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Eskom MYPD4 Revenue Application Systems Operations and Generation Nersa Public Hearings Port Elizabeth 16 January 2019

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Page 1: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

Eskom MYPD4

Revenue Application

Systems Operations and

Generation

Nersa Public Hearings

Port Elizabeth

16 January 2019

Page 2: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

Depreciation

1

The MYPD methodology through the allowable revenue formula was applied

+ + + + + =

Primary

Energy(incl imports and

DMP)

IPPsOperating

expenditure(incl R &D)

Integrated

Demand

Management

Return on

AssetsRevenue

+

Tax &

Levies

Return on assets = % cost of capital allowed X depreciated replacement asset value

𝐴𝑅= (𝑅𝐴𝐵×𝑊𝐴𝐶𝐶)+𝐸+𝑃𝐸+𝐷+𝑅&𝐷+𝐼𝐷𝑀±𝑆𝑄𝐼+𝐿&𝑇±𝑅𝐶𝐴

Page 3: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

Eskom allowed revenue application for 3 year period is R763 billion

Allowable Revenue (R'million) AR FormulaApplication

2019/20

Application

2020/21

Application

2021/22

Regulated Asset Base (RAB) RAB 1 268 310 1 336 120 1 401 506

WACC % ROA X -1.32% -0.21% 1.45%

Returns -16 687 -2 765 20 314

Expenditure E + 56 619 59 820 62 663

Primary energy PE + 73 386 75 876 79 561

IPPs (local) PE + 29 590 34 324 41 002

International purchases PE + 3 533 3 734 3 957

Depreciation D + 64 651 72 919 75 649

IDM I + 189 193 202

Research & Development R&D + 176 187 198

Levies & Taxes L&T + 8 272 8 198 8 147

RCA RCA +

Total R'm 219 730 252 485 291 692

Corporate Social Investment (CSI) - - 192 - 193 - 151

Total Allowable Revenue 219 537 252 292 291 542

Page 4: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

System Operations

3

Page 5: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

The Role of the System Operator

System operator is defined as the legal entity licensed to be responsible for short-term reliability of the IPS, which is in charge of controlling and operating the TS and dispatching generation (or balancing the supply and demand) in real time (SA Grid Code)

4

SO Business Objectives:

• Ensuring system reliability, safety and security.

• Dispatching generation.

• Operating the interconnected power system.

• Acquiring ancillary services for reliable operation.

• Undertaking various technical activities to support the above.

• Development of the Grid Code and monitoring compliance thereto by the ESI.

• Testing and certification (compliance validation) of power producers.

• Providing operational information to key stakeholders

Page 6: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

275684-01-SADC-v01-11Apr11-DP-pf-CPT.ppt5

Eskom Grid is Integrated with most SADC countries

Uganda

Libya

Mali

DRC

Zambia

Egypt

Ethiopia

Kenya

Nigeria

Tanzania

Namibia

Botswana

Zimbabwe

Angola

Zambia:

• Eskom sells non-firm power

Mozambique:

• Cahora Bassa: Eskom purchases

1 150MW

• Motraco: Eskom owns one-third of

Motraco transmission company

and sells 950MW

• EDM: Eskom wheels 300MW to

EDM from Cahora Bassa

Uganda:

• Eskom operates

concessions on two

hydro power stations

Zimbabwe:

• Eskom sells non-firm

power

Botswana:

• Eskom sells firm and non-firm

power

Namibia:

• Eskom sells firm and non-firm

power

• Eskom sells directly to two

mining companies in Namibia

Swaziland:

• Eskom sells firm

power

Lesotho:

• Eskom sells firm power and buys

non-firm power

Page 7: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

System Operator’s Role

Generation makes

the electricity

Transmission & Distribution transports the electricity

Customer Services

sells the electricity

System Operator ensures

continuous delivery of quality

electricity by maintaining a

stable network (in real-time,

every second)

The System Operator is

the electricity transport

and distribution

supervisor.

Page 8: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

South African Demand Distribution

Province

Provincial demand

at time of 2018

System Peak

Eastern Cape 2 059 MW

Free State 1 557 MW

Gauteng 10 244 MW

KZN 6 336 MW

Limpopo 2 284MW

Mpumalanga 3 714MW

North West 3 841MW

Northern Cape 1 448 MW

Western Cape 3 846 MW

10 244

1 557

2 059

6 336

2 284

3 714

3 841

1 448

3 846

Page 9: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

SA Generation Resources (January 2018 – 50 598 MW)

Arnot Power Station

Ankerlig Power Station

Gariep Power Station

Type Number Nominal capacity

Coal-fired 15 stations 38 023 MW

Gas/liquid fuel turbine 4 stations 2 409 MW

Hydroelectric 6 stations 661 MW

Pumped storage 3 stations 2 724 MW

Nuclear 1 station 1 860 MW

Wind energy 1 station 100 MW

Renewable IPP 64 stations 3 811 MW

Dispatchable IPP 2 stations 1 010 MW

Wind IPP 22 stations 1 998 MW

Solar PV IPP 33 stations 1 482 MW

CSP IPP 4 stations 300 MW

Total Eskom 30 stations 45 777 MW

Small Hydro IPP 2 stations 14 MW

Landfill IPP 3 stations 17 MW

Biomass IPP 0 stations 0 MW

Page 10: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

Cost of generation

Demand forecast

Unconstrained

schedule

(Cheapest mix)

Network constraints

Day ahead contract

Generation scheduling process

Operating reserves

Renewable Forecast

Unconstrained schedule

(Least cost)

Constrained schedule

Page 11: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

Meeting Demand on a Typical Day

• The bulk of the demand is met by base load coal, nuclear and imports via HVDC

• OCGTs and Pumped Storage plants are mainly required to manage peak demand

• The renewable generators are starting to make a substantial contribution

• Coal and hydro are the main providers of flexibility at present

• This process is monitored real time from the two control centres

16000

18000

20000

22000

24000

26000

28000

30000

32000

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

MW Thu 06-DecLandfill Gas

Small Hydro

CSP

PV

Wind

Dispatchable IPPs

Manual Load Reduction

IOS (Excl ILS)

