Asset Management Report – Operations Dec 2018

CPV Power Plant No.1 (RF) (Pty) Ltd

Index

• Executive Summary

• Key Issue Summary

• Operating Summary

• Environmental Summary

• ED & SED

• Other Matters

• Media

• Contact Details

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Executive Summary• This monthly Asset Management Report provides an analysis of and comments on the current financial and operating status at the CPV 1

Power Plant for the month of December 2018.

• Highlights:

• Plant availability remains at high levels

• Plant production levels tracking 10.7 % lower YTD compared to modelled values. If the forecast is maintained the FY18/19 production

levels will be 6.6 % below budget

• DNI lower than modelled contributing 1.2 % of this value YTD

• Operations and maintenance continue as scheduled

• Health & Safety – no reported incidents in the reporting period

• Environmental compliance at acceptable levels, no fines proposed or issued

• ED & SED fully compliant

• Financial cover ratios remain at high levels

• Key Focus Areas:

• Resolution of open R&O items with O&M Contractor – refer slide Key Issue Summary (slide 4, 5, 6)

• Grid Code Compliance - refer slide Key Issue Summary – plant found to be compliant to the grid code as confirmed by RETEC in the

beginning of December (slide 9)

• All spare parts at site as per the Spare Parts Agreement, full site inventory currently underway. Activity is still not completed, external

contractor to be appointed to complete in summer

• AFS finalization for 2014 - 2018 in progress - refer slide Key Issue Summary (slide 7 & 8)

• Warranty extension for Inverter Supplier Inverters currently being reviewed

• Water flow & flooding berm to be constructed at site to minimize the effects of flooding. Tender packs reviewed by AM and submitted to

Flood Specialist for finalization. To be issued to contractors for quoting in the next weeks

• The energy produced since May are below modelled values, the AM team is investigating the underperformance of the plant with GCC

Contractor, O&M Sub-Contractor to identify optimization possibilities, although production has picked up since November

• Bi-annual Oil replacement of Motor Gearboxes - contractual discussions ongoing with regards to responsibility between O&M Contractor

and CPV1. Further feedback to be provided once clarified. O&M Contractor finalized SAPVIA registration. Independent expert to be

appointed.

• Drive Supplier report received for drive failure earlier this year, Drive Supplier lab results outstanding to indicate root cause. Steerco with

Drive Supplier held on the 13th of November. David Pope to share final report and site visit to be scheduled towards the end of Q1 2019.

Further drive failed in November, waiting shipment details for dismantling and investigation. Sufficient spares remains at site.

• 4QD sensor prototypes units will be tested and monitored for the remainder of the financial year to inform way forward.

• Transformer failure evaluated and original root cause refuted by Transformer & Substation Consultant as to not be a cable fault, but a

transformer fault. Spare transformer rebuilt and arrived at site on the 7th of December. Some remedial works to be performed by

Transformer Supplier. Quality documentation to be updated. Further independent tests memo received, ultimate root cause determined

to be the transformer. Awaiting dates to discuss with Transformer Supplier, O&M Contractor & Transformer & Substation Consultant. Refer

slide Key Issue Summary (slide 10)

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Key Issue Summary

• O&M Contractor

• Bi-weekly progress meetings ongoing to resolve action item list (latest version to be provided on request)

• Renewed focus from O&M Contractor committed to resolve outstanding punch lists after correspondence

were issued by CPV1 to do so.

• Overview of key items:

• BOPI Punch List Items:

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Key Issue Summary

• O&M Contractor

• Overview of key items:

• BOPI Punch List Items (continued)

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Key Issue Summary• O&M Contractor

• Overview of key items:

• R&O Punch List Items –

• PV Boxes – O&M Contractor implemented fan solution. Temperature tracking to continue. This will allow us

to independently confirm the temperature of the PV Boxes in relation to the design documentation & the

requirements of the balance of the equipment contained in the PV Box;

• Generator – RTAC Automation. CPV1 completing process with assistance from Transformer & Substation

Consultant, works to be kicked off when availability test is completed and post Transformer & Substation

Consultant Safety works.

