOVERY Eskom is to suspend scheduled load shedding from Monday, May 5, said the utility's chief executive officer. He said: "We are seeing evidence of increased energy savings from municipalities and Eskom is optimistic that further reductions to reach our 10% savings target are possible." SAPA: 1 May, 2008

Maintenance

Return to Service

SA, Lights on

Coal Quality

Financial crisis

2009 CONSOLIDATION Generator unavailability %

5.5

5.0 4.5 4.0 3.5 3.0 2.5 2.0

F2006

F2007

F2008

F2009

SUMMARY • Successful implementation of Plant performance recovery initiatives but sustaining the superior performance levels proved to be significantly more challenging • Plant condition began adversely impacting the outage scope • Reserve margin allowed some level of flexibility due to a decrease in demand from 2008

SOURCE

SCOPE / TITLE

PERFORMANCE BENCHMARKING RESULT

Apr 2008

Appraisal of the Eskom Report: Benchmarking: Statistical Analysis of VGB, NERC, and WEC data

"VGB agrees that the performance of Eskom coal fired power plants is better than the performance of the relevant peer groups - VGB, NERC and WEC in terms of best quartile and median."

Benchmarking the technical performance of Eskom’s coal fleet

"Eskom’s generation performance in terms of energy availability was within the top decile of the peer group analyzed and that despite a deterioration in Eskom’s Generation Unit Capability Factor it is still amongst the best performers globally"

Oct 2008

2010 CHALLENGES As the global economy started to recover, so did the national demand for energy in South Africa to its 2007 levels. Several of Eskom’s stations are also currently in their mid-life and this meant that significant refurbishment work is needed. Keeping the lights on

Plant Health

2010 CHALLENGES – World Cup 2010 Daily Reserve Margin at Peak World Cup 2010 (11 Jun - 11 Jul)

5000

5000

MW

MW 4000

4000

3000

3000

2000

2000

1000

1000

0

0

-1000

-1000

-2000

-2000

-3000

-3000

Adequate generation to meet demand and reserves Expect to use DMP and EL1 May be necessary to use Interruptible load shedding (ILS) Expect that all ILS will be used. OCGTs required Rotating manual shedding probable

11-Jul

09-Jul

07-Jul

05-Jul

03-Jul

01-Jul

29-Jun

27-Jun

25-Jun

23-Jun

21-Jun

19-Jun

17-Jun

15-Jun

13-Jun

11-Jun

Maintenance was kept at a minimum in order to ensure sufficient capacity during World Cup 2010. The system remained healthy during the month-long tournament despite South Africa experiencing one of its coldest winters * The legend and scale is representative of the reserve margin grading at the time (2010)

7

2011 BALANCING - Daily reserve margin Maintenance

Year

~ MW

% 8.8 9.5 8.6 8.14

2008 2009 2010 2011

3370 3733 3458 3315

Arnot Hendrina Kriel Matla Duvha Tutuka Lethabo Matimba Kendal

Mid - Life 0

10

20

30

40 Age 50

In 2010 and 2011 the system was run much closer to the “red line” compared to 2009 to address the plant maintenance requirements. However, the total amount of maintenance was insufficient, thus a maintenance backlog developed

2012/13 KEEP the LIGHTS ON – Recovery steps from 2008

SUPPLY SIDE

PRIMARY ENERGY

> 2 000MW of new capacity has been added

Coal stockpiles moved from 12 days to just over 40 days

> 1 000MW of capacity signed up from IPPs and municipal generators

15 million litre diesel storage facility hired in Cape Town

DEMAND SIDE MANAGEMENT

EMERGENCY PREPAREDNESS

> 1 500MW of verified savings since 2008

Approval of load shedding and critical load management protocol (NRSO48)

>150 projects to upgrade plant and lighting at industrial installations, mines and commercial buildings

COMMUNICATION

Power Alert campaign on SABC and e-TV 49M campaign

Timeline

2014 and beyond Sustainable Generation

2012/13 Keep the Lights On

Planned maintenance and unplanned outages Apr

May

Jun

Jul

Aug

Sept

Oct

Nov

Dec

13.51

13.81

10.5

7.41

5.45

5.44

5.27

8.74

9.63

13.06

7.62

8.42

8.66

6.3

4.5

2.9

5.97

8.8

9.56

7.64

15.58

10.53

10.71

11.57

7.0

2.6

1.72

6.36

10.66

8.54

9.06

12.31

Planned %

Jan

Feb

Mar

2013

13.07

9.7

9.1

2012

12.57

13.1

2011

9.96

2010

11.91



Reduced Hydro Cahora Bassa imports, the Koeberg 1 outage, and high unplanned outages meant less space to do planned maintenance