ILS Usage

Pumped Water Actuals

Hydro Water Actuals

Gas Actuals

International Actuals

Nuclear Actuals

Thermal Actuals

Forecast

Page 12: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

11

Summer and Winter Profiles

21000

22000

23000

24000

25000

26000

27000

28000

29000

30000

31000

32000

33000

34000

35000

00

:00

to 0

1:0

0

01

:00

to 0

2:0

0

02

:00

to 0

3:0

0

03

:00

to 0

4:0

0

04

:00

to 0

5:0

0

05

:00

to 0

6:0

0

06

:00

to 0

7:0

0

07

:00

to 0

8:0

0

08

:00

to 0

9:0

0

09

:00

to 1

0:0

0

10

:00

to 1

1:0

0

11

:00

to 1

2:0

0

12

:00

to 1

3:0

0

13

:00

to 1

4:0

0

14

:00

to 1

5:0

0

15

:00

to 1

6:0

0

16

:00

to 1

7:0

0

17

:00

to 1

8:0

0

18

:00

to 1

9:0

0

19

:00

to 2

0:0

0

20

:00

to 2

1:0

0

21

:00

to 2

2:0

0

22

:00

to 2

3:0

0

23

:00

to 0

0:0

0

MW

Hours

Actual 2018 Summer Profile for Residual Demand Actual 2018 Summer Profile for RSA Contracted Demand

Actual 2018 Winter Profile for Residual Demand Actual 2018 Winter Profile for RSA Contracted Demand

Page 13: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

The system is expected to remain tight for the MYPD4 period resulting in an increase in the cost of production

MCR, all units to maximum continuous rated output

Emergency Level 1, some units exceed MCR for short

duration

Virtual Power Station, customers paid to reduce

Request mutual assistance from other power companies

Withdraw non-firm exports

Dispatch Open Cycle Gas Turbines (diesel)

Dispatch Gas Turbines

Use emergency hydro generation hours

Interruptible Load Shedding contracts

Declare SAPP emergency

Load curtailment (NRS048-9)

Load shedding (NRS048-9)

240 MW

* 700 MW

126 MW

Varies

3 086 MW

342 MW

600 MW

Varies

2 024 MW

2 hours

* 2 hours

Fuel

dependent

Fuel

dependent

Fuel

dependent

DWS

dependent

2 hours

Rotational

The merit

order varies

depending on

magnitude and

anticipated

duration of the

emergency

Page 14: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

275684-01-SADC-v01-11Apr11-DP-pf-CPT.ppt13

Thermal Fleet Performance

Page 15: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

14

Current Performance of Thermal Fleet is not Sustainable

and Needs Urgent Attention

1.1 0.7 0.4 0.5 0.9 0.9 1.1 0.7 2.6 3.2 2.6 2.8 0.8 0.7 2.5 1.7 3.5 2.2 1.3 0.9 1.4

50

55

60

65

70

75

80

85

90

95

100

105

69.6

No

v 1

77.7

14.2

Ju

n 1

7

9.6 9.6

8.1

Ma

y 1

7

6.37.6

86.1

5.9

8.2

Ju

l 1

7

82.3

Au

g 1

7

77.7

16.6

9.8

11.6S

ep

17

11.5

11.1

Oct 1

715.8

75.6

11.0

12.7

70.5

13.7D

ec 1

7

13.2

9.2

7.6

Fe

b 1

8

69.7

11.8

Ju

l 1

8

Ja

n 1

8

81.2

Ma

y 1

8

70.273.9

12.7

8.7

Ma

r 1

8

16.1

81.9

Ap

r 1

8

76.1

8.8

14.4

7.4

76.2

20.9

7.2

78.0

Ap

r 1

7

14.5

Ju

n 1

8

5.4

15.0

73.6

15.4

83.6

Au

g 1

8

72.3

9.8

Se

p 1

8

14.2

12.4

16.9

10.1

Oct 1

8

79.3

66.6

11.5

15.3

No

v 1

8

63.8

20.5

De

c 1

8

69.4

%

EAF (%)

PCLF (%) OCLF (%)

UCLF (%) GLF (%)

EUF (%)

Generation Performance FY2018

Note: OCLF- In FY2018 due to units in Extended Cold Reserve. In June and August 2018 due to industrial action.

Page 16: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

275684-01-SADC-v01-11Apr11-DP-pf-CPT.ppt15

Renewable Energy

Contribution

Page 17: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

Contribution of renewable generation

0

500

1,000

1,500

2,000

2,500

3,000

3,500

1-D

ec-1

8

1-D

ec-1

8

2-D

ec-1

8

3-D

ec-1

8

4-D

ec-1

8

4-D

ec-1

8

5-D

ec-1

8

6-D

ec-1

8

7-D

ec-1

8

7-D

ec-1

8

8-D

ec-1

8

9-D

ec-1

8

10

-De

c-1

8

10

-De

c-1

8

11

-De

c-1

8

12

-De

c-1

8

13

-De

c-1

8

13

-De

c-1

8

14

-De

c-1

8

15

-De

c-1

8

16

-De

c-1

8

16

-De

c-1

8

17

-De

c-1

8

18

-De

c-1

8

19

-De

c-1

8

19

-De

c-1

8

20

-De

c-1

8

21

-De

c-1

8

22

-De

c-1

8

22

-De

c-1

8

23

-De

c-1

8

24

-De

c-1

8

25

-De

c-1

8

25

-De

c-1

8

26

-De

c-1

8

27

-De

c-1

8

28

-De

c-1

8

28

-De

c-1

8

29

-De

c-1

8

30

-De

c-1

8

31

-De

c-1

8

31

-De

c-1

8

Technology contribution to renewable total

CSP

Solar PV

Onshore Wind

Page 18: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

Example of Daily Renewable Generation in Nov 2018

20000

21000

22000

23000

24000

25000

26000

27000

28000

29000

30000

31000

0

200

400

600

800

1000

1200

1400

1600

1800

2000

20

-No

v-1

8 0

0:0

0

20

-No

v-1

8 0

1:0

0

20

-No

v-1

8 0

2:0

0

20

-No

v-1

8 0

3:0

0

20

-No

v-1

8 0

4:0

0

20

-No

v-1

8 0

5:0

0

20

-No

v-1

8 0

6:0

0

20

-No

v-1

8 0

7:0

0

20

-No

v-1

8 0

8:0

0

20

-No

v-1

8 0

9:0

0

20

-No

v-1

8 1

0:0

0

20

-No

v-1

8 1

1:0

0

20

-No

v-1

8 1

2:0

0

20

-No

v-1

8 1

3:0

0

20

-No

v-1

8 1

4:0

0

20

-No

v-1

8 1

5:0

0

20

-No

v-1

8 1

6:0

0

20

-No

v-1

8 1

7:0

0

20

-No

v-1

8 1

8:0

0

20

-No

v-1

8 1

9:0

0

20

-No

v-1

8 2

0:0

0

20

-No

v-1

8 2

1:0

0

20

-No

v-1

8 2

2:0

0

20

-No

v-1

8 2

3:0

0

Re

sid

ual

De

man

d (

MW

)

Re

new

able

s (M

W)

Residual Demand Wind PV CSP

Page 19: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

18

Wind Generation and Load Factors

during 2017 and 2018

• High load factors over evening peaks in summer can be observed, dropping during the winter months.

