Asset Management, Smart Metering, Water and renewable Energy Industrial Hub

1. Asset Management, Smart Metering, Water and renewable Energy Industrial Hub Presented by Jerry Mafereka and Lindelani Errol Sibisi 16 August 2012 ICUE Conference 2012

2. Industry background Sources of energy are becoming scarce and COP17 Targets for mitigating against negative Climate Change are massive. Thus ESKOM as a major supplier of energy is embarking on a drive to boost supply of energy from alternative sources while simultaneously reducing demand for electricity. The Energy Industry in South Africa is not as developed as in most countries thus ESKOM needs more capacity to meet growing demand. However, there are very few local and well equipped suppliers hence the on-going importation for both the New Build Programme of Power Stations and Integrated Demand Management (IDM) Technologies. Eskom seeks to build an industry by building a group of home-grown companies that can assist ESKOM (and later other clients) and compete globally especially in Africa. The reality is that energy problems of South Africa are too complex and profound that no one company can solve them. This process will create thousands of jobs and empower hundreds of companies to help solve South Africa’s energy problems.

3. Eskom Transformation Imperatives • Create a society which allows all of its participants to generate economic growth within a framework that provides consistency and stability • This is an investment in the future of South Africa • Correcting the inequalities of the Apartheid era • 80% of population receiving 25% of total remuneration • 90% owning less than 5% percent of the JSE • 40% black South Africans unemployed compared to 10% of white South Africans (Skills-based problem) Demographics Ownership of JSE All data at November 2005 Source for all charts: DTI

4. What Eskom Supplier Development & Localization Strategy wants to Achieve • Increase the level of participation by black owned businesses mainstream economy (ESKOM AND OTHERS) • Increase income through resultant economic growth • Increase the real market in the SA economy Mainstream Economy Mainstream Economy BEE Upliftment Second Economy Second Economy More economic participants Higher Economic Growth A Bigger Market for All

5. Eskom’s Capital Investment Plans • ESKOM will spend over R1trillon over the next 20 - 30 years on New Build and IDM Programmes because the current fleet of power stations will be due for decommissioning during this period. • About 40% of this amount is to be spend on developing the local energy industry focusing on small black owned companies • This will be done through: • Skills development • Localisation • Industrialisation • Job creation for decent work • Enterprise development

6. ESKOM’s socio-economic development objectives Key performance area Definition • Skills development • Increasing the skill base (number and skill level) of South African workers in areas relevant to the energy sector and where there is a national scarcity of skills • Localisation • Country • Province/Region • Site/Operation • Utilisation of Eskom and suppliers’ spend to develop South African based suppliers relevant to the energy sector (focusing primarily on B-BBEE and Black Owned suppliers) • Industrialisation • Utilisation of Eskom and suppliers’ spend to foster the establishment of new competitive industries in the energy sector Employment and job creation • Creation of new jobs by suppliers as a direct result of Eskom business • Supplier development (SD) • Providing a platform for SA-based suppliers to develop into national and international suppliers, through Capability & Capacity & Competitiveness development | 6

7. Industrial Hub Asset Management, Smart Metering, Water and renewable Energy Industrial Hub

8. Strategic Objectives & Modus Operandi • “Utilisation of Eskom and suppliers’ spend to foster the establishment of new competitive industries in the energy sector” • Create new black owned companies in the energy sector • Boost small black owned companies in the energy sector to be competitive globally • Create jobs • Increase the skill base in the energy sector • Boost the reliability of suppliers in the local industry through fostering best practice

9. The Key Pillars of Industrial Hubs • Hub Management Office • Consist: • ESKOM SD&L and Foundation, SABEF, ZIMELE and a Consortium of SMME’s • Duties: manage the running of the industrial hub and stakeholder relationships • Scope of Work to cover: • Asset management • Large Scale Manufacturing of Capital Goods • Construction and renovation of building • Provision of related services • Smart Metering • ESCOs • Smart ICT Grids Local Water and Renewable Energy • Water and Renewable Energy • Generation of water from water • Renewable energy

10. The Drivers of Industrialization & Localization Framework and Programme Management Office • Drivers of the programme will provide assistance such as: • Business opportunities • Funding • Training • Incubation • Drivers are to be identified by ESKOM and financed by its Global ICT Suppliers, National & Provincial DFIs. • Local Beneficiary Companies / Enterprises / Co-Ops / NGOs / CBOs be vetted by accredited empowerment verification agencies for eligibility.

11. Products & Services for Eskom Business • Companies are to be grouped according to areas of specialisation • Each areas will have a champion who is part of the management team

12. Industrial Hub Framework B BBEE SMME’s Management Office (Consortium , Drivers, SABEF and ESKOM) Training and Education Institutions (e.g. CPUT) Incubation: Cape Peninsula University of Technology Market: ESKOM and other customers Asset Management Smart Metering Water and Renewable Energy Drivers • SEDA TTP • IDC • ESKOM • Cyber Tech • SAP • Hitachi • IBM • SIEMENS • IBM • T-Systems Areas Construction Manufacturing Retail Support Services Western Cape Eastern Cape KwaZulu Natal Free State Mpumalanga Gauteng Northern Cape Limpopo North West Khayelitsha Saldana Atlantis Sir Lowry’s Pass

13. Typical Activities of the hub • Induction of companies • Identify existing ESKOM suppliers who would be registered under the hub • Use SABEF to induct new companies into the hub • Identify other structure to induct new companies • Qualify companies to be added to the hub database • Companies must meet set criteria • Add to a database that will be available to the market • Train and educate new companies on energy related aspects and leadership • FET’s, Technical Universities and Academic Universities will provide training • Training programmes will also be put in place for ad hoc training programmes • Identify opportunities within and outside of ESKOM for companies in the industrial hub • A competitive process according ESKOM requirements will be followed • Sell companies in the hub to other energy suppliers • Use a portal to advertise opportunities to members of the hub • Sell members to funders • Manage hub activity • Report on statics • Number of companies added • Success rate of the hub • Perform above mentioned activities

15. Example of Targets & Outputs from the Smart Metering Pilot Study • Skills development • Through the Smart Energy School train over 15000 individuals within and out of ESKOM • Localisation • Build and empower 300 new local companies • Focus on Youth owned – 50%; and Women owned – 25% • Empower 200 existing local companies • Industrialisation • Boost the Smart Metering companies • Build a Smart Metering School Employment and job creation • Create over 15 000 jobs • Focus on black, young, women and disabled individuals • Supplier development • The 500 companies will be able to offer services to other clients such as local municipalities and across Africa • Zimele will be able to grow to compete internationally

16. Why do we think we will Succeed?

17. We are ready to partner with ESKOM in SMME Development…