• SCADA – Soitec workshop held in the first week of November. Site workshop & debrief held on the 5-7th of

December, Soitec SCADA duplicated with validation ongoing. Talend & PVSyst to be concluded;

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Key Issue Summary• Annual Financial Statements = CPV1

• Final updates completed by Mazars and checked by PWC. One entry to be clarified by Mazars

• Final drafts received, pending any change related to entry mentioned above

• The AGM held 19 December, AFS to be approved via round robin once finalized

• The remaining steps are outlined below

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Key Issue Summary• Annual Financial Statements – CPV Bond SPV

• During the finalisation of the BOND SPV AFS a VAT issue was identified with the Capital Availability Fee and the Cost of Capital Fee.

• Webbers provided an opinion as to whether these fees are subject to value-added tax ("VAT") and, if this is the case, if CPV 1 would

be entitled to claim input tax in respect of any VAT paid to Bond SPV.

• Conclusions:

• Bond SPV applied for relief under the Voluntary Disclosure Programme ("VDP"), which, if successful, would mean that Bond

SVP would not be liable for any penalties. VDP application submitted, awaiting feedback. VAT registration completed.

• VAT amount – R 12,618,457 – paid first week in December.

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Key Issue Summary

• Grid Code Compliance

• Exemptions:

� Current exemption to the 24th of October 2018. As per the August 2018 Asset Management report, CPV1 and GCC Contractor

presented at the GCAC sitting in September. An exemption was requested for Power Quality for an additional 12 month period.

No feedback received from RETEC / GCAC. GCAC noted in correspondence that feedback from the NERSA Board is

outstanding. NERSA is facing a massive back log as the projects who requested exemptions in July 2018, September 2018 and

November 2018 have not received any feedback as confirmed in the market. NERSA is currently in the process of tariff renewals.

It is unclear when the NERSA Board will sit again.

• Remaining Activities:

� Power Quality / Emissions Report – only 3 remaining harmonic orders currently exceeded, being harmonic order 5, 7 and 11.

� Based on current findings with regards to the 5th, 7th & 11th harmonic orders, the NSP suggested that CPV1 considers load

flows on the network to further investigate whether the 5th, 7th & 11th harmonics might relate to loading on the 132 kV

network. The data has been requested from the NSP and received, analysis completed. Met yesterday with Dr. Johan

Beukes and team. Developed a theory as to why the inverters generate the low order harmonics as in his opinion the

inverters should not be generating harmonics. He confirmed that the R&D team would like to try and resolve this problem

but requires some assistance in terms of information and access to the plant.

� The plant provided the necessary information, drawings, plant layout, transformer information and Transformer &

Substation Consultant settings, voltage settings. After review the team will visit site to do some measurements up to

inverter level, these measurements would be focusing on the voltage level experienced by the inverters vs the DC bus

voltage.

� Power factor tests are being run as Dr. Johan Beukes received the information from GCC Contractor in the week of the

12th of November. Visited site in December for tests and measurements. Still busy with the data analysis and model checks

and simulations. GCC Contractor to request update and timeline.

� The theory is that the network voltage is too high versus the DC bus voltage, this causes the deformation of the waveform

generated by the inverter and accounts for the related harmonic content. If this theory is correct and Eskom can lower

the network voltage in order to successfully mitigate the generated harmonics the plant can be deemed fully compliant.

If correct, this would be a quick cost effective way to solve the harmonic problems at the plant. Dr. Johan Beukes also

indicated the possibility to the plant’s levels increased due to the network issues. Currently awaiting feedback.

� NSP issued correspondence in support of the extension requested above.

� RETEC Site Tests – RETEC site tests witnessing concluded on the 7th of November. RETEC confirmed via email that after assessing

the grid code compliance tests for Touwsrivier CPV1, RETEC found the plant to be complaint to the Renewable Code, instructed

the models to be validated as the final step. GCC Contractor needs to confirm completion date for the validation of the models

which includes taking the Digsilent models submitted and accepted by RETEC in February 2018, performing validation and run

through the model and compare data from model and compare with data obtained from site and see if it agrees.

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Key Issue Summary

• Transformer Failure

� Spare transformer refurbishment completed and delivered to site on the 7th of December. Transformer Supplier to remedy certainissues at site, date to be confirmed. Quality documentation in the process of being updated.