• A similar behaviour can be observed over all hours in a week, however to a much lesser extent.

• This behaviour is consistent, even with increase in wind generation.

0

100

200

300

400

500

600

700

800

900

1000

1100

1200

1300

1400

1500

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

08

/Jan

/20

17

22

/Jan

/20

17

05

/Feb

/20

17

19

/Feb

/20

17

05

/Mar

/20

17

19

/Mar

/20

17

02

/Ap

r/2

01

71

6/A

pr/

20

17

30

/Ap

r/2

01

71

4/M

ay/2

01

72

8/M

ay/2

01

71

1/J

un

/20

17

25

/Ju

n/2

01

70

9/J

ul/

20

17

23

/Ju

l/2

01

70

6/A

ug/

20

17

20

/Au

g/2

01

70

3/S

ep/2

01

71

7/S

ep/2

01

70

1/O

ct/2

01

71

5/O

ct/2

01

72

9/O

ct/2

01

71

2/N

ov/

20

17

26

/No

v/2

01

71

0/D

ec/2

01

72

4/D

ec/2

01

70

7/J

an/2

01

82

1/J

an/2

01

80

4/F

eb/2

01

81

8/F

eb/2

01

80

4/M

ar/2

01

81

8/M

ar/2

01

80

1/A

pr/

20

18

15

/Ap

r/2

01

82

9/A

pr/

20

18

13

/May

/20

18

27

/May

/20

18

10

/Ju

n/2

01

82

4/J

un

/20

18

08

/Ju

l/2

01

82

2/J

ul/

20

18

05

/Au

g/2

01

81

9/A

ug/

20

18

02

/Sep

/20

18

16

/Sep

/20

18

30

/Sep

/20

18

14

/Oct

/20

18

28

/Oct

/20

18

11

/No

v/2

01

82

5/N

ov/

20

18

09

/Dec

/20

18

23

/Dec

/20

18

Summer WinterAverage Weekly Wind Generation over Peak Average Weekly Wind Load FactorAverage Weekly Wind Load Factor over Peak Average Weekly Wind Load Factor over Night MinimumPoly. (Average Weekly Wind Load Factor) Poly. (Average Weekly Wind Load Factor over Peak)Poly. (Average Weekly Wind Load Factor over Night Minimum)

Page 20: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

Increasing average contribution of Renewables over system peak

19

• This diagram is indicative of the increasing installed capacity but also highlights the

magnitude of the variability (particularly from wind).

• Some seasonal behaviour can be observed.

• Forecasting helps in the short term but not for planning purposes.

0

200

400

600

800

1,000

1,200

1,400

1,600

1-A

ug-

18

2-A

ug-

18

3-A

ug-

18

4-A

ug-

18

5-A

ug-

18

6-A

ug-

18

7-A

ug-

18

8-A

ug-

18

9-A

ug-

18

10

-Au

g-1

8

11

-Au

g-1

8

12

-Au

g-1

8

13

-Au

g-1

8

14

-Au

g-1

8

15

-Au

g-1

8

16

-Au

g-1

8

17

-Au

g-1

8

18

-Au

g-1

8

19

-Au

g-1

8

20

-Au

g-1

8

21

-Au

g-1

8

22

-Au

g-1

8

23

-Au

g-1

8

24

-Au

g-1

8

25

-Au

g-1

8

26

-Au

g-1

8

27

-Au

g-1

8

28

-Au

g-1

8

29

-Au

g-1

8

30

-Au

g-1

8

31

-Au

g-1

8

Technology contribution to peak

Solar PV

Onshore Wind

CSP

Hydro

Landfill gas

1200MW difference between renewable generation over evening peaks of two consecutive days

Page 21: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

20

PV Forecast Accuracy during 2018

YTD Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

MAPE 31.8% 22.8% 28.1% 33.1% 36.9% 37.6% 31.8% 24.5% 31.4% 41.2% 36.2% 28.9% 28.1%

NMAPE 4.9% 4.7% 5.3% 5.5% 7.7% 4.6% 3.0% 5.0% 4.6% 7.6% 4.1% 3.0% 3.5%

MAE 50.4 56.5 59.7 61.0 65.0 45.3 31.0 46.7 47.1 68.9 46.3 36.1 41.8

50.4

56.559.7 61.0

65.0

45.3

31.0

46.7 47.1

68.9

46.3

36.1

41.8

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

Page 22: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

21

Wind Forecast Accuracy during 2018

YTD Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

MAPE 18.9% 13.8% 18.3% 19.4% 22.8% 20.7% 16.5% 23.1% 17.8% 20.6% 20.8% 15.9% 16.4%

NMAPE 10.2% 7.8% 9.9% 9.8% 12.2% 10.9% 9.5% 12.3% 9.9% 12.1% 11.7% 8.4% 7.5%

MAE 99.2 90.4 106.8 88.4 101.1 91.1 92.7 119.5 85.7 109.4 119.3 97.8 88.7

99.2

90.4

106.8

88.4

101.1

91.1 92.7

119.5

85.7

109.4

119.3

97.8

88.7

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Page 23: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

275684-01-SADC-v01-11Apr11-DP-pf-CPT.ppt22

Current State of the System

(Performance Indicators)

Page 24: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

23

Total Monthly PCLF, UCLF and OCLF Trend(April 2015 – Dec 2018)

Insights:

The combined

unavailability of

PCLF, UCLF

and OCLF are

reaching similar

levels

experienced

during the load

shedding period

in 2015.

At the beginning

of summer 2018

this is showing

an increasing

trend.

16

29

42

3 16

29

42

3 16

29

42

3 16

29

42

0

1,500

3,000

4,500

6,000

7,500

9,000

10,500

12,000

0%

5%

10%

15%

20%

25%

30%

35%

40%

Ap

r-2

01

5

Jun

-20

15

Au

g-2

01

5

Oct

-20

15

De

c-2

01

5

Feb

-20

16

Ap

r-2

01

6

Jun

-20

16

Au

g-2

01

6

Oct

-20

16

De

c-2

01

6

Feb

-20

17

Ap

r-2

01

7

Jun

-20

17

Au

g-2

01

7

Oct

-20

17

De

c-2

01

7

Feb

-20

18

Ap

r-2

01

8

Jun

-20

18

Au

g-2

01

8

Oct

-20

18

De

c-2

01

8

Weeks

Tota

l Mo

thly

Ou

tage

s (G

Wh

)

Months

Monthly OCLF % Monthly UCLF % Monthly PCLF % Total Mothly Outages (GWh)

Page 25: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

24

Open Cycle Gas Turbine (OCGT) and Gas Turbine Trend (April 2015 – Dec 2018)

Insights:Extremely high

OCGT usage was

needed during the

load shedding in

2015.

