Asset Management Report – Operations Sept 2019

CPV Power Plant No.1 (RF) (Pty) Ltd

Index

• Executive Summary

• Key Issue Summary

• Operating Summary

• Environmental Summary

• Financial Reporting

• Ownership & Funding Structure

• ED & SED

• Other Matters

• Media

• Contact Details

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Executive Summary• This monthly Asset Management Report provides an analysis of and comments on the current financial and operating status at the CPV

Power Plant No.1 for the month of September 2019.

• Highlights:

• Plant availability remains at high levels

• Production:

• Plant production level – September 2019 (monthly) – the energy produced in September 2019 was 18.26 % lower than modelled.

DNI / yield achieved in September 2019 was 13.63 % lower than modelled

• Plant production level – Year to Date (April – September 2019) – the energy produced year to date was 10.45 % lower than

modelled for the period April to September 2019, correspondingly the DNI / yield was 4.97 % lower than modelled

• Plant production level – Forecast FY (April 2019 – March 2020) - the energy produced forecast is estimated to be 4.17 % lower than

modelled, correspondingly the DNI / yield is estimated to be 1.98 % lower than modelled

• Operations and maintenance continue as scheduled, interim agreement executed with reSA (sub-contractor) until Preferred O&M

Contractor agreement is executed

• Health & Safety – no reported incidents in the reporting period, Environmental compliance at acceptable levels, no fines proposed or

issued

• ED & SED fully compliant & financial cover ratios remain at high levels

• Key Focus Areas:

• CPV1 terminated the BOPI and previous O&M Contractor O&M contract on the 28th of June 2019. CPV1 is in the process of appointing

Preferred O&M Contractor as the replacement O&M Contractor, with current O&M Sub-contractor continuing to be the Sub-contractor.

As the Preferred O&M Contractor O&M contract & Touwsrivier Services sub-contract conclusion is taking longer than anticipated, an

interim ‘continuation of services’ agreement was agreed between the Project Company and Touwsrivier Services on the 28th of June

2019. This interim agreement shall cease to be of force and effective once the commencement date for the O&M Services under the

O&M Subcontractor Agreement has been reached – estimated effective date 1 December 2019. A delay has occurred during the

negotiations between the various parties due to unforeseen circumstances, specifically relating to the LDA & Support Agreement

• Resolution of open R&O items with BOPI and previous O&M Contractor –

• As built documentation – Substation & Engineering Consultant review of substation, control network requires remediation which

entail detailed cable inspections, tests and in principal re-commissioning in the substation. Close out session moved to early

November. Received O&M Sub-Contractor’s review of the BOPI As built documentation, internal review underway;

• PV box – temperature monitoring to start in summer months with revised design, first unit to be installed early November;

• RTAC automation works performed partly last week of September, protocol proven, issue encountered with Generator 1,

confirmation and investigation in progress. Report issued, under review and remediation planned for January 2020 due to

availability of key resource.

• Grid Code Compliance - refer slide Key Issue Summary

• All spare parts at site as per the Spare Parts Agreement, full site inventory currently underway. Activity is still not completed, Sub-

contractor completed works in September 2019, documentation of results under way

• AFS audit for 2019 started in May 2019 - refer slide Key Issue Summary

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Executive Summary (cont.)• Key Focus Areas (continued):

• Warranty extension for GP Tech Inverters approved by the Board, inverter audit completed end of October, awaiting results from Inverter

OEM

• Water flow & flooding berm to be constructed at site to minimize the effects of flooding. Previous design found not possible, two further

options being discussed and will be evaluated and approved. Site visit held at the end September. New high-level design approved,

Water & Flooding Consultant in the detailed design project phase, to be issued to CPV1 for approval in the coming weeks. Interim

flooding prevention mechanism in place

• The optimization activities are still under way

• KMI drive dismantling and training completed in June 2019. Team authorised to dismantle equipment at site going forward. Spare parts

evaluated, worm gear spares to be procured, quote received. Steerco planned for Q4 2019

• 4QD sensor prototypes units being tested at site, very limited failures experienced in 2019, only 3, with 97 in stock. Strategy being

relooked, Board agreed not to purchase further spares until SCADA project sheds light on the way forward. reSA confirmed 4QD sensors

are mostly not used, report requested by AM for review and action

• Transformers operating well, spare at site, additional spare to be purchased as approved by the Board. However Transformer 4

monitoring & further oil test confirmed localised overheating as opposed to general overloading, further oil test in September 2019 did

not show further signs of deterioration, winding resistance measurements completed on the 29th of October. Results received from Eskom,