Power station performance tends to be more volatile in summer



More maintenance needed to improve reliability



Reduction of unplanned outages to 4500 MW by winter

Unplanned Plant Unavailability at Peak 9000 8000 7000

MW

6000 5000

Unavailability

4000 Winter Allowance

3000 2000

Summer Allowance

1000 0

Date

We increased use of open cycle gas turbines to keep the lights on

The OCGTs were run harder in January, February and March 2013 than in any month in the last 4 years. Average load factors were close to 20%.

Cahora Bassa availability HCB: Energy Availability Factor (EAF) Jan 2012 - April 2013

1.40

2.5

1.20 2 1.00 1.5

0.80 0.60

1

0.40 0.5 0.20 0.00 01-Jan-12

0 01-Mar-12

01-May-12

01-Jul-12

01-Sep-12

01-Nov-12

01-Jan-13

01-Mar-13



The graph depicts the performance of the HVDC system in terms of its availability



The availability since July 2012 has been poor



This is due to the loss of a smoothing reactor (returned to service 15 November 2012) followed by the loss of one of the lines due to flooding

Integrated Demand Management Savings (MW) 700 MYPD 2

IDM Achievement

585

Demand Savings (MW)

600 500

447

400 300

345 289

342

301

200

100 0 FY 2010/11 - Actual

FY 2011/12 - Actual

FY 2012/13 - Projection

MYPD 2 Cumulative Demand Savings target = 1037MW IDM Achievement (subject to final audit) = 1272MW (123% of MYDP2 target)

The demand side management programme run by Eskom has resulted in over 3 500MW of savings since its inception Cumulative verified demand savings (MW) 3 500 3 000 2 500 2 000 1 500 1 000 500 0 2005

2006

2007

2008

Verified MW

2009

2010

2011

2012

2013

Eskom Target

• The accumulated verified demand savings for the combined financial years 2005 to 2013, is 3 586MW

Energy Savings (GWh) 2 500 Annualised energy savings (GWh)

Demand savings (MW)

4 000

2 244 1 827

2 000 1 500

1 339

1 422

1 000 500

0 2011

2012

2013

Target 2013

• This is almost equivalent to the output of a typical power station

Residential programmes on track









Power Alert system: consistently achieved a residential evening peak demand reduction of over 320 MW, during summer, on the worst system constrained days. (>17,7 million lights or 107 thousand geysers) Residential mass rollout programme: phase 1 is complete and achieved a total savings of 218 MW. More than 800 000 lower to middle income households were visited (227 direct jobs and 3018 indirect jobs created) Residential mass rollout programme: phase 2 was launched in September 2012. The savings target is 80 MW and should be completed in early 2014 financial year. The plan is to reach between 150 000 and 180 000 middle income households who will benefit from the retrofit of geyser and pool timers, efficient shower heads and lighting. This phase is expected to generate in excess of 800 indirect jobs Water heat pump rebate programme: continues to grow. A total of 6 807 units have been installed to date of which 3 962 were installed in the 2013 financial year.

Winter 2013 – Typical Demand Profile Winter peak is high but short – last winter peak was just under 37 GW. This winter expected peak is 36.8 GW

Summer load profile is much flatter, peak of 32 – 33 GW, so if there is a constraint, the system is constrained for the entire day

Going into winter, demand can spike by more than 3000 MW during evening peak – equivalent to five units of a large power station

Outlook for winter 

   





Hydro Cahora Bassa increased its output to 1 300 MW on 22 April 2013; the final 200 MW is expected to be restored by the third quarter of 2013. Koeberg Unit 1 returned to service 22 April 2013 Planned maintenance outages over the peak winter period (June-July) are approximately 2 000 MW. This is maintenance work that cannot be deferred There is an intense focus on reducing the level of unplanned outages to below 4 500 MW Peak demand this winter is forecast at 36.8 GW, slightly lower than in 2012, but this is the average for an hour – the “peak within the peak” can go as high as 37 GW – 38 GW We have supply and demand side initiatives in place – but the NERSA tariff decision could impact on our ability to finance the demand side measures needed to manage a tight system Approximately 2 100 MW of Interruptible demand, for up to two hours a week, is available from the BHP Billiton aluminium smelters to help manage the frequency of the power system

