1. Presented by Mkhuseli Faku Director - KES Energy Services Company

2. KES SHAREHOLDING Page 2 15%35%50%

3. KES in South Africa

4. KES - KZN Company began operations in 2001 following tender in 1998. The project in KZN is funded by the DOE. Development of project was intermittent due to contractual issues. Areas of installation were Msinga, Maphumulo and Ndwedwe. In Nov 2009, KES was awarded a new tender for 10000 SHS installations in Southern KZN. Installations should be completed within the next few months. Installation areas include the existing areas and also Nquthu and Umvoti. At the end of this project there still remains many non- electrified households in our concession areas.

5. KES – Eastern Cape KES was awarded a tender in 2007. This project is funded by KfW (German development agency) for a total of +/- 30000 households. Concession area is in Eastern Cape specifically DC 13 and DC14. Total of 7300 customers installed in Eastern Cape to date in the areas of Tsomo and Mount Fletcher Currently we need to identify new areas as soon as possible. KES needs clarification from the role players for the grid roll-out and subsequently the identification of non-grid areas.

6. Fee for service model Capital investment – 80% subsidy 20% KES investment Customer rents system for a monthly fee 79 rands per month – 365 days pa Depending on area monthly tarrif is subsidised by Free Basic Electricity from Local Municipality ( from zero up to 50%). KES has full operational/maintenance contract for systems for 20 yr period A prepayment meter system is used

7. 2009 Energy Forum Breakfast

9. 55 /65 wp solar panel Solar Home System 3 CFL lights, 1 LED Meter and battery enclosure

10. Challenges Institutional delays pose problems to sustainability of project Financial costs of delay – fixed costs and commitments to SMMEs – increases overall operators investment. Sustainability Current model implies customer tariff should cover payback of investment, life-time replacement costs (batteries), maintenance costs – all which are bourne by the operators. In reality, it does not. Payment issues All operators experience low and continued decreasing collection rate which impacts upon the sustainability of the model. Affordability of the monthly fee is a large contributor to non payment. FBE (free basic electricity) is not applied uniformly and might not be sufficient for the poorest of the poor. Operational Challenges Difficult Terrain, theft of systems and tampering all increase costs. There is a need for the system to evolve to balance demand and supply issues whilst always considering affordability.,

11. Benefits to the community The inclusion of off-grid electrification programs is essential to achieve the stated objective of 92% access to electricity by 2015. KES is a services company - Msinga households already have 10yrs of service The SHS replaces more expensive and hazordous energy sources. Exterior lights increase security. Access to media and education – radio and tv. JOB Creation – directly 87 permanent jobs created by KES and 6 BEE SMME Subcontractors appointed employing 100 people. This excludes all indirect jobs. Energy stores used to introduce other modern, safe forms of energy for thermal needs such as LPG, efficient wood burning stoves 98 MWh per month of green energy

12. Conclusion KES can offer the most relevant identified solution for a specific area this could imply different technological solutions (i.e mini-grid) or levels of service. However, there are challenges to the sustainability of the project that need to be addressed. We thank DOE for this platform and would encourage prompt dialogue between all stakeholders to improve sustainability of rural electrification. KES is a public private partnership, and looks forward to continuing its role of bringing energy to the rural communities. Thank you for your attention