Chris van der Merwe is busy reviewing and will submit report by mid November. Dependent on winding resistance measurement results,

further actions will be evaluated

• Operational financial model rebuilt complete, Mazars audit of model completed. Model shared with Bond and CPV1 Boards for review

• Scada optimization project in progress, manual reporting of production ratio in the process of being automated with the WinCC & PLC

system infrastructure, network stabilization underway, firewall replaced

• Yield study received from SolarGIS, showing negligible difference between P50 DNI study at financial close. Tractebel in the process of

reviewing

• PVSyst model rebuilt underway with Stace, Scada Consultant, reSA (Preferred O&M Contractor to be included upon appointment)

• Substation & Engineering Consultant works –• Protection Works – works completed, final report received – remedial action completed as possible, since testing of all the current transformers

at the PV Boxes and Chint units could not be completed please keep record of any operation by the protection and inform Substation &

Engineering Consultant of incident to investigate and confirm functionality and operation. Substation & Engineering Consultant would like to

investigate the operation of the 22kV Busbar protection at the substation and the relay logic to isolate breaker failure when Buszone is on test.

Will be conducted with the works under the As-Built remedial action

• Termination Works – works completed, workshop held. Remediation includes the replacement of severity level 1 and 2 terminations, Substation &

Engineering Consultant in the process of preparing costing estimates for approval by the Board. If terminations are not repaired, critical faults will

be experienced at the transformer level at some time in the future. Works shifted to January 2020 due to site bearing replacement resulting in

key staff non-availability

• Safety Works – works completed, report received, and remedial actions noted, close out workshop scheduled for early November

• DOE Independent Audit kicked off in March and concluded in July. The Independent Auditor sent through their draft findings on the 23rd

of August 2019, noting only a few matters of a housekeeping nature. No formal report issued yet

• Audit & Risk and Social & Ethics Committees to be established

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Key Issue Summary• Annual Financial Statements – CPV1

• 31 March 2018• SARS issued requests for IT14SDs, supplementary declarations – reconciliation of VAT, PAYE (not relevant for CPV1) and income tax

adjustments, which Mazars submitted the last week of September. No further feedback received.

• 31 March 2019• 31 March 2019 Audit kicked off;

• All audit work concluded;

• PWC team finalized dismantling provision updates, During discussions with PWC towards the end of last week, it was confirmed that

the IFRS 9 / IAS39 requirement relating to financial instruments, shareholders loans, was not treated correctly in the AFS and will

require restatement for 2017 & 2018, also impacting the 2019 AFS submitted for review;

• PWC feedback received in terms of the adjustments required, accounts updated, Mazars confirmed no tax impact, Zeenat

updated the AFS in CaseWare, submitted for final review to PWC on the 1st of November, following to be issued to CPV1 Board &

Shareholders for review and approval;

• Annual Financial Statements – CPV Bond SPV

• 31 March 2018• During the finalisation of the BOND SPV AFS a VAT issue was identified with the Capital Availability Fee and the Cost of Capital Fee.

• Webbers provided an opinion as to whether these fees are subject to value-added tax ("VAT") and, if this is the case, if CPV 1 would

be entitled to claim input tax in respect of any VAT paid to Bond SPV. CPV1 received assessment on the 16th of October, verifying

successful input claim, awaiting refund, subsequent VAT entries to be passed;

• Conclusions:

• Bond SPV applied for relief under the Voluntary Disclosure Programme ("VDP"), which, if successful, would mean that Bond

SVP would not be liable for any penalties.

• Final VAT return filed in February related to 2018_2019 COC Fee. The 2019_2020 Fee will be filed and paid only in December

2019 when the period opens as the BOND SPV is on an annual cycle.

• Deregistration to follow. Target date – end of December 2019.

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Key Issue Summary

• Grid Code Compliance

• Exemptions:

• Current exemption to the 24th of October 2018. As per the August 2018 Asset Management report, CPV1 and GCC Consultant

presented at the GCAC sitting in September. An exemption was requested for Power Quality for an additional 12- month period.

Feedback received on the 6th and the 26th of June. Extension is not granter, NERSA requested information for consideration at

the next Energy Regulator meeting in July. Requested – start date and end date of exemption requested with updated Gantt

chart; recent support letter from the NSP, quarterly reporting to be shared with Energy Regulator & Grid Code Secretariat.

Submission shared on the 6th of September to address the current status as noted under remaining activities.

