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KES – a case study

KES – a case study. Presented by Vicky Basson CEO - KES Energy Services Company. KES SHAREHOLDING. 15%. 50%. 35%. KES in South Africa. KES - KZN. Company began operations in 2001 (tender in 1998). The project in KZN is funded by the DOE.

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KES – a case study

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  1. KES – a case study Presented by Vicky Basson CEO - KES Energy Services Company

  2. KES SHAREHOLDING 15% 50% 35%

  3. KES in South Africa

  4. KES - KZN • Company began operations in 2001 (tender in 1998). • The project in KZN is funded by the DOE. • Development of project was intermittent due to contractual issues. Areas of installation were Msinga, Maphumulo and Ndwedwe. • In Nov 2009, KES was awarded a new tender for 10000 SHS installations in Central KZN - will be completed within the next month. Installation areas include the existing areas and also Nquthu and Umvoti. • At the end of this project there still remains many non-electrified households in our concession areas. • KES submitted a proposal for the remainder of 2012/13 financial year and until 2015 – awaiting feedback.

  5. KES – Eastern Cape • KES was awarded a tender in 2007. • This project is funded by KfW (German development agency) for a total of +/- 30000 households. Concession area is in Eastern Cape specifically DC 13 and DC14. • Total of 7300 customers installed in Eastern Cape to date in the areas of Tsomo and Mount Fletcher • Currently we need to identify new areas as soon as possible. KES needs clarification from the role players for the grid roll-out and subsequently the identification of non-grid areas. • Looking at larger size systems or multiple offerings

  6. Fee for service model • Capital investment – 80% subsidy 20% KES investment • Customer “rents” system for a monthly fee 89 rands per month – 365 days pa • Depending on area monthly tarrif is subsidised by Free Basic Electricity from Local Municipality • FBE policy was 48 rands per month per customer in 2004. Funded through EBSST – has never increased and rarely followed (unconditional grant) results in disparities in customer tariffs. • KES has full operational/maintenance contract for systems for 20 yr period • A prepayment meter system is used

  7. Solar Home System 55 /65 wp solar panel 3 CFL lights, 1 LED Meter and battery enclosure

  8. Challenges • Institutional delays pose problems to sustainability of project • Financial costs of delay – fixed costs and commitments to SMMEs – increases overall operators investment. • Sustainability • Current model implies customer tariff should cover payback of investment, life-time replacement costs (batteries), maintenance costs – all which are bourne by the operators. In reality, it cannot. • Payment issues • All operators experience low and continued decreasing collection rate which impacts upon the sustainability of the model. • Affordability of the monthly fee is a large contributor to non payment • Operational Challenges • Difficult Terrain, theft of systems and tampering all increase costs. There is a need for the system to evolve to balance demand and supply issues whilst always considering affordability. ,

  9. Benefits to the community • KES is a services company - Msinga households already have 10yrs of service • The SHS replaces more expensive and hazordous energy sources. • Exterior lights increase security. • Access to media and education – radio and tv. • JOB Creation – directly 91 permanent jobs created by KES and 6 BEE SMME Subcontractors appointed employing 100 people. This excludes all indirect jobs. • Energy stores used to introduce other modern, safe forms of energy for thermal needs such as LPG, efficient wood burning stoves • 98 MWh per month of green energy • In rural areas less expensive than grid connections and quicker to roll-out • In line with the government’s strategic plan

  10. Universal Access Electrification Rate 2010 – 75% • Between 1996 and 2010, 5 million households electrified • In 2012, 3.4 million still unelectrified • Currently electrification rate is 150k-200k pa. • Unless rate increased = 20 years

  11. INEP and Roadmap • DOE held Energy Indaba in 2012 • Working Groups and steering committee set up with all role-players to review all aspects of electrification including: • Access • Funding • Planning and Delivery • Roadmap to be presented to Minister and Cabinet for approval • Goal is for universal access, using best mix of solutions including a dignified level of service for all. • KES looks forward to a clear framework for business development

  12. KES and KZN Municipalities • KES has the concession for DC22, DC23, DC24 and DC29 • Municipality identifies non-grid areas to DOE, DOE fund it • KES enters into Service Level Agreement • FBE crucial to ensure affordable by your communities.

  13. Conclusion KES has been in operation for more than a decade supplying electricity to the deep rural areas of South Africa. However, there are challenges to the sustainability of the project that need to be addressed. There is a role for non-grid electrification in South Africa to obtain universal access. KES is a public private partnership, and looks forward to continuing its role of bringing energy to the rural communities. Thank you for your attention

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