Eskom s Single Buyer Office Perspective on renewable energy procurement Clean Power Africa Conference 5 September 2012 Yousuf Haffejee here Head of Single Buyer Office Eskom
Eskom is fully supportive of renewable energy generation in South Africa Developing renewable energy in South Africa is important Reduce CO 2 -emissions Mitigate climate change Diversify energy sources Government has taken several important steps to drive renewables deployment Large portion of IRP allocated to renewables Renewable Energy Purchase programme introduced South Africa has excessive resources (especially for solar) Average solar radiation of about 2,300 kwh/m 2 /year Large areas in the Cape with average wind speeds of more than 6 m/s Eskom facilitates the deployment of renewable energy and the ramp up of a renewable energy industry in South Africa 2
Eskom s commitment to IPPs Policy and regulatory environment is defined and established Industry restructuring is in process ( ISMO ), but should not hinder the IRP roll out 20 year generation plan with 17 800 MW of renewable generation by 2030 Eskom is committed to facilitating the entry of IPPs and acknowledges the role they play in the South African electricity market Eskom will continue to pursue IPP opportunities and to date have achieved the following: Signed 373 MW of PPAs with IPPs, including Sasol, Sappi, Ipsa Signed short-term PPAs for 470 MW with municipal generators with the aim to extend these agreements for three to five years In the final approval stages for 1 020 MW of peaking power Internal governance approval to sign 1 415.5 MW of renewable energy PPAs subject to PFMA and NERSA approvals 3
Eskom is involved in renewable energy in various ways System Operator Buyer Office Transmission / Distribution Renewables Unit Designing grid enhancement to allow for renewables Ensuring equitable and fair connection to grid Enter into power purchasing agreements Manage contractual relationship Grid studies and providing information on current and future grid capacity to the market Connecting to the grid To assist in service delivery, Eskom set up a Grid Access Unit for Generators Deploying pilots to understand renewables technologies Playing a role in developing, operating and maintaining Eskom renewable energy assets 4
High level process* for the renewable energy IPP programme and possibly other programmes Preparation of procurement documentation Accountability: DoE with support from NT & advisors Text Supported by various Government departments, including NT Section 34 Ministerial Determination and inclusion in IRP RE IPP programme Grid application Accountability with Eskom or Municipality Procurement process Accountability with Department of Energy Evaluation, selection of preferred bidders and negotiations Accountability with DoE License application Accountability with NERSA Approval of PPAs Eskom Governance NERSA and PFMA approvals PPA awarded to successful bidders signed by Buyer (Eskom currently) NERSA to concur Bidder enters into Implementation Agreement with DoE * Aligned to the New Generation Regulations, May 2011 Bidder enters into connection agreements with network owner 5
Agreements entered into with IPPs Once preferred bidders are announced, Eskom will support the DoE to financial close Preferred bidders will enter into an Implementation Agreement (IA) with the DoE Eskom will enter into the following key agreements: Eskom and the Project Company: Power Purchase Agreement (PPA) Transmission Agreement (TA) Distribution Agreement (DA) Standard PPA per technology Standard connection and use of system agreement Standard connection and use of system agreement for Eskom networks Eskom and the Lenders: PPA Direct Agreement TA/DA Direct Agreement Standard PPA Direct Agreement Standard TA and DA Direct Agreement Signing of all agreements is subject to PFMA and NERSA approvals 6
Eskom applications for renewable energy grid connections All current and future Eskom organisational requirements, are accommodated by the following processes Consultation with, and advising of IPPs Quotation, Contracting & Connection of generators Operation of IPPs and generators Manage service relationships with IPPs Facilitate Grid Access for generators
New Generation Capacity Regulations Regulation 9(2) of the new gen capacity regulations gazetted 4 may 2011 prescribes that before the buyer concludes a PPA, subject to the required PFMA approvals ensure that: b) ensure that the buyer has in place effective mechanisms for the implementation, management, enforcement, and monitoring of the PPAs, and c) put in place arrangements to ensure that the buyer s regulated revenue allowance for new generation capacity projects is used to meet the buyer s financial obligations in respect of those projects 8
Single Buyer Office role and responsibility re: IPP s renewable energy procurement Assist and Support DOE with procurement documents Assist and Support DOE with Financial Close Contracts Management Role (PPA) Payment and Settlement Function Eskom Single Buyer Office Manage and facilitate the contractual relationship with IPPs (PPA) Facilitate IPP Settlement and Payment Assist and Support DOE with the development of the procurement documents (RFP) Confirmation that the SBO plays no role in the bid evaluation process Assist and Support DOE with Financial Close Provision of funds to pay for IPP energy through MYPD process Plays leading role in Contracts Management of PPA Monitor IPP compliance with PPA conditions IPP Relationship Management (Re: PPA) IPP Settlement and Payment under the PPA Liaise with IPPs regarding generator long term production planning Assist System Operator with input re: IPP outage plans and IPP outage management Manage and Report on IPP allocated funds and actual spend Continual reporting on energy purchases from IPP s to key stakeholders Note that the role and interface : Re grid / network related issues is managed and dealt with via ESKOM s Grid Access Unit
Thank you 10 10
Please partner with us Embrace energy saving as a national culture, joining the global journey towards a sustainable future 49M campaign aims to create a culture of energy efficiency in SA Remember the three Ps: save power, save your pocket and save our planet. If you re not using it, switch it off! 11
Eskom process, related to the Eskom Grid Access Unit role Consultation with, and advising IPPs Quotation, Contracting and Connection of generators Operation of IPPs and generators Eskom Grid Access Unit for Generators role Manage and facilitate the service relationship with IPPs Facilitate Grid Access for generators Enabling and facilitating generators and IPP grid access, and making commercial options more viable requires service relationship, stakeholder and interface management, communication Management and integration of the development of relevant and appropriate standards, processes, frameworks Possibility of various connection, grid access and commercial options IPP pricing frameworks (costing of connection, network strengthening, and costs to wheel ) Technical capability for integration of the IPP generators Process and system capability, and facilitation thereof, to enable grid access Quotation and Contracting capability and management Sufficient data and information, to effectively facilitate, enable, plan and support Requirement for long-term viability