An overview of Demand Side Management (DSM) Implementation in RSA Morore Mashao ESKOM - DSM

1. An overview of Demand Side Management (DSM) Implementation in RSA Morore Mashao ESKOM - DSM

2. Definition of DSM • DSM is the process by which electric utilities achieve predictable changes in customer demand, which can be considered as alternatives to the provision of additional generation. • The main objective of DSM from a utility point of view is to improve efficiency by reducing the average costs of generating electricity and better utilisation of resources. • But also in lower-risk demand-side alternatives, as opposed to system expansion through the construction of new power stations.

3. History • Energy White Paper of 1998 • Energy Efficiency in the energy policy document • ESKOM - NER endeavors to keep electricity price low • ESKOM’s involvement since 1990 in Integrated Strategic Energy Plan (ISEP) to prepare for DSM • Formal adoption of DSM research and piloting in Eskom - 1994 • ESKOM, DME and NER partnership on adoption of DSM implementation - 2002 • Energy Efficiency week in July 2003

4. Benefits of DSM • A DSM programme can be implemented within 12 months while it can take more than 10 years to build a new power station. • It is far more cost-effective to implement DSM programme than to build a new power station. • The customer benefits financially due to the range of Energy-Efficient options he or she can choose from, since the value of the electricity service to customers is improved. • Macro-economic development will be supported through job creation and improved productivity. • Commercial entities will benefit through savings on monthly electricity accounts, while Electricity Services Companies (ESCos) will benefit by implementing and maintaining the project, as well as through shared savings.

5. How DSM functions in Practice

6. DSM Financing Mechanism Capex Funded through Eskom Debt Amortized over 5 years ESKOM DSM COSTS Opex Operating Costs + Interest + Amortization of Capex Recovered from the Tariffs each year 35% Shared savings from Customers Recovered from all Customers NER

7. DSM Implementation • Funding is available to RSA Cities for implementation of DSM. • ESKOM – DSM committed to a rollout plan for DSM implementation over 25 years. • DSM rollout plan is approved for 10 years

8. Energy Audit process – typical Questions • Does your facility have an energy policy? • Are you aware that electricity is a resource that can be managed – and that you can achieve notable savings through Energy Efficiency? • Is energy management an integral part of your strategic plan and the way you do business? • Do you know how much energy is consumed and how much it costs? • Do you know which factors have a direct impact on your energy consumption? • Is your staff energy-conscious and skilled in energy management practices?

9. NEXT STEPS to DO: • Appoint an Energy Services Company (ESCo) to plan and do an energy audit for an energy-efficient project your facility. • The ESCo must be registered on the DSM database before any project can be accepted. • The DSM implementation programme supports BEE companies • ESCo’s need to be technically competent and financially sustainable to enter into performance contracts and maintain projects over the long-term. • The registration process will require the ESCo to provide company information and details of employees who will be responsible for implementing and sustaining the initiative.

10. DSM process • The proposed DSM project will be evaluated by DSM technical experts and to ensure that the solution is possible and sustainable. • The evaluation processes are governed by the PFMA and ESKOM procedures. • The project will be evaluated for financial viability.

11. Who will Benefit, and How? • Eskom and Clients • Capital expenditure deferral of building generation capacity and transmission and distribution lines • Keep electricity price as low as possible • Reducing the Green House Gas emission (1 kWh = 0.89 kg of Carbon dioxide) • Less water will be consumed to supply the same number of consumers ( 1kWh = 1.27 litres) • Ensure Energy Sustainability • Clients • Savings on monthly electricity accounts • ESCo • Responsible for implementing and maintaining the project – Job creation • Shared savings

12. Goals for the Future • To concentrate on DSM programmes that provide win-win-win situations for the customer, ESCo and Eskom. • To create the opportunity for Eskom to improve supply-side planning, which results in lowered risks in implementing supply-side solutions. • To achieve market transformation and ensure DSM sustainability, which should ensure that the market does not regress to lower levels of efficiency after active participation of the utility has ceased. • To reduce the maximum demand by changing the configuration or magnitude of the load shape. In this way, Eskom will be able to accommodate the system demand growth using existing capacity.

13. In Conclusion • National Government owned Buildings • Other provincial buildings to follow • Commercial Buildings – banks, hospitals, schools, offices, hotels, etc. • Municipalities - Ekurhuleni, Nelson Mandela, Mbombela, Worcester, Potchefstroom, etc. • Industries - Gold mines, Platinum mines, Textiles, Water supply Industries, Farming, etc.

14. THANK YOU