In 2016/17 the

OCGTs were run

mostly to honour

contractual and

reliability

requirements.

There has been a

sudden increase

in Eskom and IPP

OCGT usage to

support demand

and reserve.0

0

0

0

0

1

1

1

1

1

1

0

50

100

150

200

250

300

350

400

450

500

550

600

650

700

Ap

r 2

01

5

Jun

20

15

Au

g 2

01

5

Oct

20

15

Dec

20

15

Feb

20

16

Ap

r 2

01

6

Jun

20

16

Au

g 2

01

6

Oct

20

16

Dec

20

16

Feb

20

17

Ap

r 2

01

7

Jun

20

17

Au

g 2

01

7

Oct

20

17

Dec

20

17

Feb

20

18

Ap

r 2

01

8

Jun

20

18

Au

g 2

01

8

Oct

20

18

Dec

20

18

GWh

Total Monthly OCGT (Eskom+IPP) and GT Energy Utilisation

Total IPP OCGT Total Eskom OCGT+GT

Page 26: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

25

Supplemental Demand Response (VPS) Trend (April 2015 – Dec 2018)

Insights:

There has been

an increase in

the amount of

SDR scheduled

and this trend

has continued

and escalated

further in

2018/19.

Have utilised

(and payed) for

more demand

side energy in

past quarter

than at any point

in past 3 years

(including the

load-shedding

period of 2015).

Page 27: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

26

Interruptible Load Usage (ILS) Trend(April 2015 – Dec 2018)

Insights:Following the load

shedding of 2015,

there was a

dramatic decrease

in the amount of

ILS used.

At the start of FY

2018/19, there

has been a

noticeable upturn

in the ILS used.

The amount of

incidents and

energy shed is at

it’s highest level

since August

2015, with a drop

in December 2018

due to lower

demand.

Page 28: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

Pumped Storage Generation Hours in October and November 2018

Insights:

Since beginning

of October dam

levels at pumped

storage stations

have not been

able to recover to

full levels at

beginning of each

week.

Significant

amount of

generating hours

from these

stations have

been required to

manage demand,

especially with

flatter summer

profile.

0.0

20.0

40.0

60.0

80.0

100.0

120.0

Mo

n 0

1-O

ct-1

8 0

0:0

0Tu

e 02

-Oct

-18

00

:00

Wed

03

-Oct

-18

00

:00

Thu

04

-Oct

-18

00

:00

Fri 0

5-O

ct-1

8 0

0:0

0Sa

t 0

6-O

ct-1

8 0

0:0

0Su

n 0

7-O

ct-1

8 0

0:0

0M

on

08

-Oct

-18

00

:00

Tue

09-O

ct-1

8 0

0:0

0W

ed 1

0-O

ct-1

8 0

0:0

0Th

u 1

1-O

ct-1

8 0

0:0

0Fr

i 12

-Oct

-18

00

:00

Sat

13

-Oct

-18

00

:00

Sun

14

-Oct

-18

00

:00

Mo

n 1

5-O

ct-1

8 0

0:0

0Tu

e 16

-Oct

-18

00

:00

Wed

17

-Oct

-18

00

:00

Thu

18

-Oct

-18

00

:00

Fri 1

9-O

ct-1

8 0

0:0

0Sa

t 2

0-O

ct-1

8 0

0:0

0Su

n 2

1-O

ct-1

8 0

0:0

0M

on

22

-Oct

-18

00

:00

Tue

23-O

ct-1

8 0

0:0

0W

ed 2

4-O

ct-1

8 0

0:0

0Th

u 2

5-O

ct-1

8 0

0:0

0Fr

i 26

-Oct

-18

00

:00

Sat

27

-Oct

-18

00

:00

Sun

28

-Oct

-18

00

:00

Mo

n 2

9-O

ct-1

8 0

0:0

0Tu

e 30

-Oct

-18

00

:00

Wed

31

-Oct

-18

00

:00

Thu

01

-No

v-18

00

:00

Fri 0

2-N

ov-

18

00

:00

Sat

03

-No

v-1

8 0

0:0

0Su

n 0

4-N

ov-

18 0

0:0

0M

on

05

-No

v-1

8…

Tue

06-N

ov-

18

00

:00

Pu

mp

-Sto

rage

Un

it H

ou

rs

Drakensberg Gen Unit Hours Palmiet Gen Unit Hours

Ingula Gen Unit Hours Drakensberg Required Hours on a Monday Morning

Palmiet Required Hours on a Monday Morning Ingula Required Hours on a Monday Morning

Drakensberg Minimum Hours Palmiet Minimum Hours

Ingula Minimum Hours

Monday

Page 29: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

28

Weekly Pumped Storage Generation Hours from 2015 to 2018 - at Friday Night

Insights:During load shedding period

in 2015, pumped storage

gen unit hours was very low

at end of week due to

significant usage.

This usage decreased during

2016 and 2017.

During winter months of

2018, pumped storage

stations was used primarily

for peaking purposes,

leading to higher dam levels.

Since September 2018,

pumped storage has been

utilised throughout summer

days, resulting in low dam

levels on a Friday night. This

together with limited

reserves for weekend

pumping has resulted in less

pump storage energy

available for following week.

0

10

20

30

40

50

60

70

80

90

100

Fri 0

3/0

4/2

01

5 2

0:0

0

Fri 1

5/0

5/2

01

5 2

0:0

0

Fri 2

6/0

6/2

01

5 2

0:0

0

Fri 0

7/0

8/2

01

5 2

0:0

0

Fri 1

8/0

9/2

01

5 2

0:0

0

Fri 3

0/1

0/2

01

5 2

0:0

0

Fri 1

1/1

2/2

01

5 2

0:0

0

Fri 2

2/0

1/2

01

6 2

0:0

0

Fri 0

4/0

3/2

01

6 2

0:0

0

Fri 1

5/0

4/2

01

6 2

0:0

0

Fri 2

7/0

5/2

01

6 2

0:0

0

Fri 0

8/0

7/2

01

6 2

0:0

0

Fri 1

9/0

8/2

01

6 2

0:0

0

Fri 3

0/0

9/2

01

6 2

0:0

0

Fri 1

1/1

1/2

01

6 2

0:0

0

Fri 2

3/1

2/2

01

6 2

0:0

0

Fri 0

3/0

2/2

01

7 2

0:0

0

Fri 1

7/0

3/2

01

7 2

0:0

0

Fri 2

8/0

4/2

01

7 2

0:0

0

Fri 0

9/0

6/2

01

7 2

0:0

0

Fri 2

1/0

7/2

01

7 2

0:0

0

Fri 0

1/0

9/2

01

7 2

0:0

0

Fri 1

3/1

0/2

01

7 2

0:0

0

Fri 2

4/1

1/2

01

7 2

0:0

0

Fri 0

5/0

1/2

01

8 2

0:0

0

Fri 1

6/0

2/2

01

8 2

0:0

0

Fri 3

0/0

3/2

01

8 2

0:0

0

Fri 1

1/0

5/2

01

8 2

0:0

0

Fri 2

2/0

6/2

01

8 2

0:0

0

Fri 0

3/0

8/2

01

8 2

0:0

0

Fri 1

4/0

9/2

01

8 2

0:0

0

Fri 2

6/1

0/2

01

8 2

0:0

0

Fri 0

7/1

2/2

01

8 2

0:0

0

Ge

n U

nit

Ho

urs

Gen Unit Hours at Pump Storage Stations at the end of the WeekDrakensberg Gen Unit Hours Palmiet Gen Unit Hours