� Actions:� Discuss the cable fault / transformer fault incident with site personnel to shed more light on the analysis of the sequence of

events – Transformer & Substation Consultant works scheduled for February 2019 after O&M Contractor Availability Test.� Inspect all cable terminations – Transformer & Substation Consultant works scheduled for February 2019 after O&M Contractor

Availability Test.� Test all PV Box protection systems as a matter of urgency to determine whether or not they are trip capable – Transformer &

Substation Consultant (after RETEC)� Analysis of oil samples by ESKOM lab completed and results reviewed by Transformer & Substation Consultant. Only one

transformer indicated the requirement for further tests, with the rest indicating normal operation. This transformer’s oil retestedthe week of the 25th and no further deterioration noted. Further test to be done in March 2019.

� Second opinion sought due to impact of future transformer failures. Transformer & Substation Consultant issued memo fordiscussion with O&M Contractor, Transformer Supplier and Ron Coney, key matters from the memo:� The reports from Transformer Supplier & Ron Coney indicated cable fault as the cause of the transformer failure was found to

be incorrect.

� Based on the review, study of the relay data, field report, pictures Transformer & Substation Consultant concluded that the

failure occurred due to an insulation failure of the transformer. There could be a number of reasons for this type of failure, inter

alia local hot spot at a specific position on the winding, weakening the winding insulation at that point or weak insulation

material showing accelerated aging.

� Next steps are to meet with all parties to investigate and identify the root cause of the failure.

� Remaining windings to be unwound on the failed transformer to review and inspect for any signs of insulation deterioration

while the transformer is open.

� Feedback to be provided as the matter is investigated further. O&M Contractor unable to schedule session with TransformerSupplier prior to the closing of Transformer Supplier. Will only be held in the new year.

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Operating Summary• Energy Production

• The total energy produced for the month of December was 8,254,902 kWh (1st to 31st December 2018)

• as compared to the modelled energy of 8,442,607 kWh (PV-Syst incl. losses & degradation), an underproduction of -187,705

kWh (1.53 %), deviation explained in summary slide.

• compared to the previous month with 7,550,933 kWh (1st to 30th November), an increase of 703,968 kWh (9.32% month to

month increase).

• compared to the last year production of 7,574,891 kWh (1st to 31st December 2017), an increase of 680,011 kWh (8.98 % year

on year increase).

• Produced vs. modelled energy as monthly sum in [MWh] since COD

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Operating Summary• Energy Production (continued)

• Produced vs. modelled energy for each month [MWh] since COD, annual comparison 2015, 2016, 2017, 2018

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Operating Summary continued

• Reportable Incidents

• The energy produced this month is lower than the modelled energy, this could be due to a number of external factors.

• Recording of water usage is continuing as per BGCMA requirements.

• Constant monitoring of the fibre rings is continuing, this is due to the high failure rates of the RSB20 Switches. Solution to be

implemented in March/April 2019 post the Availability test & Transformer & Substation Consultant safety works.

• Communication is being monitored across site. All inverters are currently available to the PPC.

• Soitec SCADA Handover is progressing very well.

• Optimization study kicked off, data in the process of being analysed.

• The SCADA system requires improvement to have DATA displayed with minimum delay (real time), in order for the operators

to respond to faults on the Inverters and Trackers much quicker – in progress with Soitec workshop concluded 3 to 6

November. Debrief and action workshop conducted for 5 to 7 December; Soitec SCADA system successfully duplicated

with tests & validation ongoing. Talend & PV Syst set up outstanding, scheduled to be concluded between January and

February 2019;

• The interface on the SCADA needs to allow for a remote resetting of the inverters and clearing of error codes. This will

drastically reduce down time on the inverters – concluded and successful;

• Tracker Performance and other equipment performance study to be kicked off, as noted in point above;

• Production ratio investigation to be kicked off as part of optimization activities;

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Operating Summary continued• Production Ratio - Actuals

• Summarizing the performance since COD, below the comparison of the Production ratio, year on year – month of December

96.67 %.

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Operating Summary continued• Production Ratio – Contractual Measurement

• Comparison between actual Production Ratio and the contractual guaranteed %, incentive energy % and the rolling

consecutive 2-year period measurement after 2 years of production.

