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INTEGRATED RESULTS PRESENTATION
KING III APPLICATION
 
   



Keeping the lights on

“Keeping the lights on” refers to Eskom’s ability to ensure that sufficient generating units are on line, and, during periods of generation constraints, to balance the power supply and demand by using demand-savings initiatives to reduce energy usage. “Keeping the lights on” is about asking all customers to use electricity more sparingly, especially during peak hours, when demand at times exceeds supply, or when abnormal events occur that impact on the available supply.

Previously, Eskom had no choice but to defer power station maintenance in order to keep the lights on, which was not a sustainable approach. At the end of 2012, Eskom’s board approved the Generation sustainability strategy. The plan spans five years, with 2013/14 being the first full year that the plan has been in place. The “keeping the lights on” strategy now also includes managing the demand such that the Generation sustainability strategy can be achieved, while avoiding rotational load shedding, as well as tracking the status of reduction in the maintenance backlog.

Eskom’s “keeping the lights on” performance is also assessed in terms of verified energy savings and reductions in the maintenance backlog.

Key performance indicators for keeping the lights on

Indicator and unit
Target
2017/18
 
Target
2013/14
  Actual
2013/14
 
Actual
2012/13
 
Actual
2011/12
 
Target
achieved?
 
Evening peak demand savings, MW 174   379   410   595   365    
Internal energy efficiency, annualised GWh1 0   15   19   29   45    
Maintenance backlog reduction based on the Eskom technical governance committee approval, number 0   0   0   n/a   n/a    

1. The figures reported for each year are for projects verified in the relevant financial year.

Managing supply-and-demand constraints

During 2013/14 Eskom performed more planned maintenance than normal as a result of implementing the Generation sustainability strategy – refer to page 114, which deals with maintenance in further detail. While implementing this strategy is critical to ensure the long-term sustainability of the generating assets, it has inevitably created more pressure on the already tight supply/demand balance.

Although there was sufficient capacity to meet the demand during the day in winter, on a number of evenings the power system was tight with all available generation in service and contracted demand reduction used to reduce load. The average available operating reserves over the peak period in June 2013 were under 3% as depicted on the graph. For Eskom’s rotational load shedding event that occurred on
6 March 2014, refer to page 104.

Average monthly % actual reserves including OCGTs (Excess capacity compared against actual demand)
Average monthly % actual reserves including OCGTs (Excess capacity compared against actual demand)

Eskom has managed to meet the daily peak demand with the support of customers with interruptible load agreements (the Bayside, Hillside and Mozal aluminium smelters), demandmarket participation (DMP) customer support, emergency DMP, demand-side management (DSM), tariffs (more expensive tariffs during peak periods encourage customers to reduce demand during peak periods), municipality assistance, independent power producers (IPPs) as well as utilising the open-cycle gas turbines (OCGTs). The 2012/13 power buyback programme impacted the GWh sold in April and May 2013, however, the cost of this programme was provided for in the 2012/13 financial year.

Refer to page 143 for details on electricity purchases from IPPs and pages 111 to 114 for details on demand-side levers, which have contributed to the security of electricity supply.

A lower than normal reduction in sales volumes to key customers in the winter periods to offset the growth in sales to the remainder of the customer base did not manifest itself as strongly this year, resulting in additional demands on the OCGT fleet. Electricity demand during the peak periods of 17:00 to 21:00 was still significant, hence the requirement for OCGT generation during peak periods. As generation units are taken off-load for maintenance, it also necessitated the increased usage of these expensive diesel burning OCGT stations. OCGTs were used in winter as well as summer to ensure security of supply.

The total production by OCGTs reached 3 621GWh against a budget of 1 284GWh in 2013/14 (2012/13: 1 905GWh). The actual load factor on the plant for the year to 31 March 2014 was 17.16%, against a budgeted factor of 6.08% (2012/13: 9.03%). The total board approved spend on diesel for the OCGTs for 2013/14 was R11.3 billion, of which R10.6 billion was spent in the year to 31 March 2014
(2012/13: R5.0 billion). The MYPD 3 decision for OCGT purchases was R2.5 billion for 2013/14, which was R8.1 billion less than the actual spend.

