SECRET

Purpose On 10 December 2014, Cabinet endorsed a Five Point Plan The purpose of the presentation is to brief the PCE on the following: War Room Institutional Framework and its resourcing Update on the load shedding prospects – Eskom emergency measures Funding of the interventions Progress on the development of detailed implementation plans

Problem statement The country is facing a real risk of load shedding daily. Approximately 14,000MW or about one-third of total Eskom generation capacity on average is offline. Of this 14,000MW, over 8,000MW is due to unplanned (breakdown) maintenance. To reverse this trend, Eskom needs space to execute preventative (philosophy based) maintenance instead of the reactive maintenance. What’s required? In the immediate, the focus will be on sustained maintenance and operational efficiency to reduce the level of this unpredictable breakdowns, and In the medium to long term, the focus will be to bring in new generation capacity to alleviate the constrained system and accommodate demand growth The key objective is to improve plant performance while limiting load shedding

Key milestones achieved since adoption of the Five Point Plan The War Room has been set up and the participating Departments have nominated representatives The Coal IPP RFP was issued The RFI for the Demand Management Interventions was issued MOU has been signed between Eskom, CEF (Petro SA), Strategic Fuel Fund and Transnet (TNPA) regarding diesel supply

War Room Institutional Framework

Principles for prioritising actions The key objective of the War Room is to facilitate the creation of space to effect the maintenance to improve plant performance. The interventions are prioritised based on the following: How quickly can the intervention/s deliver or save the additional megawatt to the grid The scale or capacity load factor The cost/KW Based on the above, the Eskom’s emergency measures and funding work streams have been prioritised More work to be undertaken on other areas to deliver additional capacity in the medium to long term

Prioritised Interventions: Eskom Emergency Measures SECRET

Key initiatives in the short term Sourcing funding to support financial sustainability and diesel costs UCLF reduction to 7 GW through structured planned maintenance Reduce partial load losses Reduce outage slips Technical skills capacity to do maintenance, plans to address shortage of skills Majuba recovery interim (full coal supply) solution for full load First synchronisation of Medupi unit 6 Integrated Demand Management

UCLF reduction to 7 GW through structured planned maintenance, Reduction of partial load losses and outage slips Reducing partial load losses greater than 7 days down to 1000 MW through; Targeting of sustained partial losses in scopes of philosophy outages as well as prioritising additional short term corrective outages on the capacity Reducing generating planned unit outage backlog through; Executing the GX sustainability outage programme Reduce Outage Slip (UCLF) through; Improve performance management of contractors during execution of outages to ensure both quality and productivity (part of the turn-around strategy)

First synchronisation of Medupi unit 6 Commercial Operation of Medupi Unit 6 through; By the synchronisation of the unit to the network during the first quarter of 2015 The completion of the optimisation and tests of all sub systems for commercial operation during the second quarter of 2015

Co-generation initiatives SECRET

No decisions required, focus on execution of the procurement process Key interventions Existing agreements for renewal Key focus Short Term (1 – 2 months) Conclude PPA with Sasol Secunda which was previously contracted on the MTPPP – 200MW from 1 January 2015 Conclude PPA with Tshwane if their plant is in a position to be operated – 165MW by 1 January 2015 Short term (0-3 years) Extend the current MTPPP, STPPP, cogeneration and municipal generation agreements for a further three years Short to medium term (0-3 years) Conclude on the DoE IPP Unit’s Request for Proposals issued on 5 December 2014 and contract all potential suppliers with a target of 800MW. RFP already issued No decisions required, focus on execution of the procurement process

2. Gas imports SECRET

Scope of work The Gas will not be able to provide additional capacity in the immediate term i.e. over the next 3 months Focus is on accelerating the conversion of OCGTs from diesel fuel to gas However, through preliminary discussions between the relevant stakeholders, the scope of the plan has been expanded to include gas to power generation options in addition to the diesel to gas conversions

3. Coal IPPs SECRET

Coal IPP Progress Risks and enablers There is a determination for 2500MW for Coal IPPs. Request For Proposals (RFP) out in the market since 12 December 2014 Submission for bids are due on 8 June 2015 Announcement preferred bidders August 2015 Legal close by preferred bidders is expected by March 2016. Financial Close by preferred bidders is expected around June 2016 Commissioning (1st MW) by early 2019 As seen with renewable energy IPPs, it is possible that the commissioning can happen earlier than the above mention date through the fast tracking of construction by IPPs. Environmental Impact Assessment (EIA), grid connection and water licenses are generally considered to be enablers that can impact on the commissioning timeline. Lephalale (Waterberg) has been identified as an area that needs some strategic investment to be able to unlock its potential for coal for power plants beyond Medupi. The water infrastructure requirements are being addressed through SIP 1 and the same needs to be done with regard to the electricity transmission (grid) infrastructure.

4. Demand Side Management SECRET

Demand side management Most of the supply side interventions are likely to be realised over the medium to long term Demand Side Management (DSM), present a viable option to ease the pressure on the system The focus will be on: The costing of the interventions Quantify the impact Securing funding

Thank You