Eskom’s response to Minimum Emission Standards Presented at the Parliamentary Portfolio Committee on Environmental Affairs' Air Quality Management Colloquium Date: 13 September 2017

A few thoughts upfront… The Minimum Emission Standards are much needed to reduce harmful health effects of poor air quality in South Africa The MES provide certainty as to what level of emission reduction is required Eskom supports the MES and is doing its utmost to comply

What has Eskom already done to comply with the MES What has Eskom already done to comply with the MES? Particulate matter emissions Particulate matter emission reduction Power station upgrades 30% reduction in relative particulate emissions over past 2 years Fabric filter plant retrofits almost completed at Grootvlei, and in advanced planning for Tutuka and Kriel Plans to improve the performance of the electrostatic precipitators with high frequency transformers are progressing well and expected to meet the emission standards at a lower cost than FFP retrofits. Pilots installed at Lethabo and Duvha Clean stacks after Grootvlei retrofit Matla ESP upgrade

What has Eskom already done to comply with the MES? SO2 and NOx Flue gas desulphurisation (FGD) at Kusile Re-agent prep and gypsum de-watering Boiler island Fabric filter plant FGD absorber Island Sulphur dioxide and NOx emissions Flue gas desulphurisation (FGD) to reduce sulphur below 500 mg/Nm3 is running on Kusile Unit 1. FGD will be retrofitted at Medupi within six years of commissioning each unit. Plans to retrofit low NOx burners at Tutuka, Majuba and Matla are progressing Camden burners are being replaced with low NOx burners. 4

What has Eskom done to comply with the MES? Budget commitment ~3% higher electricity tariff Cost (nominal) Description Current emission reduction plan to 2025 (57% compliance) R63 billion FGD at Medupi ESP upgrades at 4.5 stations Low NOx burners at 3 stations FFP at 2.5 stations Requested by DEA in the postponement decision in addition to Eskom commitment >R79 billion FGD at Matimba and Kendal ~10% higher electricity tariff Full compliance including retrofitting of stations close to end of technical life (risk cost) >R300 billion (total) FGD at 11 power stations ESP upgrades at 4.5 stations Low NOx burners 11 stations FFP at 3.5 stations

Opportunities and challenges of MES compliance Significant capital investment allows for sustainable localization of manufacturing. Creating capacity and building engineering capability to support differently. The above is unlocked by buying Intellectual Property and localising design for: De-NOx – Low NOX Burner technology, SCR Technology, SNCR Technology Particulates – FFP Technology, ESP Technology De-SOX – Wet FGD, CFB FGD (semi-dry Technology) Challenges Compliance timeframes do not align with planning horizons for large construction projects The costs of upgrades increase the electricity tariff Currently no additional water available for flue gas desulphurisation 6

Eskom’s air quality offsets programme Pre-feasibility study Pilot projects in KwaZamokuhle – 120 households 30-house electricity pilot in KwaZamokuhle Lead implementation (KwaZamokuhle, Ezamokuhle Sharpeville) – 5000 households Large-scale roll-out (at least one settlement per power station) – 40 000 households 2011-2013 2014-2016 2017 2018-2020 2019-2025 Insulation and electricity Tested insulation, LPG, clean coal stoves, electricity subsidy; electricity starter pack The implementation of an air quality offsets programme to reduce ambient particulate matter concentrations is a condition of the approved MES postponements granted to 12 power stations

Air quality offsets: opportunities and challenges Opportunity to significantly improve ambient air quality in residential areas (up to 50% reduction in PM) Improve quality of life Local job and business creation Cost effective Challenges Offsets are still in pilot stage Complexity of changing behaviours, human desires and variability in housing hampers implementation Informal dwellings 4-plate stove and oven Electric heater Insulated ceiling (and walls)

Concluding recommendations Dialogue between government departments is needed to unlock conflicting mandates hampering full compliance with the MES (for example keeping electricity tariff low vs cost of reducing health burden; water for FGD) A cost-benefit analysis is needed to prioritise retrofits and most efficiently channel scarce resources. Could be done in partnership between DEA and industries Eskom is commissioning independent cost-benefit analysis for power station emission reduction Will give effect to section 5.4.3.3 of the National Framework for Air Quality Management in the Republic of South Africa: ‘The listing of activities therefore must be informed by appropriate analysis, such as cost benefit analysis’ Eskom remains committed to reducing its environmental footprint