Summer and winter have very different load profiles as depicted below. Unlike winter, where the demand increases during the evening peak, the demand profile during summer is much flatter (“Table Mountain” profile as depicted in the figure below) with an increased demand profile throughout the day, primarily due to air-conditioning and geysers. The outlook for the coming year is predicted to be very tight due to the maintenance required by the generating fleet, resulting in Eskom on occasion being up to 1 000MW short to meet the evening peak over the winter period. The summer period shortage may not be as high but will be for longer periods as can be seen from the profile below.

Summer and winter load profiles
Summer and winter load profiles

September – March: spring/summer

“Live lightly”

Table Mountain profile
Constrained all day including from 17:00 – 21:00
Air-conditioning, geysers and pool pumps primarily impact demand
Commercial, agricultural and residential customers can make the biggest difference
April – August: autumn/winter

“Beat the peak”

Peak profile
Constrained from 17:00 – 21:00
Electrical heating, geysers and pool pumps primarily impact demand
Residential customers can make the biggest difference as demand increases in the evenings

Eskom

Cross-border purchases and sales of electricity

Eskom is a member of the Southern African Power Pool (SAPP) that provides the opportunity for the various utilities in the region to ensure integrated planning and smooth and safe operation of the interconnected transmission system. The various members of the SAPP support each other during emergencies and wheel (transport) electricity on behalf of each other across their grids. It also provides access to a day-ahead market where surplus energy can be traded with those who are experiencing a deficit.

Eskom has bilateral electricity trading agreements with most SAPP members and continues to export and import electricity. Eskom is aware of its responsibility to South Africa regarding the exporting of electricity when the domestic supply-demand balance is constrained. To reduce the impact of exports, Eskom has ensured that the contracts with SAPP trading partners are sufficiently flexible to allow for the following controls:

During emergency situations in South Africa, non-firm agreements (Botswana and Namibia) and industrial customers across the border (Mozal and Skorpion Zinc) are interrupted in line with the terms of their agreements
The remaining firm supply agreements (Swaziland and Lesotho) continue to be supplied in full, but they are urged to reduce consumption. During load shedding in South Africa they are required to undertake proportional load shedding

Botswana failed to bring its new Morupule B coal-fired power station into commercial operation, resulting in a significant supply deficit in that country. Eskom agreed to continue supplying 100MW on a firm basis (which is withdrawn if South Africa is exposed to rotational load shedding) and additional capacity subject to availability.

For 2013/14, 15% of the international sales have occurred during peak periods, 38% during standard hours and 47% during off-peak hours.

Cross-border purchases and sales of electricity

  Actual
2013/14
  Actual
2012/13
  Actual
2011/12
 
Sales, GWh 12 378   13 791   13 108  
Purchases, GWh 9 425   7 698   9 939  
Net sales, GWh 2 953   6 093   3 169  

The energy exports continue to exceed the planned level due to delays in the commissioning of new generation assets in neighbouring countries and due to a drier than normal season affecting the availability of hydro generation in neighbouring countries. Despite this, the exports are still 1 321GWh less than in 2012/13.

The performance of Hidroelectrica de Cahora Bassa S.A. energy imports remains a risk due to challenges regarding the reliability of the high-voltage direct current transmission lines.


The 49M initiative that aims to inspire and rally all South Africans behind a common goal – saving electricity – now has 135 corporate partners who have pledged their support
The 49M initiative that aims to inspire and rally all South Africans behind a common goal – saving electricity – now has 135 corporate partners who have pledged their support

Integrated demand management and energy efficiency

Eskom employed various demand-management strategies to ensure security of supply, while creating space to maintain and refurbish its power stations during the year.

Demand-side management

Demand-side management (DSM) encourages customers to limit their electricity usage. Demand-side management initiatives support national security of supply and minimise the negative economic consequences of a power shortage for the country.

During 2013/14, Eskom spent R1.36 billion on DSM whereas the MYPD 3 decision for the 2013/14 financial year was R1.46 billion.