Ingula Gen Unit Hours Poly. (Drakensberg Gen Unit Hours)Poly. (Palmiet Gen Unit Hours) Poly. (Ingula Gen Unit Hours)

Page 30: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

29

Minimum Monthly Reserves over Evening Peaks from 2015 to 2018

Insights:

In 2015, available

reserves during

evening peaks were

extremely low. For most

days, was negative,

leading to load

reduction. These

reserves improved from

end of 2015 onwards.

In 2018, available

reserves decreased

continuously, moving

again into load

reduction space.

Presently, system is

very sensitive and any

significant event

pushes us into load

reduction, as was case

in June and July during

industrial action.

-4000

-3000

-2000

-1000

0

1000

2000

3000

4000

5000

6000

Ap

r 2

01

5

Jun

20

15

Au

g 2

01

5

Oct

20

15

De

c 2

01

5

Feb

20

16

Ap

r 2

01

6

Jun

20

16

Au

g 2

01

6

Oct

20

16

De

c 2

01

6

Feb

20

17

Ap

r 2

01

7

Jun

20

17

Au

g 2

01

7

Oct

20

17

De

c 2

01

7

Feb

20

18

Ap

r 2

01

8

Jun

20

18

Au

g 2

01

8

Oct

20

18

De

c 2

01

8

MW

Sh

ort

fall

Evening peak reserves over tightest day of the month

Poly. (Evening peak reserves over tightest day of the month)

Page 31: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

30

Load Reduction Events during Nov and Dec 2018

Sun 18-Nov-2018

Load Shedding stage 1 from 12:15 to 19:00

Load Curtailment stage 1/2 from 12:15 to 19:00

Thu 29-Nov-2018

Load Shedding stage 1 from 12:00 to 21:00

Load Curtailment stage 1/2 from 14:00 to 21:00

Fri 30-Nov-2018

Load Shedding stage 2 from 09:00 to 20:30

Load Shedding stage 1 from 20:30 to 21:00

Load Curtailment stage 1/2 from 11:00 to 21:00

Sat 01-Dec-2018

Load Shedding stage 1 from 09:00 to 16:00

Load Shedding stage 2 from 16:00 to 20:47

Load Shedding stage 1 from 20:47 to 21:16

Sun 02-Dec-2018

Load Shedding stage 2 from 08:00 to 20:18

Load Shedding stage 1 from 20:18 to 20:48

Mon 03-Dec-2018

Load Shedding stage 2 from 09:00 to 20:30

Load Shedding stage 1 from 20:30 to 21:00

Load Curtailment stage 1/2 from 11:00 to 21:00

Tue 04-Dec-2018

Load Shedding stage 2 from 09:00 to 21:00

Load Shedding stage 1 from 21:00 to 21:30

Load Curtailment stage 1/2 from 11:00 to 21:30

Wed 05-Dec-2018

Load Shedding stage 2 from 09:00 to 21:00

Load Shedding stage 1 from 21:00 to 21:30

Load Curtailment stage 1/2 from 10:00 to 21:30

Thu 06-Dec-2018

Load Shedding stage 2 from 09:00 to 20:30

Load Shedding stage 1 from 20:30 to 21:00

Load Curtailment stage 1/2 from 10:00 to 21:00

Fri 07-Dec-2018

Load Shedding stage 1 from 09:00 to 21:00

Sat 08-Dec-2018

Load Shedding stage 1 from 09:00 to 21:38

Page 32: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

Conclusion:The System is talking, are we listening?

The system is expected to remain tight for the duration of the MYPD4 period

We are currently running a very expensive power system and need to be addressed urgently (high utilization of emergency resources)

A tight system make it difficult to follow Scheduling and Dispatch Rules

The transmission network has also experienced unprecedented failures lately

The uncertainty of renewable energy is less of a concern at present

As more renewables (both grid-tied and behind-the-meter) are integrated, the role of essential (ancillary) services products is expected to increase and the costs thereof

Although the costs of balancing and flexibility are currently socialized, these may have to be explicit in future

31

Page 33: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

Generation

32

Page 34: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

Limpopo

Kwazulu-Natal

Eastern Cape

Western

Cape

Northern

Cape

North West

Free State

8

Cape Town

16

1

2

3

41

MpumalangaGauten

g12

345

67

9

10

Johannesburg

1513

11

12

9

7

8

56

2

Eskom currently operates 26 stations throughout South Africa (installed capacity on completion shown)

1 Klipheuwel Windfarm –

3MW (decommissioned)

Renewable energy

Nuclear Power Station

Koeberg – 1 940 MW

Camden – 1 510 MW

Arnot – 2 352 MW1

2

3

4

5

6

7

8

9

10

Duvha – 3 600 MW

Hendrina – 2 000 MW

Kendal – 4 116 MW

Kriel – 3 000 MW

Lethabo – 3 708 MW

Majuba – 4 110 MW

Matimba – 3 990 MW

Matla – 3 600 MW

Tutuka – 3 654 MW

Base load stations

11

12 Grootvlei – 1 200 MW

Komati – 940 MW13

1

2

4

3

Acacia - 171 MW

Port Rex -171 MW

Ankerlig - 1 338 MW

Gourikwa - 746 MW

Peak demand stations

5 Gariep - 360 MW

6 Vanderkloof - 240 MW

7 Drakensburg - 1 000 MW

8 Palmiet - 400 MW

14 Kusile - 4 788 MW

15 Medupi - 4 800 MW

New build stations

9 Ingula - 1 332 MW

2 Sere Windfarm - 100 MW

(Sustainability)

Eskom coal stations

New Build coal stations

Peaking Stations

Renewable Energy

Koeberg Nuclear

Power Station

Page 35: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

Planning OverviewEskom applies asset management principles which include planning on how to ensure the optimal operating and maintenance of the existing fleet for the duration of its economic life

3

4

The LOPP is based on a codified preventive maintenance strategy for each power station. This prescribes what maintenance

interventions are required at what periodicity as well as the standard maintenance activities required.

