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Emergency Response and Business Continuity Plan Special Task Team – Mandate & Constitution June 2010 Supported by EON Consulting © Copyright EON Consulting © Copyright EON Consulting Pragmatic intelligence… enabling business to succeed Pragmatic intelligence… enabling business to succeed Agenda © Copyright EON Consulting 1) Welcome and Introductions 2) Background 3) Begin with the End in Mind 4) Mandate, Structure, Integration 5) Roadmap & Deliverables a) Method & Approach b) Energy Response Wedges c) Fact Sheets d) Assign Responsibilities 6) Flight Plan for the next 4 weeks 7) Questions & Closure Pragmatic intelligence… enabling business to succeed 2 Background • South Africa cannot afford economic recovery to be halted and the country plunged back into recession due to electricity shortages • The Electricity Supply Industry must be able to support economic growth • Significant risks of energy shortfalls in the period 2011 to 2015 • Short-term demand side and supply side solutions required to mitigate risks • Maintain line of sight with IRP2010 and integrate seamlessly into longer term supply plan • Various initiatives from different stakeholder perspectives have been launched, in a non integrated manner Definition of Energy in context of this project to be interpreted as Electrical Energy © Copyright EON Consulting Pragmatic intelligence… enabling business to succeed 3 Confusion & Mixed Signals Demand Side Initiatives Standard Offer vs Tax Incentives Supply Side Initiatives Policy, Regulation & Legislation Crisis Looming? IRP 2 Crisis Over? Funding One version of the “Truth” “Mutually Exclusive Comprehensively Exhaustive” © Copyright EON Consulting Pragmatic intelligence… enabling business to succeed 4 Begin with the End in Mind © Copyright EON Consulting Pragmatic intelligence… enabling business to succeed 5 Begin with the End in Mind © Copyright EON Consulting Pragmatic intelligence… enabling business to succeed Begin with the End in Mind © Copyright EON Consulting Pragmatic intelligence… enabling business to succeed ) Structure & Mandate ( Key Stakeholders (IAP’s) Government Cabinet Ministers Inter-Ministerial Committee (IMC) DG/DDG’s Inter-Departmental Task Team (IDTT) Government Policy making entities (PME’s) Work Tracks Ministries Presidency DoE DTI DPE Nt NERSA Eskom Specialist Technical WG 1 Technical WG 2 Work Technical WG 3 Technical WG 4 Technical WG 5 Technical WG 6 © Copyright EON Consulting Emergency Response & Business Continuity Team Alignment facts and technical recommendations SOE SOE CoM BUSA BLSA SALGA Nedlac Cosatu NUM Responsible ministry Informing policy making Technical work (TTT) Pragmatic intelligence… enabling business to succeed EIUG AMEU CoM NBI 8 The Planning Process (Way We Work) Debate A & B until all agree A The “uncertainties” in getting from A to B are sorted with a Systematic ABCD CURRENT REALITY C B D STRATEGY IMPLEMENTATION When A & B agreed Develop C When ABC agreed Develop D © Copyright EON Consulting Pragmatic intelligence… enabling business to succeed OBJECTIVES Phase 1: Risk Assessment and Mitigation Measures A B CURRENT REALITY OBJECTIVES Uncertainties C D STRATEGY • IMPLEMENTATION Identify the CURRENT Reality – Update post MYPD2 Supply curve – Update “Business as Usual” demand curve – Add additional contingencies to improve robustness of plan – Establish the Energy Shortfall Gap © Copyright EON Consulting Pragmatic intelligence… enabling business to succeed Phase 1: Risk Assessment and Mitigation Measures A B CURRENT REALITY OBJECTIVES Uncertainties C D STRATEGY • IMPLEMENTATION Solutions to close the Gap Funded DSM Electricity efficiency awareness Eskom Internal Efficiency improvement Energy Efficiency Improvement Public buildings program Virtual Power Station (DMP and ULM) Own generation and co-generation Renewable generation Willing Buyer Willing Seller Municipal generation IPP generation Electricity Conservation © Copyright EON Consulting Pragmatic intelligence… enabling business to succeed Phase 2: Engagement and Development (Strategy) A B CURRENT REALITY OBJECTIVES Uncertainties C D STRATEGY • IMPLEMENTATION Parameter Sheets for each solution – Detailed definition of each solution – Impact on Supply or Demand curve – Assumptions included in establishing the parameter values – Parameter Values (Each solution’s contribution to closing the gap identified) – Range of parameter value – Preconditions for this parameter