AGRI-SA Commodity Conference 2016

Independent Power Producers (IPPs)

26 February 2016

By: W. Böhmer

Title: Regional Manager

Eskom Grid Access Unit

Overview of the presentation

Introduction.

Achievements to date: recent large/key Independent Power Producer (IPP) project connections to the Eskom grid.

NERSA Notice regarding small embedded generators, and the impact on Eskom.

Eskom’s responses to Small/Micro Generators (SMGs).

Conclusions.

Supporting slides:

• definitions, standards, processes.

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Introduction

• SA has recently experienced a tight electricity supply , and reserve margins were < target of15% of demand.

• Demand is expected to decline a bit more, and grow at lower rate thereafter (this is alsoreinforced by, amongst others, the global decline in commodity prices).

• The SA power sector is in a period of significant capacity ramp up (generation capacity, gridinfrastructure, network expansion, etc.)

• Eskom continues to drive the New Build Programme ; this will add new capacity in theforeseeable future (rest of Medupi units, Kusile, Ingula).

• It is further expected that the IPP Programme driven by the SA Government will addsignificant additional IPP capacity .

• SA’s energy mix needs to diversify (IRP 2010), and is expected to significantly shift torenewables over 15-20 years.

• The Eskom strategy is to support a growing economy and a robust power sector .

Recent DoE Renewable Energy IPP connections (Large/Key projects)

Description TOTALS

Projects MW

Grid connection (Contracted MW) Projects connected to the grid 45 2626.162

Commercial Operation (CO) (Achieved MW) Projects achieved COD 43 2429.322

Early Operating (EO) (Achieved MW) Projects in EO Period 1 50.000

The total generating capacity in CO and EO is 2479.3 MW.

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• The processes to connect IPPs have been rolled out.• In addition a significant amount of additional network and grid planning engineering work is

also complete (for connection estimates for other bid windows and/or DoE programmes).• The Tx Grid Connection Capacity report has been completed recently, also the 10-year

Transmission Development Plan .

NERSA Notice and Eskom, related to SMGs

• In December 2015 NERSA issued a notice informing that the Department of Energy (DoE)is in the process of drafting licensing regulations (including for activities related to smallembedded generation).

• Also that these regulations will provide the necessary policy framework within whichRegulatory Rules will be formulated and applied (i.e. also the licensing requirements).

• Eskom has given input on the previous version of draft regulations , also at the publichearing. Once any new regulations are published, Eskom has to determine the impact onour governance process, and again inform NERSA, and obtain ultimate approval when/ifnecessary, before implementation.

• In the meantime, Eskom had developed a Framework for Small/Micro Generation(SMG) to deal with applications and connection from IPPs (capacity < 1,000kW). TheEskom Grid Access Unit (GAU) has been facilitating this.

• Historical LV Distribution network designs are radial: there is one single source ofenergy, and portable earthing is not provided for employee safety, when work is inprogress on LV networks. The connection of SMGs introduces new challenges,including reverse power flow on the LV Network.

• Therefore, this requires revision of LV Design, Operating and Maintenancephilosophies, in order to ensure safety of public, staff and equipment.

Eskom’s response to SMGs

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Critical objectives to be achieved by Eskom for service offerings to SMG network customers:

• Provide consistent communication, and ease of information availability and accessibility.

• Non-discriminatory access to the Eskom grid (while maintaining system and network integrity).

• Optimal cost of the service.

Eskom established the SMG Steering Committee to drive the framework.

The IRP 2010–30 (update) estimates that residential and commercial PV capacity could reach 22.5GW by 2030 (and there are also other SMG technologies).

Eskom’s response ... (cont)

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Connection costing and Contracts

Process excellence: Application through to Operations

Billing and Cost recovery (Payments)

Technical (Eskom Group Techn and Dx)

Operations

IDM & Renewables Integration

• Use GAU to manage service relationship, stakeholder management and interfaces related to SMG’s in the interim until the framework is finalised.

• Define and implement technical standards for connection and operation.

• Develop an optimised SMG connection process.

• Define operations processes for SMG.

• Resolve pricing policy and cost recovery issues.

• Build SMG intelligence framework and capability.

• Establish capability to integrate SMG’s across the business.

Establish clear accountability

Improve Eskom’s image and reputation in dealing with SMG’s

Achieve non-discriminatory grid access for SMG’s

Effective organization with process excellence in SMG connection and operationsCommunication

Area To Be Addressed OutcomeMeasures

Small/Micro Generation (<1 MW) Framework

Conclusions

• Development of the industry is underway, in order to adapt to fundamental changes thatare happening.

• The role of IPP Industry Associations is developing (e.g. for quality assurance,participation in policy and standards developments).

• Eskom has taken every application for grid access (also from SMGs); connections at lowvoltage are quoted to connect at medium voltage, and is working on more effectiveprocesses for SMGs (from advising, through application to connection and operations).

• Eskom is also supporting other entities where/if appropriate (e.g. Department of Labour,SABS, etc).