Stations have specific requirements with respect to the numerous cyclical maintenance interventions required on a power plant.

However, generic rules exist:

• General Overhaul (GO): Every 10 – 12 years plant shutdown to do inspection and repair of turbine & generator.

• Mini GO: Every 5 - 6 years inspection of low pressure turbines, and statutory pressure test.

• Interim Repair (IR): 18 – 36 monthly plant is shutdown to inspect and repair the boiler components.

• Boiler Inspection (IN): Between IR’s an inspection is carried out to review condition of the boiler and scope the next outage.

Maintenance Planning is informed by what

maintenance needs to be performed, in terms of

replacement/refurbishment of components of the

assets as well as the routine outage maintenance

activities.

• Life of Plant Plan (LOPP), details these major

maintenance and refurbishment projects that are

required over the life of the plant.

• Technical Plan is a more refined extract of the

LOPP over a shorter period and the Maintenance

Plan is a listing of the outages required to

implement the LOPP and Technical Plans.

• Capacity Plan then takes a detailed view of the

first year of the Maintenance Plan to ensure that

all required outages are scheduled whilst

ensuring there is adequate capacity available to

meet demand.

• Production Planning describes how the required

energy demand is to be met on an hourly basis

whilst maintaining least-cost dispatch within

known constraints.

Page 36: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

Capacity Outlook schedules required outages according to system constraintsThis is re-optimised typically on a weekly basis

Source: Tetris Plan V4.3 – 14 January 2019

20000

25000

30000

35000

40000

45000

50000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

2019 2020

Available Capacity Gas units Operating Reserves PCLF UCLF Peak Demand Installed Capacity

Summer UCLF7500 MW

Summer UCLF7500 MWWinter UCLF

6500 MW

UCLF

PCLF

Operating Reserve

Available Capacity

Gas

5000 MW

Average Planned Maintenance (PCLF)

MD03 CO

KS02 & MD02 COMD01 CO

KS03 CO

To execute this plan, OCGT usage is anticipated. The unplanned allowance is projected at 7 500 and 6 500

MW for summer and winter respectively.

Further optimisation possible from December 2019.

Page 37: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

Production Planning plans optimal output from available power stations to reliably meet system demand at least cost, while recognising Generation, primary energy and any other technical constraints

3

6

• The key principle is for merit order dispatch within known constraints.

• Constraints may include emissions, coal shortages/surplus, water shortages and any other

technical constraints.

• Merit order dispatch - deriving the merit order from the primary energy costs (mainly coal and

diesel cost) resulting in an energy cost (R/MWh) ranking per station from the cheapest to the

most expensive.

• Coal and diesel costs are the major contributors to the variable cost of electricity

production, and on its own, results in an accurate relative merit order and optimum

dispatch.

• The Production Plan outcome provides the expected production level at each station which is

the basis of the Primary Energy (i.e. Coal, Water, Limestone, Nuclear, OCGT, Start-up Fuel,

Water Treatment, Coal Handling and Environmental Levy) cost projections.

Page 38: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

Energy supplied by Eskom Stations is stagnant while that from IPPs grows significantly

37

25,000

215,000

0

10,000

15,000

5,000

20,000

225,000

220,000

FY2019 FY2020 FY2021FY2018 FY2022 FY2023 FY2024

+107.7%

+0.2%

International GWhEskom GWh IPPs GWh

Projected energy required to be supplied by Eskom is stagnant and actually decreases from FY2020.

Energy projected to be supplied by IPPs more than doubles in 6 years.

Page 39: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

Production Plan both requires numerous assumptions as input and is a key input into the costs of operations

40

Page 40: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

Costs for primary energy, maintenance etc. are dependent on the Production Plan

41

Other Gx EAF

Demand Gx new build

IPP capacity

Production Plan assumes:

• EAF of 78%.

• Best estimate for new build

• REIPP to BW 4.5

• Realistic demand growth

Result:

• Some stations not required

to produce electricity

Production Plan is dependant on a number of key

assumptions.

“Stress test” assumes:

• EAF of 75%.

• Conservative estimate for

new build

• REIPP to BW 4.5 (delayed)

• Stretch / Corporate plan

demand growth

High

uncertainty in

assumptions so

performed a

“Stress test”

Shut down units from Grootvlei,

Komati and Hendrina when

they require major Capex

injection to continue to run but

do not decommission; in

Reserve Storage as

“insurance” in case required.

Illustrative

assumptions

Page 41: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

42

In first half of FY2018, maintenance was deferred due to funding

constraints. Capex and Opex for outages could not be released until

funding secured

1.1 0.7 0.4 0.5 0.9 0.9 1.1 0.7 2.6 3.2 2.6 2.8 0.8 0.7 2.5 1.7 3.5 2.2 1.3 0.9 1.4

50

55

60

65

70

75

80

85

90

95

100

105

69.6

No

v 1

77.7

14.2

Ju

n 1

7

9.6 9.6

8.1

Ma

y 1

7

6.37.6

86.1

5.9

8.2

Ju

l 1

7

82.3

Au

g 1

7

77.7

16.6

9.8

11.6S

ep

17

11.5

11.1

Oct 1

715.8

75.6

11.0

12.7

70.5

13.7D

ec 1

7

13.2

9.2

7.6

Fe

b 1

8

69.7

11.8

Ju

l 1

8

Ja

n 1

8

81.2

Ma

y 1

8

70.273.9

12.7

8.7

Ma

r 1

8

16.1

81.9

Ap

r 1

8

76.1

8.8

14.4

7.4

76.2

20.9

7.2

78.0

Ap

r 1

7

14.5

Ju

n 1

8

5.4

15.0

73.6

15.4

83.6

Au

g 1

8

72.3

9.8

Se

p 1

8

14.2

12.4

16.9

10.1

Oct 1

8

79.3

66.6

11.5

15.3

No

v 1

8

63.8

20.5

De

c 1

8

69.4

%

EAF (%)

PCLF (%) OCLF (%)

UCLF (%) GLF (%)

EUF (%)

Generation Performance FY2018

Note: OCLF- In FY2018 due to units in Extended Cold Reserve. In June and August 2018 due to industrial action.

Reduced maintenance up to October negatively impacted reliability and meant that

high PCLF was required for the remainder of the year.

Higher UCLF and PCLF = low EAF.

As E

AF

de

cre

ased, E

UF

in

cre

ase

d

= p

lan

t ru

nn

ing “

ha

rde

r”.