• Remaining Activities:

• Power Quality / Emissions Report – only 3 remaining harmonic orders currently exceeded, being harmonic order 5, 7 and 11• Quarterly letter for Q2 was submitted as well as an updated report issued to GAU (NERSA) beginning of September;

• Final tests performed on the 26th of June (requested for by Dr. Beukes);

• Data downloaded and provided to Dr. Beukes for analysis (GCC Consultant separately processed and analyzed the data on a high

level). GCC Consultant overview shows no conclusive evidence of either the plant or the network being the cause of the harmonics,

but rather shows mutual contribution;

• Meeting was held with Hennie Mosterd (NSP), Dr. Beukes, GCC Consultant & the AM team on the 19th of August – aim was to conclude

the matter at this meeting (i.e. whether a filter must be installed and if so, for which harmonics), further test requested;

• Further test to determine background harmonics done on the 28th of August, the plant was switched off completely to determine

background harmonics. If the test proves, as suspected, that the background harmonics are high, the result will be deducted from the

current measure harmonics for 5, 7 and 11, resulting in a compliant status for the plant;

• Test results from GCC Consultant, showed on the following slides, shows that there is no significant change in voltage harmonic

magnitudes when the plant is connected and not, indicates that the emissions from the plant is generally regarded as zero;

• Was confirmed by the R&D department & the NSP in subsequent sessions;

• GCC Consultant consolidated Power Quality report issued to the NSP on the 16th of October, as well as to RETEC & the GCAC (NERSA),

the NSP will formally confirm their support and confirm the plant’s compliance via RETEC;

• AM following up weekly with RETEC and GCAC

• Once NERSA & RETEC receives the NSP feedback, GCC compliance certification/correspondence will be issued to CPV1;

• RETEC Site Tests – RETEC found the plant to be complaint to the Renewable Code in December 2018, instructed the models to

be validated as the final step. GCC Consultant and Inverter OEM still finalizing the validation of the models to be submitted to

RETEC. Further calls were held in the last couple of weeks to pressure Inverter OEM to conclude. Issues seems to be resolved on

the RMS and EMT models, GCC Consultant is busy vetting, encountered issues with the revised PPC model – Inverter OEM was on

leave August 2019, resulting in further delay. Discussions ongoing with Inverter OEM in order to resolve, further day workshop held

on the 29th of October, issues seem to be resolved, GCC Consultant in the process of updated full scale models. Validated

models to be submitted to RETEC towards the mid of November, RETEC will be performing their validation, workshop to be held.

Sign off to proceed there after.

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Operating Summary• Energy Production

• The total energy produced for the month of September was 4,748,040 kWh (1st to 30th September 2019)

• as compared to the modelled energy of 5,809,002 kWh (PV-Syst incl. losses & degradation), an under production of 1,060,962

kWh (18.26 %), deviation explained in summary slide;

• compared to the previous month with 5,833,266 kWh (1st to 31st August 2019), a decrease of 1,085,226 kWh (22.86 % month to

month increase);

• compared to the last year production of 5,339,677 kWh (1st to 30th September 2018), a decrease of 591,637 kWh (11.08 %

year on year decrease);

• annual year to date (January 2019 – December 2019) deviation of 8.08 % compared to modelled energy.

• Produced vs. modelled energy as monthly sum in [MWh] since COD

• Red line shows reporting month to reporting month year on year trend since COD

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Operating Summary• Energy Production (continued)

• Produced vs. modelled energy for each month [MWh] since COD, annual comparison 2015 - 2019

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Operating Summary continued

• Reportable Incidents

• The energy produced this month is lower than the modelled energy, this could be due to a number of external factors;

• Recording of water usage is continuing as per BGCMA requirements;

• Constant monitoring of the fibre rings is continuing, this is due to the high failure rates of the RSB20 Switches;

• Investigation into transformer 4 are proceeding, oil sample is due to be taken again on the 31st of September;

• PVSyst calculation is being done manually by consultants of CPV1 and Touwsrivier services staff. This does cause some delay to the

monthly report, but this process will improve over time as this is a new process.

• There has been work done on the Siemens SCADA environment, this has resulted in some SCADA Data not being available for the

monthly report. The method of tracking Average and Maximum DNI as well as Maximum wind and temperature had to be

changed. This resulted in lower than expected values.

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Operating Summary continued• Production Ratio - Actual

• Summarizing the performance since COD, below the comparison of the Production ratio, year on year – month of September

2019 99.89 %.

• Updated calculation implemented during the manual reporting process implementation resulted in small deviations reported in

earlier reports in 2019.

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Operating Summary continued• Production Ratio – Contractual Measurement

• Comparison between actual Production Ratio and the contractual guaranteed %, incentive energy % and the rolling

consecutive 2-year period measurement after 2 years of production.

• Year 2015 requirement shortfall shall be measured at 50 % due to the shorter calculation period, the 2016 year the average is

calculated for the 2015 and 2016 period.