• Year 2015 requirement shortfall shall be measured at 50 % due to the shorter calculation period, the 2016 year the average is

calculated for the 2015 and 2016 period.

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• Meteorology• The Temperatures in December peaked

at 36.10 °C with an average of 28.65 °C

during production hours. The averaged

DNI was 630.33 W/m² and the averaged

peak DNI was 1002.71 W/m².

• The total DNI energy received for the

month of December was 275.91

kWh/m² (1st to 31st December)

Operating Summary continued

• compared to the value of the Typical Meteorological Year (TMY) of 272.97 kWh/m² the irradiation was above average of 2.95 kWh/m² (1.08%);

• compared to the previous month Irradiation of 256.73 kWh/m² (1st to 30th November), an increase of 19.18 kWh/m² (7.47% Month to month increase);

• compared to the last year DNI Energy received of 261.00 kWh/m² (1st to 31st December 2017), an increase of 14.91 kWh/m² (5.71% year to year increase).

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• Meteorology (continued)• The rainfall in December was in total 12 mm and it rained over total amount of 1 day.

• The average rainfall for December as per http://www.worldweatheronline.com [average from 2002 – 2012] should be 9 mm.

Thus the rainfall received in December was above the average rainfall for this Month (Refer average graph below, no actual

data).

• The plant went into Storm Mode, due to high wind speeds in excess of 12 m/s on 19 occasions during the hours of production

for the total duration of 15h07 min.

Operating Summary continued

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• Preventative Maintenance

• In accordance with the O&M Manual the Pyrheliometer sensors are cleaned on a weekly basis. The complete plant was

washed over the six weeks period ending on 16 December. The washing will continue as per contractual requirement.

• The regular inspections of the substation and the field equipment has continued as scheduled.

• The regular monthly maintenance on the Substation and Generators was done in the first week of December.

• Preventive Maintenance on trackers is complete for the year. Tracker optimization was completed on the 19th of October.

The tracker team is focused on additional work and monitoring this month.

• Preventive Maintenance on Balance of Plant equipment is going forward as planned. The installation of additional substation

stone went ahead this month, final finishing off will be completed by the middle of next month.

• Reactive Maintenance

• Various components have failed on the trackers. These were replaced upon failure by the O&M Team. The installation of the

adapter plate has significantly reduced the number of encoder failures due to grease ingress. This will be monitored to ensure

that the failure rates do not increase again.

• The Transformer Supplier Transformers are being monitored for signs of new leaks.

• Health & Safety

• The staff complement on site during the month of December was 48, which includes the subcontractors O&M Contractor,

Solar O&M Services, Security Contractor, Pele Green, Visitors, and the Touwsrivier Services Staff. The number of LTI free hours

for is 26 026 compared to the target LTI Free hours for the project of 71 536. There were no Health and Safety incidents in the

month of December.

• Resource Usage

• Resource Usage Summary for the month in review:

Operating Summary continued

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• Availability

• The availability of the plant as per below:

• The values indicated in the table are based on equipment being out of operation for more than one full production day. The

100% availability indicates that all plant equipment was available for the complete duration of September, however, minor

(short outages) are not accounted for.

Operating Summary continued

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• Inventory Management – Spare Parts Used

A summary of the Parts used is given in Table 2 and the update of the spare part stock is given in Table 3. The number of CPV components

replaced during the month are indicated in red in Table 2. Components, having the stock level is below the contractual amount is marked

in red in Table 3.

Operating Summary continued

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• Inventory Management (continued) – Spare Parts Stock on Site

Operating Summary continued

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Environmental Summary• Feedback – Environmental Officer December 2018

• Compliance issues• Percentage compliance achieved during the site audit for 12 December 2018 = 91.9 % (Compliance with the EMP is regarded as

unacceptable if it is below 80 %)

• Score obtained 87.3 out of 95

• Non-compliance noted on the following items• Site clearance and bulk earthmoving activities were completed. At the time of the audit only small open excavations for servicing

purposes were present.

Recommendation – Ensure that all spoils left in areas where earthworks have been completed are levelled and the areas arerevegetated to minimise potential erosion and generation of dust.

• At the time of the audit, oil and grease drums had been placed in a designated bund area or in a steel drip trays where otherwise

stored. Larger than normal volumes of gearbox oil had been present on site due the maintenance schedule.