Page 42: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

43

Revised Production PlanApplication

Current availability of Generation fleet is significantly below EAF

assumption in MYPD4 application and even less than the “stress test”

Thus a revised production plan was run - using assumptions based on latest information:

Application FY2020 FY2021 FY2022

EAF (%) 78 78 78

PCLF (%) 9.0 9.1 9.0

UCLF (%) 11.9 11.9 11.9

OCLF (%) 1.1 1.1 1.1

OCGT LF

Sales Forecast

Constrained to 1%

Moderate sales foorecast

Revised FY2020 FY2021 FY2022

EAF (%) 71.5 72.5 73.5

PCLF (%) 9.50 9.00 9.00

UCLF (%) 17.50 17.00 16.00

OCLF (%) 1.50 1.50 1.50

OCGT LF

Sales Forecast Revised, lower sales forecast

Unconstrained

New Build CO Date

Assumptions - ApplicationMedupi Kusile

1st unit Commercial Commercial

2nd unit Commercial October 2018

3rd unit Commercial August 2019

4th unit October 2018 December 2020

5th unit May 2019 August 2021

6th unit May 2020 June 2022

New Build CO Date

Assumptions - RevisedMedupi Kusile

1st unit Commercial Commercial

2nd unit Commercial May 2019

3rd unit Commercial December 2019

4th unit April 2019 December 2020

5th unit April 2019 August 2021

6th unit November 2019 June 2022

Page 43: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

44

Revised Production Plan shows even less Energy supplied by

Eskom Stations - mostly due to the lower demand assumption

15,000

10,000

25,000

20,000

0

225,000

5,000

210,000

215,000

220,000

FY2018 FY2019 FY2024FY2020 FY2023FY2021 FY2022

-3.2%

+107.7%

Eskom GWh IPPs GWh International GWh

Projected energy required to be supplied by Eskom decreases significantly.

Energy projected from IPPs more than doubles in 6 years and will continue to assist in meeting demand.

The lower assumed availability of Eskom stations requires higher OCGT usage – over 15% in FY2020 but

dropping to about 6% and then around 1%.

Note: Production does not equal demand as it also includes losses, pumping, etc..

Page 44: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

45

Result of constrained system, aggravated by low Generation

availability, was load shedding that started in November

The following 6 points show the reasons for unavailable capacity…

11.5% PCLF• Essential planned maintenance to address safety, statutory requirements and

performance related work to prevent even higher UCLF

• Approximately 5 000 MW not available on average

4 units on long-

term forced outage

• Lethabo u5, Duvha u4, Grootvlei u2, Kriel u2

• Total MW not available = 1 833 MW

• Duvha 4 returned during November but had multiple failures after return

Partial Load

Losses (PLLs)

(UCLF + OCLF)

• UCLF PLLs of 8.8% = 3 862MW on average

• OCLF PLLs of 1.0% = 437 MW

• More than 4 000 MW not available

12 units in

Extended

Inoperability or

Reserve Storage

• Extended Inoperability: Duvha u3; Hendrina u3 (760 MW)

• Reserve Storage: Grootvlei u4, u5, u6; Hendrina u1, u9;

Komati u1, u2, u3, u6, u8 (1389 MW)

• Total MW not available = 2 149 MW

Performance of

New Build

Medupi & Kusile

• High UCLF and PCLF partly to address design deficiencies at

Medupi (EAF = 59.2%) and Kusile (EAF = 17.1%)

• Almost 1 500 MW not available on average (note that some of this is included in

PCLF and PLLs above)

Full Load Losses• On average almost 5 200 MW not available due to full load losses

• This includes 4 units on long outages above and new build stations

Page 45: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

Overview – Root cause of current Generation plant performance is capacity shortage, caused by:

• First contributor to capacity shortage is the delay of new capacity.

• Investment decision to build Medupi (and other stations) was needed by, not later than,

1999 to meet increasing demand by 2007.

• Investment decision (business case) only made in December 2006 => needed capacity not

available in time.

• This was exacerbated by delays in commissioning of both Medupi and Kusile.

• Second contributor was deteriorating plant performance of existing plant.

• Particularly since 2010 World Cup, necessary philosophy maintenance was delayed in

interests of avoiding load shedding

• Above led to very high load factors and limited time available for maintenance outages.

• High utilisation of deteriorated plant created the cycle of deteriorating availability.

• Despite some improvements due to efficiency and effectiveness of operations and

maintenance, cycle could only be broken with adequate funds and space in which to

perform required maintenance.

• Underlying cause of deterioration in fleet’s performance is lack of sufficient capacity, aggravated

by the onset of age and usage related equipment failures and insufficient available Capex

• By 2014, about 80% of existing fleet’s capacity was already in period where they required

major equipment replacements in order to restore plants’ economic life.

• Deferring this work was a major cause of escalation in plant breakdowns.

Page 46: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

Energy Availability Factor (EAF) measures the availability of the generating fleet from a system point of view.

4

7

• Decline in availability (EAF) from

2013 contributed to constrained

system which required increased

OCGT usage for system security and

to minimise load shedding,

notwithstanding the improvement in

2016.

• Availability (EAF) better than or in

line with peers until rise in UCLF

from 2013

• The general trend, for both Eskom

and the VGB benchmark units is that

of reducing availability. This is

consistent with the expectation due

to ageing fleet with few or no new

units being commissioned in this

period.

• Decline in EAF primarily due to

increase in UCLF

• Nevertheless, in line with peers until

2013. Mostly due to lower PCLF.

• Improvement in 2016 due to

decrease in UCLF

Page 47: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

Eskom coal units have been consistently run harder than the coal units of the other VGB members.

4

8

• EUF measures “how hard” the units

are being run and thus is an

indicator of stress on systems and

components.

• Since 2012, even Eskom’s lowest

quartile stations are running at a

higher utilisation than the VGB

highest quartile.

• Generation stations have been

running harder than other utilities

and in “red zone” for last 15 years.

• High utilisation means plant

systems required to operate at

limits, leading to strain, increasing

wear-and-tear and decreasing plant

reliability.

• *NERSA stated that “Eskom is

running power stations at higher

load factors than previously

expected and therefore incurs wear

and tear which will require

maintenance and repairs.