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• Meteorology

• The Temperatures in September peaked at

32.80 °C with an average of 22.71 °C during

production hours. The averaged DNI was 278.89

W/m² and the averaged peak DNI was 775.70

W/m².

• The total DNI energy received for the month of

September was 162.70 kWh/m² (1st to 30th

September)

Operating Summary continued

• compared to the value of the Typical

Meteorological Year (TMY) of 188.46

kWh/m² the irradiation was below average

of 25.76 kWh/m² (-13.67%)

• compared to the previous month

Irradiation of 208.16 kWh/m² (1st to 31st

August), a decrease of 45.46 kWh/m² (-

21.84 % Month to month decrease)

• compared to the last year DNI Energy

received of 194.39 kWh/m² (1st to 30th

September 2018), a decrease of 31.69

kWh/m² (-16.30 % year to year decrease)

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• Meteorology (continued)• The rainfall in September was in total 9 mm and it rained over total amount of 2 days.

• The average rainfall for September as per http://www.worldweatheronline.com [average from 2002 – 2012] should be 24 mm.

Thus the rainfall received in September was below the average rainfall for this Month (Refer average graph below, no actual

data).

• The plant went into Storm Mode, due to high wind speeds in excess of 12 m/s on 20 occasions during the hours of production

for the total duration of 8h51 min.

Operating Summary continued

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• Preventative Maintenance

• In accordance with the O&M Manual the Pyrheliometer sensors are cleaned on a weekly basis. The complete plant was

washed over the six weeks period ending on 22 September. The washing will continue as per contractual requirement.

• The regular inspections of the substation and the field equipment has continued.

• Preventive Maintenance on Balance of Plant equipment is proceeding as planned. Actom Transformer in block 4 is still under

investigation. The oil sample has been taken again at the end of September. Further action to be decided once the results of

the oil samples have been made available.

• Reactive Maintenance

• Various components have failed on the trackers. These were replaced upon failure by the O&M Team. The installation of the

adapter plate has significantly reduced the number of encoder failures due to grease ingress. This will be monitored to ensure

that the failure rates do not increase again.

• We experienced various failures on inverters this month.

• Health & Safety

• The staff complement on site during the month of September was 84, which includes the subcontractors Solar O&M Services,

Thorburn, Scada Consultant, Pele Green, Substation & Engineering Consultant, GCC Consultant, Visitors and the Touwsrivier

Services Staff. The number of LTI free hours for is 93,406 compared to the target LTI Free hours for the project of 216,619. There

were no Health and Safety incidents in the month of September.

• Resource Usage

• Resource Usage Summary for the month in review:

Operating Summary continued

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• 2019 Maintenance Tracker

Operating Summary continued

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• 2019 Maintenance Tracker

Operating Summary continued

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• Availability

• The availability of the plant as per below:

• The values indicated in the table are based on equipment being out of operation for more than one full production day. The

100% availability indicates that all plant equipment was available for the complete duration, however, minor (short outages)

are not accounted for.

Operating Summary continued

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• Inventory Management – Spare Parts Used

A summary of the Parts used is given in Table below and the update of the spare part stock is given in the following slides. The number of

CPV components replaced during the month are indicated in red below. Components, having the stock level is below the contractual

amount is marked in red in the following slides.

Operating Summary continued

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• Inventory Management (continued) – Spare Parts Stock on Site – CPV & BOPI

Operating Summary continued

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• Inventory Management (continued) – Spare Parts Stock on Site - BOPI

Operating Summary continued

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• Inventory Management (continued) – Spare Parts Stock on Site - BOPI

Operating Summary continued

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Environmental Summary• Feedback Environmental Office September 2019

• Compliance issues• Percentage compliance achieved during the site audit for 30 September 2019 = 96.7 % (Compliance with the EMP is regarded as

unacceptable if it is below 80 %)

• Score obtained 91.80 out of 95

• Non-compliance noted on the following items

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Finding Recommendation

Site clearance and earthmoving activities were completed. The plant is operational

and at the time of the audit small open excavations for servicing purposes were

present. The open excavations collected run-off storm water during the recent rains.

Ensure that all spoils left in areas where earthworks have been completed are

levelled and the areas are revegetated to minimize potential erosion and improve

storm water management.

A designated bund area had been constructed, the bulk fuel facility was removed

and replaced by a mobile unit. The mobile unit was parked under a roof on a

concrete area next to the bund area with a plastic drip tray placed underneath.

Water was present in the drip tray and on the concrete area. This should be

removed.