Recommendation – Ensure that all containers within the bund area is appropriately sealed or closed to prevent it from filling with rainwater an possible spillage.

• At the time of the audit a large volume of used conveyer belts had been left in the field. The original idea was that the area where these

conveyer belts are stored will be turned into a laydown area by Group5 for storage of equipment. Since then a new storage yard had

been developed closer to the workshop areas and the conveyer belts had been left where they were originally placed. Therefore the

conveyers is currently seen to be placed in the field. Please ensure that all used conveyer belts are moved to the appropriate storage

area, or sold.

Recommendation – Ensure that the conveyer belts are removed and placed in the designated laydown area. The area where theconveyers had been stored need to be cleaned and all waste associated with storage of the conveyers need to be removed.

• At the time of the audit various open containers had been placed inside the bund area. The contents of these containers included

contaminated soils, oil rags, etc. these substances are listed as hazardous materials and should be place either in containers with lids, or

under a roof.

Recommendation – Ensure that the substances listed are placed in drums with lids and appropriately labelled. Ensure it is disposed of atthe appropriate disposal facility and safe disposal certificates are available on site.

• At the time of the site visit hazardous materials present on site were stored inside a bund area or flammable materials store. Some of the

containers stored inside the bund area did not have lids.

• Recommendation – Even though the hazardous materials are stored within the bund area, ensure that all the containers have lids andare clearly marked to indicate the contents and prevent the co-storage of antagonistic chemicals or substances. It had been observed

that some containers with contaminated soil had not been appropriately closed or labelled.

• At the time of the audit alien vegetation had been observed on site that requires removal. These include species e.g. Oldman Saltbush

etc. it had been observed that some of these specimens had been removed.

Recommendation – Ensure alien vegetation is cleared and properly disposed of. This is an ongoing task an need to be handledwhenever new specimens are observed.

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Environmental Summary continued• Additional Notes

• General housekeeping on site was maintained to a high standard and the area around the store and office construction had

improved significantly.

• The retainer wall at the substation showed signs of cracking and it will be continued to be monitored during each site visit. Widening

of these cracks may pose a safety risk and should be mitigated. Bulging at the foot of the wall had been observed, however without

proper measurements, it was not clear whether this was worse than the previous audit. This is being monitored on a monthly basis

and any changes will be documented.

• Ensure that Group5 are made aware of the conveyer belts and that they are placed in the field. The area had been earmarked as

a possible laydown area for these materials, but it had never realized. Ensure that it is either fenced as a laydown area or removed

to their existing storage yard or sold.

• No repeat non-compliances by CPV1 had been observed during this audit, No fines recommended

• Water Usage• The CPV1 Solar facility is located within the J12B water management area. This allow the facility to abstract 150m3/ha/annum

multiplied by the size of the property. This is capped at 40000m3/annum. The total abstraction for the year (January 2018 –

December 2018) amounts to 1,279.13 m3, which is below the volumes allowed for. It should also be noted that no more than 10m3

may be extracted on a single day.

• Status of Water Permit/License• Monitoring of Water Usage – At the time of the audit only a small number of activities were in progress and water usage use was

within the thresholds allowed for in the current General Authorization.• Numbers deviate from O&M Report on slide 16 due to the timing of the meter readings. Eco report measures visit to visit, Operations measure calendar

month.

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Environmental Summary continued

• Photographic Evidence of Environmental Issues

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ED SED Summary

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ED SED Summary

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ED SED Summary

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ED SED Summary

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ED SED Summary

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ED SED Summary

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ED SED Summary

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ED SED Summary

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ED SED Summary

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Other Matters

• Events of Default – none recorded during reporting period• Lock up - Bondholders implemented a lock-up on all distributions until the AFS matter is

resolved. This issue is expected to be resolved by the end of January 2019.• Legal Claims – none recorded during reporting period. • Dispute with O&M Contractor with regards to gearbox oil replacement ongoing.

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– Vegetable Garden Progress

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Media

Ziska Mc Gilton

Pele Energy Group

Senior Asset Manager

Mobile: +27 (0) 82 929 8322

ziskam@peleenergygroup.com

Thank you & Contact

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