Eskom contributes to the government’s solar water heating initiative, which aims to install one million solar water heaters
Eskom contributes to the government’s solar water heating initiative, which aims to install one million solar water heaters

Demand-side management and energy efficiency

Demand-side management is divided into two broad programmes:

The demand-response programme consists of a range of sub-programmes which offers commercial and industrial customers financial incentives to reduce their electricity requirements as and when needed. Before being placed on hold, the requirements for taking up demand response programme products (standard product and standard offering) were amended to allow smaller companies to participate in the programme. Eskom spent R350 million (2012/13: R3.1 billion) on demand market participation, the reduction from previous year mainly as a result of a significant decrease in the power buyback programme.
The residential mass roll-out programme aims to reduce residential electricity usage by encouraging households to use energy-efficient technologies. The programme is a significant lever to reduce demand during periods of system constraint, but it will require funding from government as it has not been accommodated in the MYPD3 determination. It includes the following sub-programmes:

- The compact fluorescent lamps (CFL) programme – phase 2 of the CFL roll-out has been completed, with 1.2 million bulbs installed, realising verified savings of 65MW in 2013/14. The CFL roll-out phase 3 began in February 2014
- The solar water-heater programme – Eskom contributes to the government’s solar water heating initiative, which aims to install one million solar water heaters. Over the year ended 31 March 2014, a total of 47 020 solar water heaters were installed, bringing the total for the rebate programme and residential contracts to 381 052 since its inception in 2009

Verified accumulated demand savings against the cumulative target per year (MW)
Verified accumulated demand savings against the cumulative target per year (MW)

Energy-efficiency measures

Eskom’s Power Alert and “5pm to 9pm” campaigns continue to reduce power demand during the evening peak. The average weekday evening peak impact for the period under review for all colours (green, orange and red) is 224MW. The average impact for the red flightings in the evening peak on the worst constrained day is 294MW. The impact shows the positive response by customers to these signals.

Eskom’s 49M campaign, a long-term behavioural-change initiative that encourages energy-efficiency practices, particularly for residential users, has the ultimate goal of reducing energy consumption by 10%. This includes targeted seasonal campaigns such as the “beat the peak” campaign and the “live lightly” campaign. To date, 133 partners have joined the campaign and have committed to promote energy efficiency in their organisation.

Internal energy-efficiency initiatives

Eskom continues to improve the internal energy efficiency of its facilities (power plant and buildings) by undertaking energy audits and implementing efficiency programmes that focus on lighting, heating, ventilation and air-conditioning. Annualised energy savings of 19GWh were achieved from new IDM projects for the year ended 31 March 2014, exceeding the target of 15GWh.

The piloted power management software has been rolled out to Eskom’s Windows 7 users and includes the roll-out of the enhanced power management rules for both desktops and laptops. This has already resulted in energy savings.

Decreasing the maintenance backlog

Between 2008 and 2012, Eskom had no option but to defer certain planned maintenance on its generating fleet to ensure security of supply. This backlog, coupled with the burning of below-standard coal and the high utilisation of the plant, resulted in wear and tear on plant and impact the health of the ageing fleet.

In 2013/14, Eskom started rolling out the Generation sustainability strategy that involved increasing the fleet’s planned capability loss factor (PCLF) – that is, planned down time for maintenance and refurbishment – to 10% of overall energy availability to create a gap for maintenance. Historically more maintenance is scheduled for the summer months, when the electricity demand is lower, but more maintenance was scheduled in the winter months than ever before in order to reduce the backlog. See the graph below which demonstrates the increase in planned maintenance over the previous three years.

Eskom, through its technical governance committee, prioritised nine maintenance items for the year, with a target of zero items outstanding by 31 March 2014. This target was achieved by December 2013.

Maintenance plan for a coal-fired power station

Coal-fired generating units need to be regularly taken out of service to conduct routine repairs and inspections. While these units are down, the rest of the generating fleet needs to compensate for the commensurate decrease in generating capacity.

Activity Cycle time (years)   Duration (days)  
Major general overhaul 6-12   40-60  
Interim repairs 2-3   14-35  
Mini general overhaul 6   28  
Boiler inspection 1-1.5   7-14  
Statutory inspection and test 6   35  
Main steam pipe work ad hoc   120  

The year-on-year maintenance cost has grown incrementally, as shown in the following table, as a result of extensive planned and unplanned maintenance. The UCLF of 12.61% and the PCLF of 10.50% are indicative of the level of maintenance that was executed.

  Actual
2013/14
 
Actual
2012/13
 
Actual
2011/12
 
Generation operating maintenance costs, R million1 7 763   5 954   4 936  

1. This is after the capitalisation of costs, which are included in capital expenditure. The gross maintenance for Generation, before capitalisation is R14.3 billion
(2012/13: R10.6 billion)

Monthly planned maintenance (PCLF) (%)
Monthly planned maintenance (PCLF) (%)