State of the Power System Quarterly Update. Winter Outlook. 5 June Collin Matjila Interim Chief Executive

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1 State of the Power System Quarterly Update 5 June 2014 Winter Outlook Collin Matjila Interim Chief Executive

2 Overview Pre-winter Overview Winter Outlook IPPs and New Build Conclusion 2

3 Overview Eskom load shed for the first time in 6 years for 14 hours on 6 March. This was due to a major coal supply incident in a very tight system, exaggerated by unprecedented rainfall throughout the country. This was a painful yet necessary decision to protect the electricity power system from a total country-wide blackout. The system continues to remain tight and vulnerable this winter meaning that any shift on the power system could result in a shortage of supply. This could result in Eskom invoking its emergency protocols. In winter, the load will increase by up to 36.0 GW particularly during the evening peak from 5pm to 9pm. The increase is predominantly due to the use of space heating, geysers and cooking that takes place during this time. While we continue with maintenance, this will ramp down in June. We will increase and secure approximately 400 MWs through demand market participation from key industrial customers. In addition we will utilise independent power producers and municipal generation to offset this over-reliance during winter. It remains important for all customers to Beat the Peak from 5pm to 9pm this winter, by maintaining or achieving 10% electricity savings especially in the commercial and residential sectors. The period from 5:30pm to 6:30pm has the highest demand.

4 Overview continued The Eskom Leadership, together with the Eskom Board have taken a hands-on joint responsibility, by establishing an Emergency Task Team, to oversee long-term financial and operational sustainability. The objective is to develop levers and solutions to ensure that Eskom continues to ensure security of supply. Deliver on Financial Sustainability by achieving Business Productivity targets, including funding options and driving internal efficiencies Deliver on Operational Sustainability by primarily ensuring improved Generation plant performance, and other supply-side measures Deliver on Asset Creation by ensuring Medupi Unit 6 is synchronised 4

5 Plan up to Medupi synchronisation Target Current Projection Comments Election plan 4500 MW 4800 MW 4500 MW - Successfully completed including inauguration Winter plan 4500 MW 4500 MW 4500 MW - Unplanned generation maintenance (UCLF) trending downwards. Partial load losses going down to about 2000 MW Summer plan to Medupi 6500 MW 6500 MW - Secure additional capacity and demand management 5

6 Other operation sustainability measures Target Current Projection Comments Generation maintenance plan - Manage slip, absorb Duvha U3, review UCLF assumptions, clear partial load losses through 2-3 week intervention Emissions - Applied for 5-year postponement of compliance Additional supply Independent Power Producers Additional demand reduction 1000 MW 705 MW 900 MW - Commercial process for additional IPPs, municipalities and Aggreko 1000 MW 40 MW 1000 MW - 40 MW supplemental DR secured. 30 MW DR in the pipeline - Executing the reduction of long standing partial load losses by 1000 MW for 2-3 weeks 6

7 Targeted Levers Supply Side target >1000 MW Reduce partial load losses 1000 MW Short Term IPP 300 MW Kelvin 150 MW Aggreko 148 MW Demand Side target >1500 MW Supplemental DMP 230 MW IDMP 700 MW Other 200 MW Interruptible contracts Open process 500 MW Driving world class generation performance, with Zero Harm 7

8 Overview Pre-winter Overview Winter Outlook IPPs and New Build Conclusion 8

9 Pre-winter overview The period running up to winter was difficult. We are grateful to all industrial, commercial and residential consumers for reducing load during this period. Power system emergencies - whereby key industrial customers, excluding mines, were instructed to reduce load - were declared on, 20 Feb, 21 Feb and 6 March to protect the integrity of the national power system. This pragmatic use of the NRS048-9 Code of Practice avoided load shedding on two of the three occasions during this period. This was achieved as key industrial customers reduced load as instructed. We incurred very high diesel expenditure and interruptible loads were used beyond the contracted times to manage the system during this period. On 6 March rotational load shedding was required to ensure power system integrity. Large customers curtailed load by 20% while exports reduced from about 1500 MW to 1100 MW which was just over a 25% reduction. All available independent power (wind, gas and solar) and municipal generation available in the country was brought on-line to supplement supply. 9

10 Pre-winter generation challenges Imports from Cahora Bassa were twice reduced from 1500 MW to 850 MW due to a transmission line failure in Mozambique. Koeberg Unit 2 (900 MW) was taken out for planned re-fuelling late March On 30 March a boiler incident on Unit 3 at Duvha resulted in the unavailability of 600 MW. The incident is still under investigation. The Duvha coal conveyor belt that was impacted by fire in December 2013 has now been re-built. Coal stocks at Duvha have now recovered to normal levels. Until recently all coal had to be trucked into the station. Boiler tube leaks due to high load factors and poor coal quality remain the prime reason for power station outages. 10

