Powering the Future Knowledge, Technology, Interaction African Utility Week Silas Mzingeli Zimu C.E.O. Suzlon Wind Energy SA CTICC 14 th May2014
Political Overview The society we are striving to build Politics of ANC informed by Freedom Charter These ideas also informed the Constitution of RSA, Act 108 of 1996 GDP GDS/IDP building a developmental state Developmental state Improving life of people Improving quality of life Building capacity Sustainable economic growth Massive infrastructure investment Aligned resources Broad based economic development Green technologies/alternative energy 2
ANC Priorities Manifesto commitment Sustainable jobs creation Education and skills development Better health care Rural development Poverty reduction Access to basic services, incl electricity (34m with access to electricity; 15m without) Energy supply to be more than the demand Reduce environmental pollution Reduce global warming Eliminate theft and vandalism of key national points, such as electricity infrastructure 3
Global Situation in Recent Years Energy crisis is a reality. The headlines below show that this is a global challenge. Spain Hits Record Demand Friday, Cuts Seen Government Prepares To Avoid Blackouts Next Winter Italy Braces For Possible More Blackouts Monday Adopted from EPRI Presentation Intl. Demand Response Issues
The global challenge: To sustain growth and prosperity South Africa 1994-2010 growth 79% Real GDP 16.7% Power capacity (~6 500 MW) How do we keep the lights on and move to a cleaner future? This requires vast investments in power generation capacity; affordable and universal access to electricity; move to a cleaner future 5
SAPP PLAN: ELECTRICITY GENERATION CAPACITY Numerous projects (generation & transmission) identified but virtually no implementation outside of Eskom/RSA SAPP Generation Projects Capacity Estimated Cost Period [MW] [US$ Million] 1 In Progress & under development 3 211 1 410 2005-2007 2 Rehabilitation 1 048 523 2007-2010 3 Short-Term (New build) 4 217 3 830 2005-2010 4 Long-Term (New build) 43 542 37 585 2011-2020 Total Planned Capacity 52 018 43 348 Completion dates shift annually Plant Country Capacity (MW) Planned New date Inga 3 DRC 3,500 2012 2017 Kafue Lower Zambia 750 2012 2015 Muela 2 Lesotho 110 2012 2015 Medupi South Africa 4,800 2012 2012-2015 Ingula South Africa 1,300 2014 2014 Kusile South Africa 4,800 2013 2013-2017 Estimate needs to be updated based on current costs Medupi and Kusile power stations delays = good for alternative energy Source : DBSA Cross Border Financing Study 2009 Expected completion dates, as supplied by utilities, are c unachievable in the absence of a regional body to coord implementation of both generation projects 6 & interconn
RSA NATIONAL TARGETS A final energy demand reduction of 12% by 2014. For the industry sector 15% For the commercial and public sector 15% For residential sector 10% For the transport sector 9% 7
Eskom will invest significantly to strengthen the energy sector New build programs Medupi Kusile Ingula Networks Gas Other = R 308 bn 1 Accelerating universal access = R 18.5 bn (2010-15) * Funding still to be found Support IPPs Growth of renewable energy Biomass Solar 2 Wind Waste = R 7.4 bn (2010-15) Support solar geyser program = R 3.5 bn (2010-15) Eskom today Strengthen existing asset base Boilers Turbines T&D networks IT = R 48.4 bn (2010-2015) R&D UCG = R 0.8 bn Growth related to mining Coal mining projects Water pipeline Road maintenance Majuba rail link (R 4.9 bl) Mpumalanga rail development (R 2.2 bl) Waterberg link 8
Geo-Political-Techno Issues Energy/Climate Energy is one of the interesting sectors in the world, it affects everyone Energy security Energy prices Energy supply Energy policy Climate change Developed world will have to reduce emissions drastically Huge gap between energy policy and energy projects being implemented China and India have confirmed that their next generation capacity would still be from coal, but they are also introducing alternatives as high pace Business unusual = unprecedented decisions
The World is at significant crossroads System Reliability Resource adequacy Fuel diversity Grid reliability System operability Advancing technology Renewables Storage Grid communications (AMI/ BPL) Customer networks Increasing environmental pressure Continuing rate pressure Climate change policy Renewable Portfolio Standards Significant energy efficiency aspirations Record high electric prices Significant infrastructure investment on horizon Regulator and customer frustration
Energy Challenges CHALLENGES FOR THE INDUSTRY Supply v/s demand Global warming v/s reliance on fossil fuels Tariffs cost reflectivity v/s affordability Skills development v/s skills retention Retirement age v/s skills transfer CAPEX to renew v/s OPEX to maintain
Energy Challenges CHALLENGES FOR THE INDUSTRY Women empowerment Youth empowerment Improve relations with government structures Convert government/political policies into technical projects that would make access to electricity easy Drive government/political promises on service delivery Take advantage of the abundance of nature: solar, wind, hydro etc Develop green villages
Leadership challenges 1. What to keep 2. What to change 3. When to change 4. How to make the leap Are we at a strategic inflection point? 2008-2014 1994-2007 20/05/2014 Page 16
The mind of the manager in three places at once Get results from the current business (Execute) Make the shift to a new model (Adapt) Shape the future (Innovate)
What the team needs to know Where is our hill? How will we get there? 20/05/2014 Page 18
Our hill To be a world class: 1. Clear standards 2. Proactive 3. Professional 4. Deliver on promises 5. Excellent customer service 20/05/2014 Page 19
Constitution and Mandate Municipalities are service authorities Municipatilities choose the service providers Energy Access Keeping The Lights On Create employment Develop skills Eliminate poverty
Key Challenges and Solutions (continued) Generation Group Divide into 5 sub groupings and appoint senior executives for each sub group Energy mix to include large scale renewable energy Decentralise procurement and let head office guide and monitor Transmission Group Protect from ISMO Energy buyers department to be elevated to EXCO Southern African Power Pool Self Build PPP Modern live line programme Inga shorter route and DC not AC Distribution Group Municipality relations executives be part of IDP, IDS, Mayoral Council Customers are voters 20A v/s 60A for metros Customer Education WIC s as per NRS 047 Key Customer Division - +60% revenue
Key Challenges and Solutions (contd) Payment Levels Education Drive Incentives and promotional items Rebrand operation khanyisa Retrofit townships such as Soweto with SWH s and PV for lighting, refrigeration, TV, etc Involve civic organisations Remove illegal connections and arrest izinyoka and staff involved Convert all customers to AMR Residential prepaid Industrial/commercial/agricultural post paid
Ke Nako! COMMITMENT WILL SEE US THROUGH!