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Thank you

Inquiries: Wolfgang Böhmer

Regional Manager Grid Access Unit

Programme Manager Eskom SMG

Wolfgang.Bohmer@eskom.co.za

Supporting Slides

Definitions and terms related to SMGs

• SMG – Small/Micro Generation (any customer-owned generation that is less than 1000kW, and connected and synchronised to the Eskom grid).

• LV – Low voltage supply which is normally at 400V (three phase) or 230V (single phase).

• Dedicated transformer supplies – This is where a customer takes a LV supply and is the only customer to be supplied from that transformer. The supply could be: 16kVA, 25kV, 32kVA, 50kVA, 100kVA, 200kVA, 315KVA, 500kVA.

• Shared LV network customers – These are where multiple customers are supplied from a single Eskom transformer at LV (typically residential-type customers).

• MV Customers – This is where the customer owns the transformer and takes a supply from Eskom at medium voltage (11kV or 22kV - typically).

• EG – Embedded generation plant owned by the customer. Could be PV, wind, hydro, biogas, biomass, etc. type generation.

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Small/Micro Generation - more background

• Eskom has well defined standards, processes and systems to deal with the application, connection and post connection management of generation projects to be connected to the grid that is greater than 1MW (Large and Key IPP and other generation projects).There are also well defined national grid codes for these types of generators.

• There are no national standards , regulations and grid codes for connection of Small/Micro Generation (SMG) that is less than 1MW at LV.

• There are various commercial options available to IPPs (SMGs and Larg e/Key)

• A Power Purchase Agreement (PPA) through the DoE procurement programme

• “Wheeling” to a third party, or to own site – often large or key IPPs

• Banking of energy

• Off-set (no export onto the grid) – very often SMGs

• Etc.

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Status of standards (for both the Network Customer and the Utility)

•Ops Guideline –dedicated Supply

•Ops Guideline – Shared Supply

•HV and LV Regulation updates

•Database for Installed PV•Operating Diagrams•Use of Smart technology

•How to apply for permission•Certificate to Connect (in the absence of SANS 10142-3

•Testing requirement of Inverters (until there is an SABS approved products –inverters)

•Who pays for what

•RSA Grid Code•NRS 097-2-1•NRS 097-2-2•NRS 097-2-3•SANS 10142-1 - Wiring•SANS 10142-3 - INV•SANS 10142-xx – DC•Interim Eskom Guide – INV

•Equipment Specifications –Disconnector Isolator (Once off stays off) and RCD

•Labelling Requirement•Meter Kiosk Requirement –Dedicated network

•Meter Kiosk Requirement –shared network

Project Engineering

Planning and Design

Requirement

Operating Requirement(Emphasis on Safety)

Grid Access Requirement

Process flow – Connection Options

• Convert to MV

SMG (less than 1MW)

Small power users tariffs Large power users tariffs

Prepaid Dedicated Transformers

Distributed LV feeders

Connected at MV

• No solution in place

• Operating guideline

• Factors associated to NERSA SSEG policy

• Existing connection process (=Large/Key process)

• No banking option for exported power

• SMG SC and Pricing OC banking policy approval needed

• Option to export power and be compensated in line with existing policy

• Supply tariff conversion options available but very expensive and no Dx stds.

Connected at LV

• Operating Guideline and CUoS agreements available

• Complete 28 Pilot sites and establish OU take over

• Allow for additional sites in controlled manner (to follow process)

• Approval for pilot site establishment

Process to deal with “illegal” SMG connections

• There are three categories for SMG electrical connections that are being done “illegally” by existing Eskom Customers (sometimes it is also >1MW)):

• SMG on a Shared LV network

• SMG on a Dedicated Transformer Supply (this type of connection is also not allowed because it is, by definition also LV)

• SMG on MV Supply (this is allowed by Eskom but the process of connection has to be followed).

• If Eskom finds any of the three types of connections, Eskom will issue a letter to the customer to indicate that the EG needs to be disconnected. Any EG / SMGs that is grid tied and where no Connection Agreement is in place, is “illegal”. There is a process to get to a signed Agreement.

• Should the customer not disconnect on receipt of the letter or again reconnect his EG later on, Eskom will issue a tamper fee and disconnect their Eskom supply. The customer can only have a reconnection by signing a valid Connection Agreement with Eskom (by following the process of Application through Quotation), or the EG must not be grid-tied, then Eskom will reconnect.

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Process to deal with “illegal” SMG connections ... (cont)

• If the meter has reversed , Eskom will replace the meter will an electronic meter, recover all lost revenue and issue a tamper fee.

• For MV and HV supplied customers, there is a proven connection process . We are optimizing the SMG processes, and developing the approach to follow more effective and appropriate engineering processes (but still cover all requirements).

• Customers on dedicated transformer supplies can also apply to have the supply point converted to MV so that they can follow the MV connection process.

• In most cases it is “expensive” to convert an existing Eskom supply from LV dedicated transformer supplies to MV. The customer will still have to provide his own MV/LV transformer and the other electrical connection requirements. The customer then also takes on the responsibilities related to the OHS Act (MV supplies).

• Customers on dedicated transformer supplies can also wait for the connection process for LV dedicated transformer supplies to be implemented.

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