Make the call to make a difference Briefing

Make the call to make a difference Briefing Session for Stakeholders January 2015 (to be used when you cannot play the AV)

Introduction As South Africa’s primary electricity supplier, Eskom’s mandate is to ensure security of supply to service the South African economy and society.

Introduction • In meeting its mandate Eskom generates, transports (high voltage lines) and distributes electricity. • While electricity generation and transmission is managed by Eskom for the entire country, in terms of supplying electricity directly to homes, Eskom only supplies more than 5 million households. • Which means that most of us are supplied directly by municipalities.

Introduction • At all times, there must be sufficient supply to meet demand. • But electricity demand is not consistent because of peak periods when demand is higher – and continuous growth in the number of customers requiring electricity services

Introduction • Managing a power system requires prudent management of supply to meet demand. • Today, Eskom faces the challenge of a constrained power system that will affect us until substantial new power capacity is available. • In the meantime, to meet demand, our older power stations and infrastructure are being used to full capacity. • Routine and necessary maintenance of plant and infrastructure is carefully scheduled to limit compromising supply capacity during periods of high demand.

Load shedding • We have strengthened the distribution network to reduce localised outages when the power trips because of overload in a local areas such as suburbs. • Localised outages should not be confused with load shedding. 6 • Local outages occur when there is a technical fault in the distribution network, when electricity equipment has been tampered with such as theft of cables, or when there is an overload of the system due to irregular high usage due to electricity theft.

Load shedding • Load shedding (load reduction) is done countrywide as a controlled option to withstand unplanned events to protect the electricity power system from a total blackout. • While we generally use the word blackout loosely to mean no lights in our local area, a county-wide blackout has more serious consequences. • This occurs when there is too much demand too little supply, bringing the power system into an imbalance – tripping the power system in its entirety. 7

Load shedding • Many countries and cities have experienced complete blackouts. To re -start their system, they are able to tap into a power system from a neighbour which can take a few hours or days. • We have to rely on ourselves to start the system from scratch, energising one power plant at a time and one section of the country at a time. • It can take up to two weeks to restore full power which would have a severe impact on our country! • This is why we use load shedding or load reduction to effectively manage our power system.

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Managing demand in winter • South Africa has a ‘peak’ electricity demand profile in winter. • The electricity demand picks up significantly and ‘peaks during the evening between 5 pm to 9 pm. • The greatest increase and risk period of load shedding in winter is between 5: 30 pm and 6. 30 pm. 10

Managing demand in winter • The winter demand forecast sees a rapid increase in electricity usage of approximately 4000 MW, predominantly due to increased use of space heating, geysers, pool pumps and cooking appliances. • To maintain supply capacity when faced with winter demand, Eskom has adjusted its maintenance schedule so that additional capacity becomes available in winter by doing less maintenance in this period. However, scheduled maintenance must continue to be pursued for long-term plant health. 11

Managing demand in winter • During this time key industrial customers assist by reducing their demand over the peak. • Every year, the high level of illegal connections causes significant load increase and subsequent overloading of localised networks. • To counter illegal connections and prevent meter tampering, Eskom has embarked on an intense national partnership programme called Operation Khanyisa. 12

Managing demand in winter • On the Supply side, Eskom also purchases power from cross-border countries mostly Mozambique, independent power producers and from municipal generation to add to supply capacity and reduce the use of expensive Open-cycle Gas Turbine generation. • But despite these measures to balance supply and demand, our national electricity system continues to remain tight and vulnerable, meaning that any shift on the power system could result in a shortage of supply. 13

Managing demand in winter • It remains crucial for all Eskom employees and customers to ‘Beat the Peak’ from 5 pm to 9 pm in winter. • This is done by maintaining or achieving 10% electricity savings. • As this occurs at night, residential customers can make the biggest difference. 14

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Managing the demand in summer • South Africa has a flat profile or Table Mountain profile in summer. • This means that demand is high for the entire day up to 10 pm, predominantly due to an increase in usage of air-conditioning, geysers and pool pumps. • In addition, planned maintenance increases significantly in summer which means we have less capacity to supply demand. 16

Managing the demand in summer • Unlike in winter, in summer the risk of load shedding remains high throughout the day until 10 pm, and in the event of unplanned activities within the value chain. • This makes it important for consumers to continue to reduce consumption during summer too and remember the call to live lightly. 17

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Impacts on supply capacity • The stable supply of electricity is affected by many variables which can impact on our capacity to supply, such as: • extreme weather conditions • transportation issues on our transmission lines • quality and availability of raw materials or primary energy such as coal, water, wind, solar (unforeseen faults from Cahora Bassa imports from Mozambique) • unplanned failure on our plant such as, fire damage and mechanical problems. 19

Eskom’s load shedding protocols • Keeping the power system balanced at 50 Hz, as per international standards, is critical to prevent a nation-wide blackout. • When the national electricity grid is under pressure with normal measures implemented, Eskom must reduce demand, as agreed with the National Energy Regulator (NERSA), and implement a process of Load Reduction which has two components: 20

Eskom’s load shedding protocols 1. Load Curtailment • Our agreement with some of our large industrial customers means we can instruct them to reduce electricity consumption when it is urgent to balance the system. • They are able to reduce their load by up to 25%, significantly easing capacity on the grid; but it takes a minimum of 2 hours to implement. 21

Eskom’s load shedding protocols 2. Load Shedding • If, after Load Curtailment, the demand on the system is still larger than available supply, we have to implement a process of load shedding to prevent an imbalance and subsequent blackout. 22

Eskom’s load shedding protocols • The load shedding protocol that Eskom follows can be explained by looking at the situation on 6 March 2014 when we implemented load shedding for 14 hours – the first time since 2008: • Taking these measures – although drastic – was necessary, as doing so helped to avoid the far more negative impact of a nationwide blackout. 23

Are you affected? • When we reach the point of load shedding, users are referred to schedules – and it’s about knowing where to find the information: • On our website if you are a direct Eskom customer. • And by contacting your municipality if you are supplied by them. Their schedule will tell you if you are affected. 24

Information channels • Eskom provides information on a regular basis through the following channels: 25

What you can do to help? • In the event of significant incidents on the power system the probability of load shedding increases but it remains impossible to predict when we will have to reduce load. • It’s no longer simply an Eskom challenge, but a national challenge and each of us has a part to play in ensuring a bright future for our country. • Make a positive difference by reducing your electricity usage at home and at the office, and encourage your friends and family to do the same. • Saving electricity not only reduces pressure on the grid, but also reduces your electricity bill and South Africa’s carbon emissions. 26

What can we all do to help? 27