11 Overview Pre-winter Overview Winter Outlook IPPs and New Build Conclusion 11

12 Context for winter 2014 Winter 2014 is likely to be very similar to that of last year. However, the risk is always significantly increased during extreme cold fronts, especially when these occur during the week. As was done in winter 2013, some generation maintenance will continue to be done throughout the winter, but will ramp down in June, to assist in ensuring a sustainable generation fleet. There is expected to be sufficient plant to meet the demand during the day while the challenge exists over the short sharp evening peak particularly between 5:30 and 6:30 pm. While the number of IPPs that are connected to the grid continues to grow and contribute to meeting the country s energy demands, the contribution over peak is currently not substantial. There is slightly less dependency on South Africa by some of the neighbouring utilities. 12

13 Winter profile: Beat the Peak Peak profile experienced from as early as May up to end-august Constrained from 5pm 9pm (with the highest demand and risk from 5:30pm to 6:30pm) Electrical heating, geysers and pool pumps primarily impact demand Residential customers can make the biggest difference as demand increases in the evenings MW Summer & Winter load profiles Summer flat (Table Mountain profile) Typical Winter Day :00 02:00 05:00 08:00 11:00 14:00 17:00 20:00 23:00 02:00 Winter Peak Profile Winter constraints are short, sharp peaks while summer constraints are throughout the day Help us Beat the Peak as it reduces high diesel usage 13

14 Comparison with winter 2013 Supply Side Winter 2013 Winter 2014 Cahora Bassa s output during winter was 1300 MW Planned maintenance done in June July of approximately 2000 MW No significant long-term Unit outage. Duvha Unit 4 returned to service Jan 2013 No Renewable IPPs utilised Other supply-side input between 200 MW to 300 MW Power station's production not constrained by Emission License Cahora Bassa at 1300 MW, expected to return to 1500 MW by July Planned maintenance ramped down to 1620 MW by July Duvha Unit 3 off load (575 MW), boiler pressurisation incident. Under investigation Approximately 600 MW renewables, however very limited benefit over peak Other supply-side input an average of 345 MW (includes increase to 148 MW from Aggreko) New Atmospheric Licences require emission related load reductions (Kriel and Grootvlei most impacted) 14

15 Comparison with winter 2013 Demand Side Winter 2013 Winter 2014 Peak demand 35.4 GW on 11 June 2013 Peak demand projected below 36.0 GW No power buy-backs No power buy-backs About 2100 MW of interruptible demand available from BHP Open cycle gas turbines and reduction by contracted industrial customers were used to meet demand About 2000 MW of interruptible demand available from BHP Open cycle gas turbines and reduction by contracted customers to be utilised We urge South Africans to continue to respond with additional savings through Power Alerts on TV 15

16 Maintenance over this period As at 29 May 2014 A significant level of planned maintenance was conducted compared to previous years The tight system in March resulted in short-term delays in the maintenance programme, impacting the longer-term programme going forward 16

17 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec GWh Increased gas turbine usage Total Monthly OCGT and GT Energy Utilisation 2012 Total (OCGT + GT) Total (OCGT + GT) 2014 Total (OCGT + GT) As at 29 May Although costly, the use of OCGTs created space to do maintenance Lower OCGT usage is expected in winter due to the peak profile 17

18 Winter 2014 Planned Maintenance MW Demand Forecast Planned Maintenance 0 1-Apr 15-Apr 29-Apr 13-May 27-May 10-Jun 24-Jun 8-Jul 22-Jul 5-Aug 19-Aug MW Planned Maintenance versus Demand Forecast Year to date Unplanned Losses trending down Partial Load Losses Coal Quality Load Losses 0 01-Apr 08-Apr 15-Apr 22-Apr 29-Apr 06-May 13-May May 27-May MW Planned Maintenance over winter drops to 1600 MW when demand is forecasted to be the highest for the year On-line Load Loss Reduction Plan being executed to improve capacity available by 1000 MW

19 System Outlook: localised outages Localised outages in urban areas generally increase during winter due to increased levels of customer demand and hence greater stress on the system. High level of illegal connections in winter cause significant load increase and subsequent overloading of the localised network. In preparedness for the higher demand in winter, Eskom strengthened its distribution network during the summer and we anticipate fewer localised outages as a result. Ongoing maintenance includes: Installation on additional re-closers and links, proactive thermal scanning and maintenance, pro-active pole top inspection using live work techniques. In the event of power outages, Eskom s key focus is to improve the restoration time of supply; in this regard, we have embarked on projects for moving networks in townships to allow for easy access. Eskom has embarked nationally on an intense program to counter illegal connections and to prevent meter tampering. Report all electricity theft or tampering to Crime Line: Eskom customers should assume that all power outages are localised and should report faults to the Eskom Contact Centre Municipal customers should report localised faults directly to their Municipalities 19