Inspect the drip tray to check fluid levels and empty it as per the procedure when

required. Avoid it from overfilling during rain events. Install absorbent socks or

material in the water to minimize oil contamination.

At the time of the audit some open excavations along the edge of the ring road

accumulated storm water run-off. These may pose a risk of flooding and erosion to

the site.

Ensure that sufficient storm water channeling measures are implemented to direct

run-off away from potential ponding areas.

At the time of the audit some of the Substation & Engineering Consultants on the

bund areas at the transformers were found to be left in the open position after a

recent rain event. Should a spill occur at that time the soil around the transformer

would be contaminated.

Ensure that all Substation & Engineering Consultants on bund areas are kept in the

closed position in order to contain potential spills.

At the time of the audit alien vegetation had been observed on site that requires

removal. These include species e.g. Oldman Saltbush etc. it had been observed that

some of these specimens had been removed.Ensure alien vegetation is cleared and properly disposed of.

Environmental Summary continued• Additional Notes

• General housekeeping on site was maintained to a high standard and the overall site was neat and tidy.

• The retainer wall at the substation showed signs of cracking and it will be continued to be monitored during each site visit. Widening

of these cracks may pose a safety risk and should be mitigated. Bulging at the foot of the wall had been observed, however without

proper measurements, it was not clear whether this was worse than the previous audit.

• Ensure that no vehicular traffic occurs in areas that had been seeded for revegetation.

• Ensure that the hazardous waste stored in the bund area is appropriately disposed of and the bund area cleaned.

• Ensure that all Substation & Engineering Consultants on bund areas are kept in the closed/locked position in order to contain any

spills within and prevent soil and water pollution.

• No repeat non-compliances by CPV1 had been observed during this audit, No fines recommended

• Water Usage• The CPV1 Solar facility is located within the J12B water management area. This allow the facility to abstract 150m3/ha/annum

multiplied by the size of the property. This is capped at 40000m3/annum. The total abstraction for the year (Oct 2018 to Sept 2019)

amounts to 1,365.37 m3, which is below the volumes allowed for. It should also be noted that no more than 10m3 may be extracted

on a single day.

• Status of Water Permit/License• Monitoring of Water Usage – At the time of the audit only a small number of activities were in progress and water usage use was

within the thresholds allowed for in the current General Authorization.• Numbers deviate from O&M Report on slide 16 due to the timing of the meter readings. Eco report measures visit to visit, Operations measure calendar

month.

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Environmental Summary continued

• Photographic Evidence of Environmental Issues

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Ownership & Funding Structure

5.18 Structure Update

PGE SOITEC SA PIC

PGE CPV

SPV

Concentrix

Holding SASCOMMUNITY

TRUST

CPV1BOND SPV

20 % 5 %35 %

100 % 100 %

PIC

CPV1 Equity

40 %

100 %

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ED SED Summary

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Management Summary: Sept 2019

Highlights for implementation included:� All Programmes beneficiaries participated at the 2019 Touwsrivier Experience;

� Successfully completed the iteration process for all Starter Pack beneficiaries;

� Hosted the Terms of Reference workshop for the Touwsriver SEED Working Group Members.

ED SED Summary

Implementation Tracker

Management Summary: Sept 2019

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SE.ED Programmes Project status Stage Comment

BursaryOn Track

Execution All beneficiaries participated at the 2019

Touwsrivier Experience

Work Experience ProgrammeOn Track

Execution All beneficiaries participated at the 2019

Touwsrivier Experience

Experience Works 360 On TrackExecution All beneficiaries participated at the 2019

Touwsrivier Experience

NPO Fund On Track

Execution NPOs have started to implement

programme with the funds that were

disbursed. Site visits will be conducted for

monitoring purposes

Touws Hub On-Track Planning Project planning stage

Touws Ex On TrackPlanning Programme was well executed and

supported by the community

Starter Pack On Track Execution Starter Pack iteration process completed

Zisize On Track

Execution Construction for the off-grid system has

been postponed due to unforseen

circumstances

Other Matters

• Events of Default – none recorded during reporting period• Lock up - Bondholders requested a delay on distributions pending the successful handover

between BOPI and previous O&M Contractor & Preferred O&M Contractor, signed off by LTAto be appointed. Further R15 million to be retained once sign off is achieved

• Legal Claims – none recorded during reporting period

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Media

• RTAC Works – Generator 1 & Transformer

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Media

• KMI Dismantling Workshop

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Media

• Water & Flooding Consultant Site Visit

Ziska Mc Gilton

Pele Energy Group

Senior Asset Manager

Mobile: +27 (0) 82 929 8322

ziskam@peleenergygroup.com

Thank you & Contact

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