Power buybacks 



  

Eskom and large customers, mainly in the ferrochrome and ferroalloy industries entered into a mutually beneficial arrangement in terms of power buybacks Up to 1 000 MW of power was bought back with a commitment from the customers involved to not compromise contractual commitments with their customers nor incur job losses Eskom used this space to continue with its planned maintenance programme The current power buyback programme began in November 2012 and comes to an end on 31 May 2013 Winter tariffs for Eskom’s large industrial and mining customers are implemented in the months of June, July and August and these result in reduced demand

“Beat the Peak” - Four Hours, Four Steps  

Saving electricity reduces pressure on the grid and cuts your electricity bill and South Africa’s carbon emissions Evening peak is between 5 pm and 9 pm – four steps to beat the peak 1. Switch off all geysers and pool pumps during peak 2. Switch off all non-essential lighting 3. Find alternative to electrical heaters • Dress warmly, and make less use of space heaters • Insulate ceilings to keep the heat in • Invest in thermostatically controlled heaters (fan heaters are ideal for quick heat; oil heaters for longer periods) • Consider gas heaters and hot water bottles



4. Respond to the Power Alert messages by switching off all appliances that are not being used Switch to energy efficient technologies: take advantage of solar water and water heating pump rebates and the residential mass rollout programme, which provides a range of free products

20

The need for a sustainable Generation fleet  







Our power stations are ageing and need focus to maintain and improve performance. Planned maintenance has often had to be shifted or deferred to ensure we have the capacity available to meet demand and keep the lights on. This approach is not sustainable – it is essential that planned maintenance be done to enable predictable and sustainable performance from Eskom’s power stations. Eskom has put in place a five year strategy for Generation sustainability which includes a firm commitment not to postpone critical maintenance. We will implement a programme which will allow for better resource planning and more effective use of contractor capacity as well as improved internal skills and processes.

Achieving a Sustainable Generation Business requires us to accommodate all major types of maintenance; however, essential philosophy maintenance have been sacrificed in the last few years ▪ Major projects

▪

▪ Environmental

Design-based Maintenance

Statutory and Safety

▪

Sustainability projects refurbish plant condition back to useful life Enhancement projects improve station performance (e.g. LifeEx)

Essential Design-based maintenance backlogged, while Statutory and Environmental - related maintenance given preference

Upgrades to plant to reduce the environmental impact of operating the plant, e.g., reduce emissions or water usage

Design-based maintenance only a small proportion of PCLF executed (needs to be 6%)

Preventive maintenance intended to keep the plant in working order. The maintenance is carried out at regular, predetermined intervals (e.g. inspection every 18 months)

▪ Statutory maintenance required by law ▪ Safety maintenance ensures a safe operating environment

Plant Short-term/ Emergent Work

▪ Short-term is work done on weekends ▪

and other short duration maintenance opportunities Emergent maintenance is reactive to address arising signs of existing or imminent failure

Executed DesignPCLF based

Statutory Short and term Safety

Emergent Outage extension

Strategy to ensure a sustainable Generation fleet 

We have chosen a maintenance strategy for the next five years which will ensure that Eskom’s Generation fleet is sustainable for the long term



80:10:10 principle – on average, an Energy Availability Factor of 80%, planned maintenance of 10% and a projected unplanned outage ratio of 10%



About 8% of the planned maintenance will be made up of maintenance that is fixed in terms of its schedule. The other 2% will be short term maintenance - allows for certainty in planning and executing the maintenance outages



Any improvement in unplanned outages will be used to create space for planned maintenance



A minimum of 9 units will undergo planned maintenance this winter, because they have reached technical or statutory limits. This cannot be rescheduled.

Conclusions 

The power system has been very tight during summer because of reduced imports and high levels of unplanned outages, including Koeberg Unit 1, and this has meant less space to do the maintenance work we had planned



Going into winter, Eskom will for the first time plan to do extensive maintenance work, even during the coldest months, to improve reliability



Our teams are preparing contingency plans to manage the impact of any severe weather events – as they did last winter



We urge all customers to reduce demand, particularly over evening peak from 5 pm - 9 pm: Beat the Peak



We have done a comprehensive review of the five year maintenance plan required to ensure our power stations can deliver more sustainable performance



We have put initiatives in place on the supply and demand side – but are concerned about the impact of the tariff decision on these



An Energy Conservation Scheme or similar measures is needed as a safety net



We are determined to keep the lights on for South Africa – but Eskom cannot do it alone

THANK YOU