20 Projected winter system outlook With the increase in demand as we move deeper into winter, the system will remain tight with an increased use of Open Cycle Gas Turbines (OCGTs) Supply and demand-side levers are required to improve the picture As this includes OCGTs, it must be noted that RED and ORANGE indicate a severely constrained system while PURPLE indicates a high probability of requiring load reduction. 20

21 Coal stock at sufficient levels Coal stock days are above the expected level of 42 days, with April 2014 ending on 45 days. (May 2014 is up to 28 May 2014) Stock days are below minimum levels at the following stations: Arnot Below minimum, additional coal sourced and deliveries started Tutuka Below minimum but steadily increasing Actual Stock days FY2008, FY2014 and YTD FY /8 2013/ / Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Note: Eskom financial year is from April to March 21

22 How to Beat the Peak this winter Saving electricity not only reduces pressure on the grid but also reduces on your electricity bill and South Africa s carbon emissions. Evening peak is experienced between 5pm and 9pm. Switch off! Particularly from 5:30pm to 6:30pm, when the demand is at its highest. To keep the system in balance please: Switch off geysers and pool pumps during peak times Reduce swimming pool pump operating time and limit water circulation to once a day Dress for the weather, to postpone switching on space heaters Install ceiling insulation - an insulated room requires 51% less energy to heat up Invest in a thermostatically controlled heater - a fan heater is ideal for quick heat situations, while an oil heater can be considered to keep a room warm for longer periods Consider gas heaters and hot water bottles to keep warm Respond to the Power Alert messages by switching off all appliances that are not being used 22

23 Overview Pre-winter Overview Winter Outlook IPP s and New Build Conclusion 23

24 Supply-side: Renewable IPPs gain momentum The Department of Energy introduced three bid windows for the Renewable Independent Power Purchase Programme Of the 21 Renewable IPPs connected to the grid, 10 projects (312 MW) have achieved their contractual Commercial Operation Date (COD) and 3 projects are generating Early Operating Energy. Expect the last project of Bid Window 1 by no later than the first half of 2015 Bid Date MW Power Purchase Agreements Type of Technology Status (As at 16 April 2014) 1 5 Nov Wind, Solar PV, Solar CSP 2 9 May Wind, Solar PV, Solar CSP, Landfill & Biomass - 21 of 28 connected - 10 projects achieved COD; 3 projects in Early Operating - Last plant commercial expected by Feb Progressing well 3 - Bid Window 3 still to be concluded 17 bidders for 1456 MW - Wind, Solar PV, Solar CSP, Landfill and Biomass technology 24

25 New build status Medupi Unit 6 is on track for synchronisation by December Kusile s overall performance against target is still not where Eskom would like it to be Unit 1 synchronisation is still targeted for 2015/16 financial year The Ingula schedule is still significantly impacted by the accident that resulted in 6 fatalities at the end of October 2013 There is a 12-month expected delay on Unit 3 first synchronisation, now forecasted second half

26 Continued progress with New Build Twenty of the 46 wind-turbines at Sere Power Station are complete and the station s 100 MW is expected to be commissioned by end of FY 2014/15 26

27 Overview Pre-winter Overview Winter Outlook IPP s and New Build Conclusion 27

28 Conclusion Eskom leadership and the Eskom Board are taking a hands-on approach to ensure operational sustainability. The system remains tight this Winter particularly during peak from 5pm to 9pm, (with the highest risk between 5:30pm 6:30pm) and will remain so for the next few years until the build programme is completed. The tight system means that the probability of load reduction and load shedding remains high in the event of significant incidents on the power system. As a precautionary measure, residential customers should familiarise themselves and download winter load shedding schedules. We thank all electricity users who continue to assist by reducing consumption. 28

29 Thank you

30 Duvha Unit 3 boiler incident investigation Progress update on the Duvha Unit 3 major incident investigation

31 Duvha Unit 3 s boiler has been severely damaged as a result of an internal explosion At 23:20 on 30 March 2014, an explosion occurred in the Duvha Unit 3 boiler resulting in catastrophic damage. Immediately following the explosion an emergency response was initiated. The incident investigation process is aligned to international best practice to identify the root cause. The investigation process is expected to last until the end of August A business case is being developed concurrently to determine the best option for recovering the lost 600 MW of capacity. 31

32 Immediately after the Duvha Unit 3 boiler explosion occurred an emergency response was initiated Complete shutdown of Unit 3 Complete Safe to operate assessment of other 5 units Quarantine Unit 3 for investigation and recovery The entire unit was shutdown and isolated as per the operating procedure Major incident reported to National Control All key stakeholders informed of incident Inspection of the remaining five units with all relevant stakeholders to assess if units were safe for continued operation Assessment findings presented to power station manager (PSM) to prove safe operation of remaining units PSM approved continued operation of remaining units Entire Unit 3 quarantine with only authorized personnel granted access All Eskom Class 1 incident investigation protocols instituted An incident investigation, assessment and recovery team set up for the unit SOURCE: Assurance and Forensics team 32