DSM

1. The accelerated DSM programme in the Western Cape:Lessons learnt from a policy and regulatory perspective

2. DSM • Process by which electric utilities achieve predictable changes in customer demand • Considered as alternatives to the provision of additional generation plant. • Includes load management and energy efficiency • Benefits • Participant • Financial savings • Utility: • Lower cost than generation plant • Lower lead time to implementation • Nation: • Better utilisation of national resources • Lower environmental impact • Job creation

3. Supply-side Options DSM Options 16 14 12 10 R/MW 8 6 4 2 0 RLM ICLM CEE - VSD IMEE - VSD New Coal-fired New Pump Storage CEE - Fans&Pumps IMEE - Fans&Pumps REE - HW Insulation CEE - Efficient Lighting REE - Efficient Lighting IMEE - Efficient Lighting R/MW Comparison of DSM and Supply Side Options between 6&7pm

4. EIA + Site Licensing + Fuel Source Dev. + Eng & C.A + Construction Nuclear plant : 2 x 900 MWe Pumped Storage Scheme : 1000 MWe Coal fired PF Station : 6 x 700 MWe Simunye Stations : 3540 MWe Nuclear PBMR : 10 x 100 MWe HHUGPS 2 x 500 MWe • Benefits of DSM: • Dramatically shorter lead times • Average lead time 1 year • Diversity across users • and market segments • Environmentally benign CCGT: 2 x 750 MWe DSM 11 10 9 8 7 4 3 2 1 6 5 Lead times on Supply-side and Demand-side projects

5. Load Winter Max : 4250 MW Summer Max : 3900 MW Transmission Capacity 2400 - 2800 MW Koeberg Generation 1800 MW Eskom Peaking Generation 400 MW Palmiet 150 MW Acacia Note: The above excludes the City of Cape Town’s generation Western Cape Network – Load and Capacity

6. What happened?

7. Predicted Weekly Shortfall • Shortfall Risk: 300 to 400 MW during morning and evening peaks Unit 2 Unit 1 Unit 1 and 2

8. DSM - Programme Overview Programme MW 1. Efficient lighting 155 2. Extended operation of backup diesel generators 50 3. Industrial, municipal and commercial efficiency measures 40 4. Subsidies on efficient appliances 25 5. Gas cooking and heating 50 6. Extensive conservation drive 80 - 160 Target 400

9. Energy Efficient Lighting • 5.3 million bulbs distributed • 3.27m installed ‘door-to-door’ • 1.9m exchanged at dedicated points • 200k installed by Eskom and Cape Town City Council employees • 300,000 households visited directly • 2,200 jobs created in communities • Criminal element threatened to undermine the programme • Saving of 229 MW achieved • Fortunately risk of harmonic distortion didn’t materialise

10. Load switching to gas • Very controversial programme in view of price hikes and availability concerns over winter • Safety concern successfully addressed • 400 safety officers recruited, trained and deployed • Economics better than most other DSM programmes

11. Backup diesel generator incentivisation • 63 MW of load reduction obtained • Diesel price increases put programme under pressure • Metering was a significant challenge

12. Efficiency upgrades in plants and buildings • Limited success due to long lead time in in contracting, procurement and installation • 12 MW load reduction achieved

13. Geyser and piping insulation • 180k geysers insulated • Significant logistical challenges • Difficult work environment • High skill levels required • Weather

14. Power Alerts were flighted on SABC 1, 2 and 3 From 18h00 to 21h00 from 1st June to 31st August Communicate status of energy demand and call people to reduce energy usage Broadcast educational infomercials on savings tips every 15 minutes Expect to achieve 150 MW demand reduction impact if only a conservative 20% of the residential consumers react Power Alert - Overview

15. Advertising Campaign Example - 1

16. Advertising Campaign Example - 2

17. Advertising Campaign Example - 3

18. 21:00 18:00 Power Alert – LOW/Orange Thank you Cape Power Interruption Avoided You may switch on: - Geyser - Air conditioner - Electric heating - Kitchen appliances Thank you for your cooperation! For more information visit: www.PowerAlert.co.za

20. Not using a heater Using a gas stove Overall effectiveness of the campaign (amongst those aware of the campaign) n=291 The campaign is perceived to have a positive effect and people are aware of many ways in which they can save electricity in their households. Other ways of saving electricity less than 5% are not shown Source: Q5, Q6

21. So…. What was achieved?

22. Average Weekday Impact: June 2006

23. Sustainability of measures                         

24. How to achieve sustainability • Instill an energy efficiency culture • Drive down costs of DSM implementation • Stronger competition between ESCO’s • Build stronger buying power • Establishment of local industries where viable • Overcome the following barriers to DSM implementation….

25. Tariffs not cost reflective Uncertainty as to which organisation(s) should be carry DSM forward Complicated DSM policy Lack of regulatory pressure on distributors Sub-optimality across energy carriers Current barriers to DSM

26. A Revised DSM Policy Should: • Provide certainty that DSM is a long term initiative • Deal with solar water heating and synergies with alternative energy carriers eg. LPG • Allow for 100% funding of viable energy efficiency projects • Promote residential time-of-use tariffs • Take additional factors into account when calculating approval hurdle rates: • transmission and distribution costs • Full-life cycle costs including social and environmental externalities • Allow investment in activities to ensure sustainability • Make provision for ‘emergency DSM’ when required • Encourage innovation

27. Other regulatory and policy requirements • Energy efficient housing and building design • Thermal energy for households • Efficiency rating of appliances + minimum standards • Disposal of e-waste and other hazardous material • Prevention of importation of non-efficient appliances in South Africa (dumping)

28. Thank You