GRID ACCESS FOR NEW ENTRANTS SOLA Credentials Vertically

GRID ACCESS FOR NEW ENTRANTS

SOLA Credentials Vertically Integrated Independent Power Producer Solar PV and battery storage specialists in the distributed and utility sectors since 2008 A market leader in financed solar solutions / Power Purchase Agreements for Commercial and Industrial off-takers Solar assets developed 341 MW Solar assets funded R 100 000 Solar assets designed and built 61 MW Founding member of the Solar assets under operation South African Solar Photovoltaic Industry 45 MW Association Winner of SANEA “Project of the year” Award in 2018 for the Robben Island Microgrid Project Construction Industry Development Board Rating: 7 EP ISO 9001: 2015 Quality Accreditation 2

Contents ● ● ● ● Information Resources to Assist Planning Grid Access Framework Eskom’s Grid Access Unit Connection Documentation Process Cost Break Down of Interconnection Risks and Planning Considerations Wheeling Framework

Information Resources to Assist Planning

Information Resources ● ● Transmission Development Plan ○ Planning timelines relating to demand forecast and generation patterns ○ Related Budget ○ 10 year timeline Grid Connection Capacity Assessment ○ Short and Medium term connection capacity available at substations Strategic Grid Plan ○ Long term strategic transmission corridor requirements ○ 20 year planning horizon Grid Access Unit Key to understand connection available and possible solutions prior to approaching Grid Access Unit

Grid Access Process ● ● ● Process to apply for connection is regulated by the Network Code Generators are entitled to connect to licenced networks, provided generators comply with the generation licencing required by the Electricity Regulatory act, and the connection is safe and compliant with Grid Codes. Distributors inform of the costs and time to provide connections via Cost Estimate Letter or in principle Use of System Consent Eskom Grid Access Unit ● Interface between Eskom and IPP or Embedded Generator ● ● ● Facilitates Grid Connection Process, and manages related departments Issues Cost Estimate Letter Municipalities’ electricity departments provide similar role as the GAU

Grid Access Unit ● Major Steps Cost Estimate Letter Budget Quotation Financial Close/ Connection Agreements Construction Commissioning Grid Code Compliance Commercial Operation

Grid Access Unit

Connection Documentation ● ● ● Budget Quotation initiated after Project is Successful in government Bid, or able to proceed in private sector Results in Final IPP Grid Connection Design, Costing and related agreements ○ Connection Use of System Agreement ○ Self Build Agreement Signature of Agreements allows IPP/Embedded Generator to reach Financial Close and commence construction of grid interconnection First Kick Off Meeting Stakeholder Engagement Meeting Technical Evaluation Forum / Design Review Team Detailed Design Package Connection Agreements

Cost Components of Connection The Tariff Codes regulates components that Network Service Provider charges for, and considerations and analysis that inform these charges ● ● ● Monopoly Works Connection Charge ○ Self Build ○ Eskom Build Use of System Charges Guarantee Early Termination Guarantee Connection Charge Guarantee

Risks ● ● Scoping of Cost Estimate Letter needs to be managed as connection may have multiple solutions Network Service Provider allowed additional 40 days prior to providing feedback where connection is involves transmission assets. Regional Variance in GAU resources Municipal By-Laws regulate who has what authority within a municipality, adding additional processes Early decision around Self Build, Eskom Build or Own Build Location of the meters determines who owns what part of the infrastructure ● Design according to approved Eskom principles and template designs ● ●

Planning Considerations ● ● ● Know the grid Know Eskom/Distributor staff and responsibilities Understand possible connection scope ○ Self Build vs Eskom Build ○ Environmental Impact Assessment ○ Servitudes Proactive approach Initiate Grid Code Compliance processes before Financial Close Constant Engagement with Eskom/Municipal Staff and Consultants

Wheeling Framework ● ● Wheeling allows renewable energy to be transported and delivered to an end user, without that user being geographically close to the source of generation. Instead, the grid is “rented”, to transport the power from the source of generation (such as the Northern Cape) to the location of the off-taker. Place Image here

How Wheeling Arrangements are Structured ● ● POWER GENERATOR Connection and Use-of-System Agreement Budget Request (CEL Process) ● ● POWER PURCHASE AGREEMENT (PPA) END USER EG OFFICE BUILDING ESKOM/ MUNICIPALITY ● ● Original Energy Supply Agreement Amendment to Energy Supply Agreement Generator requires Licence/Comment Trader to add Generator to licence

Wheeling - Costs The 2012 NERSA framework and 2019 Distribution Tariff Codes ardetailed, and mainly caters for wheeling across Eskom’s network, which has unbundled its tariffs into the following 1. Energy charge (k. Whs used) 2. Network Access Charge (or capacity charge (R/k. VA/m) 3. Service Charge (R/connection/day) 4. Administration Charge (R/connection/day) 5. Ancillary Services (cents/k. Wh) Charges are rebated based on a Loss Factor applied to the Wholesale Energy Price Most municipal tariff structures are not yet unbundled, making a municipal wheeling transaction heavily complex, and requires negotiation on a case by case basis

Conclusion ● ● ● Regulatory environment in SA is evolving and improving Stakeholders and Role players have now integrated several Gigawatts of energy and are now very experienced Access to a Distributor’s network to export power from a utility scale project or an embedded generator is becoming smoother

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