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INTEGRATED RESULTS PRESENTATION
KING III APPLICATION
 
   



Leading and partnering to keep the lights on

Eskom remains committed to keeping the lights on whilst at the same time maintaining a sound basis for sustainable operations and financial sustainability. Eskom is achieving this by taking a leading role and actively partnering with all key stakeholders in a comprehensive supply-and-demand management strategy. At the same time, Eskom is working hard to deliver on capacity expansion projects that will increase its generating capacity

Operating highlights

Demand-savings initiatives achieved a total of 410MW, exceeding the target of 379MW
The residential mass roll-out programme has been a key contributor to the demand savings. Phase 2 of the programme has been completed and 87MW of these savings have been verified in 2013/14
Annualised energy savings of 19GWh were achieved from new integrated demand management (IDM) projects for the year ended
31 March 2014 relating to internal energy efficiency of Eskom’s facilities, exceeding the target of 15GWh
The pilot underground coal gasification plant has been built at Majuba. Testing is ready to commence, pending environmental and water permissions from the relevant state departments
120MW of generation capacity has been commissioned, 811km of transmission power lines built and 3 790MVA of transmission substation capacity commissioned during the year
The return-to-service programme has now been completed with the successful commissioning of the final unit at Komati power station at the end of September 2013. In total, all 23 units of the three mothballed power stations have been returned to service
(3 741MW) at a cost of R26 billion
Despite the outage constraints, some of the refurbishment projects have progressed well, i.e. all Kriel units have now been refurbished; the last unit (Unit 5) synchronised on load on 15 March 2014. Three of the six Matla units have been refurbished, with the third unit (Unit 5) synchronised on load on 25 March 2014
In June 2013, a partnership agreement was signed between Eskom, contractors and labour to bring about stability at the Medupi and Kusile construction sites. Since the conclusion of the agreement, the sites have experienced less work stoppages and no violence
Eskom has taken the initiative in facilitating the establishment of the Medupi leadership initiative to address the consequence of demobilisation of workers

Operating challenges

As a result of contractor’s performance regarding the continued failure of the control and instrumentation systems factory acceptance tests on the boiler-protection system at the Medupi power station, Eskom has stepped in and placed a contract with an alternative contractor for the engineering and manufacturing of the boiler-protection systems, which form a small part of the overall scope of the control and instrumentation systems works contract. The current contractor of the control and instrumentation system for Medupi remains bound to fulfil its obligations in terms of such contract
Acquisition of servitudes over state-owned and tribal land is a lengthy process because in many cases the land has not been surveyed. This causes significant delays to the construction and expansion of the transmission network
As a result of a constrained power system, the difficulty in obtaining outages for Transmission projects and Generation coal projects (including refurbishments), continues to pose a challenge to the execution of projects

Future focus areas

Continued focus on accessing alternative funding for Eskom’s IDM programme and developing low cost energy-saving programmes in view of financial constraints
Servitude acquisitions remain a critical priority and engagement continues with government departments to assist in dealing with the challenges experienced with regard to expropriation applications
Procurement and due diligence processes regarding the conversion of the OCGT plant from diesel to gas
The milestones leading up to the commercial operation of Medupi Unit 6 are all expected to be completed in the second half of 2014
Lifting of the work stoppage instruction in terms of section 54 notice of the Mines Health and Safety Act at Ingula to allow for work to continue in the inclined high-pressure shafts
For the Generation coal projects and Transmission projects, managing the requirements regarding the integration of the project outage schedules

Power system emergencies and rotational load shedding

For many hours of the day, the reserve margin is more than adequate. However, during peak hours or when abnormal events occur, demand at times exceeds supply. When this occurs, Eskom implements demand and supply-side management strategies, including the demand response programme where selected large customers reduce their demand on request from Eskom. As a last resort, Eskom will introduce rotational load shedding to protect the integrity of the power system. Failure to do so could lead to a full national power blackout with severe consequences for the country. Clear protocols are in place in the event that there is no option but to resort to load shedding.

The emergency response command centre was activated on a total of 36 occasions in the year to 31 March 2014. The majority of the activations were proactive interventions (in alert mode) to manage emerging threats. However, emergencies had to be declared on four occasions during the year.

Emergencies declared on 19 November 2013, 20 and 21 February 2014 and 6 March 2014
Power system emergencies were declared when there was insufficient capacity to meet the demand. Instructions were given to large customers to reduce demand in accordance with the protocols for stage one load reduction. Control centres were instructed to be ready for load shedding. For the first three emergencies rotational shedding was not required as the response from customers was adequate to stabilise the power system. However on 6 March load shedding was instituted.

Customers responded admirably when Eskom declared these emergencies and reduced demand by 600MW in November 2013, by 340MW in February 2014 and by 1 160MW in March 2014.

Rotational load shedding on 6 March 2014
The already constrained system was exacerbated by a rapid change in the early hours of 6 March 2014, as production at four units at power stations was severely curtailed, with load losses of 3 226MW by 08:00.

An emergency was declared at 06:00 and load curtailment commenced. By 08:00 it was necessary to commence with rotational load shedding, which continued for 14 hours. The load shedding reached stage three in the morning, reducing demand by approximately 5 000MW, thus enabling the stable operation of the system. By mid-day the load reduction was reduced to stage two and at 22:00 the system emergency was cancelled and all load was restored.

Stages one, two and three indicate the degree of severity of the supply shortfall, and thus the frequency and duration of the required rotational load shedding, with three being the most severe.

The curtailment of production at the four units was mainly due to the handling difficulties regarding wet coal as a result of continuous rain over a number of days leading up to this date. After the load shedding in 2008 following heavy rains, Eskom is mixing coarse coal with the finer coal to prevent the wet coal from coagulating on the conveyors. However, the length of this period of wet weather meant that many of the coarse stock piles were depleted.

This was the only incident of rotational load shedding during the year.

Communication to all customers
In an effort to reduce electricity demand, an integrated communication and stakeholder “Keeping the lights on” programme encourages all South Africans to “beat the peak” in winter and to “live lightly” in summer. The Power Alert and Power Bulletins on TV and radio have proved effective in encouraging customers to reduce their power usage when the power system is constrained, having achieved a cumulative average saving of approximately 350MW. In addition, bi-weekly status updates are issued to the media and quarterly power system media briefings are held, along with regular national, regional, and local stakeholder engagements to provide open and transparent information on the state of the power system.
International customers
Cross-border international customers are also subjected to load reduction and load shedding protocols. Customers with discretionary agreements are declined in advance of a tight supply situation. Customers with non-firm agreements follow the same load reduction and load shedding as large customers in South Africa. Industrial end-use customers are interrupted in line with their agreements. Those with firm supply agreements continue to receive supply, but are urged to cut back consumption.