Increased plant breakdowns result

in increased use of start-up fuel to

bring plant back into production.”*Reasons For Decision of 18 June 2008 on Eskom’s ‘Revision Application –

Price Increase Application for the 2008/09 financial year’,

Page 48: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

Load factors / high utilisation

From 2003 Eskom’s coal fleet has been operating at very high output levels to meet rising demand

Energy Utilisation Factor (EUF) has been in the “red zone” above design parameters for more than a decade

Overloading and strain on components decreases plant reliability and increases unplanned breakdowns (UCLF)

UCLF went from around 5% between FY2008 and FY2011 to about 15% in FY2015 and FY2016 before improving in FY2017 and FY2018 which was short-lived with a deterioration to over 16% so far in FY2019

Direct correlation between high EUF and increased plant breakdowns

Result is a cumulative and compounding vicious circle threatening loss of control of plant performance

2019-01-16 49

Page 49: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

50

Higher utilisation leads to additional stress on components

and thus to increasing breakdowns but only after a delay.

(Right Hand Axis)

70%

75%

80%

85%

90%

95%

0%

5%

10%

15%

20%

25%1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Coal Unplanned Outage Rate EUF

EUF (Right hand axis)

UCLF (Left hand axis)

High utilisation in the “Red Zone”.

Years of high utilisation

led to increasing UCLF

Page 50: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

51

From FY2011 until FY2017 there is a correlation noted

between Maintenance spend and Generation performance

8.79.5 9.0

8.0

9.1

9.99.6

5.14.4 5.1

6.1 8.0 9.9

1.4 0.8 0.7 1.3 1.0 1.1 1.8 1.1 1.0 1.5 1.7

65

70

75

80

85

90

95

100

105

6

22

10

2

14

0

4

8

12

16

18

20

24

26

28

12.1

FY

11

FY

12

12.1

FY

13

75.1

12.6

FY

14

73.777.7

15.2

82.0F

Y1

5

13.0

14.9

10.4

FY

16

FY

17

72.271.1

10.2

FY

18

16.6

77.3

FY19

YTD

84.9

10.5

78.0

0.7

FY

08

85.3

FY

10

FY

09

85.2 84.6

9.1

%

UCLF (%)

EAF (%) OCLF (%)

PCLF (%) Capex & Maintenance Spend (Rbn real)

Generation Performance over the past 10 years

Rbn

Note: FY2019 YTD is as at end Dec’18

Increased PCLF (planned maintenance) from

FY2014 was a contributing factor to the improved

availability in FY2017 and FY2018.

Projection

Page 51: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

Eskom operates an ageing Generation fleet, notwithstanding the new stations under construction.

5

2

More than half of the stations and more than half of the coal-fired stations will be

over 37 years old by the beginning of the MYPD 4 period.

Page 52: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

Constrained system leading to reduced maintenance was exacerbated by age of the stations – in 2014, most of Eskom’s coal stations were past or approaching 30 year life.

53

• Average age of the stations was 34 years and all except Majuba had reached or past that period

where they required major equipment replacements in order to restore the plants’ economic life.

• Replacement/refurbishment of major components requires extensive outage time, and is expensive.

• Primarily due to financial and capacity

• constraints, particularly to keep the lights on between 2008 and 2014, much of this refurbishment

could not be executed.

• Major components not being replaced or refurbished when due increases the risk of incurring a

significant decline in technical performance.

Page 53: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

A 9 point recovery programme has been put in place to address our key operational challenges

Fixing coal stock piles

Prepare for increased

OCGT usage

Fixing human capital

Prepare for rain

Fixing new plant

Fixing outage duration

and slips

Fixing units on long-

term forced outages

Fixing full load losses

and trips

Partial losses and

Boiler tube leaks

1

3

4

2

5

7

8

6

9

Each of the 9 points has an dedicated lead person and is backed up by detailed action plans.

Page 54: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

To expedite programme, timeous financial and outage space as well as government support need to be met

6 months (Apr’ 2018 – Oct’ 2019)

New plants

Timelines

Full load losses & trips

Units on long term

outages

Partials and tube leaks

Outage duration & slips

Human capital

Prepare for OCGT

usage

Prepare for rain

Fix coal stock piles

Phase 2- Steady operations

Phase 1- Firefighting

Conduct Tech &Forensic review,

& develop cost time estimates

▪ Develop detailed repair plans,

measures and approvals

4 months (Dec’ 2018 – Mar’ 2019)

Build capacity , spares

optimisation and resource linking

▪ Drive Operator sourcing,

development, and excellence

Return Grootvlei unit 2

Take decision for Duvha unit 3

▪ Bring back Duvha 4, Kriel unit

2 and Lethabo unit 5

Drive delivery of outage plan to

release 1st tranche of 1567MW¹

▪ Drive delivery of outage plan to

release 2nd tranche of

1605MW Source funding for FY20,

Allocate specialist resources

▪ Monitor, track and drive

continuous Improvement

Appoint GE Gx, PSM's and Tier 1

man. Relink functions to stations

▪ Tier 1 man. development,

operator app. and training

Place contracts and build source

min stock levels

▪ Sustain stock levels

Build 3 days strategic stock and

fuel oil stock

▪ Sustain fuel oil stock levels

Establish contracts and restore

coal stockpiles to 28.2 days

Phase 3- Sustain

▪ Implement changes

Nov’ 2019 onwards

▪ Sustain performance

▪ Decision required on bringing

back HD 9, GV 5 and 6

▪ Track, monitor and report

POU on 5 big outages

▪ Sustainable development of

all critical staff

▪ Ensure Plant sustainability

and minimum stock levels

▪ Track and monitor fuel oil

stock levels

▪ Restore coal stock piles to 51

days

▪ Replicate delivery lessons

learnt with further outages

▪ Continue to restore stockpiles

Achieved

Partially achieved

In progress

1. Figures derived as per the November 2018 Outage Listing

Page 55: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

Conclusion on Generation Performance

• High and increasing reactive maintenance, and the resultant decreasing amount of proactive

maintenance, were the direct result of the constrained system, aggravated by the reduced plant

reliability and also by capital expenditure constraints.

• Increased maintenance from 2016, with an emphasis on proactive maintenance, which includes

refurbishment. If this had not been done (see increased maintenance from 2016) and outages had

continued to be deferred in order to keep the lights on, the availability would have continued to

deteriorate even further and the improvement from late 2015 would not have been possible.

• It was thus prudent that the OCGTs were, as was expected when they were commissioned, utilised

beyond their normal peaking function, during the 2015 and 2016 financial years, “to improve the supply /

demand balance … during the period of plant shortage” as NERSA said in December 2007.

• This contributed to creating space for maintenance and limiting the far more expensive load

shedding, once all other demand and supply side options had been fully utilised.

• The improved performance from late 2015 was, however, not sustained and breakdowns increased

again from the latter half of 2017.

• Sustained improvement is only possible with a motivated workforce with the required skills and

experience as well as the funding and space to execute the ideal level of effective maintenance

Page 56: Eskom MYPD4 Revenue Application Systems Operations and ... · The Role of the System Operator System operator is defined as the legal entity licensed to be responsible for short-

Thank you