to be successful – Parameter Owner © Copyright EON Consulting Pragmatic intelligence… enabling business to succeed Phase 2: Engagement and Development (Strategy) • • • Identify Constraints for each solution to be successful Possible Remedies to break the constraints Recommended implementation plans for each remedy 1 A B CURRENT REALITY OBJECTIVES Uncertainties C 2 Describe Current Situation Agree the Objectives 3 D STRATEGY IMPLEMENTATION Identify the “Uncertainties” Opportunities & Constraints 4 5 Describe each Opportunity & its Constraints For each constraint Identify its REMEDIES R1 R2 Rn 6 For each remedy Identify its IMPLEMENTATION PLANS IP1 IP2 IPn © Copyright EON Consulting Pragmatic intelligence… enabling business to succeed Phase 3: Track and Monitor (Implementation) A B CURRENT REALITY OBJECTIVES Uncertainties C D STRATEGY IMPLEMENTATION Opportunities A B C D Constraints A B C D Remedies A B C D © Copyright EON Consulting Implementation of Remedies to remove Constraints standing in the way of the success of Opportunities in order to reach objectives (Filling the Gap) Pragmatic intelligence… enabling business to succeed Programme Roadmap Objectives: • Prepare a 6 year Business Continuity Plan • Solicit participation & align stakeholders • A: Confirm the Current Reality • B: Define where we want to be • Identify & launch quick-hits Outcome Expected: • A: Agree the current Demand and Supply picture or Gap • B: Define agree opportunity wedges to close Gap • Gather required data from all • Identify Constraints • Establish & communicate big picture perspective • Plan & launch engagement & develop phase PHASE 1 “Assessment & Planning” A&B (Next 4 weeks) © Copyright EON Consulting <Insert Date> Outcome Expected: • C: Define how we can get there D: What must be done to get there • Constraint resolution: Regulatory & Policy Barriers removed • Launch initiatives : Demand Management Opportunities • Launch initiatives : Supply Management Opportunities • Secure required funding • Capacity and Skills required to drive and manage PHASE 2 “Engagement & Develop” (Next 4 months) Outcome Expected: • Manage Implementation and create stability. • Track and Report on MW Savings and additional non Eskom Generation • Identify appropriate SOE to own and manage Programme PHASE 3 “Implement & Stabilise” (Over the next 18 months) Pragmatic intelligence… enabling business to succeed PHASE 4 “Track and Monitor” (Post 18 Months) 15 Wedges & Owners Emergency Response Wedges Ompi Aphane Demand Side Management Tom Skinner Funded DSM (Eskom & Munics) Supply Side Management Pieter Brand Demand Response Mokgadi Matheekgana Public Buildings EEC Own generation Du Toit Grobler / Wolfgang Fechter Tom Skinner Eskom Internal Efficiency Nico Smith Val Geen / Paul Botha Energy Efficiency Improvement Electricity Conservation Nico Smith Charles Mahoney Co-generation Managed energy conservation (cap & trade) Paul Vermeulen Renewable generation Municipal generation Doug Kuni Ian Morison IPP generation Willing buyer, willing seller Regulatory, Legislative, Policy and Funding © Copyright EON Consulting Pragmatic intelligence… enabling business to succeed 16 Parameter Quantification Rules • Parameter value quantification to consider two scenarios: • High probability targets under current regime (“as is” regime) High Probability definition = high level of confidence (can substantiate) that the proposed project will be implemented and produce energy savings within the required time frames • Stretch targets, with binding constraints resolved (“to be” regime) • Ramp-up period: 2011 to 2016 • Double counting to be avoided: • • • Example 1: Co-Gen to meet Energy Efficiency Accord targets, counted only in Co-Gen wedge not Energy Efficiency or Conservation Wedge • Example 2: DSM initiatives, funded from National Government or NERSA (MYPD) to be counted once in Funded Initiative wedge Primary departure point: • High probability Demand and Supply Initiatives identified • GAP after high probability initiatives, to be closed by Energy Conservation Management initiatives • Stretch targets, if achieved, will reduce gap and increase margin for error All constraints towards realisation of targets to be identified © Copyright EON Consulting Pragmatic intelligence… enabling business to succeed 17 Proforma Example Parameter Description Impact on Supply and Demand Gap Assumptions included in establishing parameter value Parameter Value Quantification (Bankable or High Probability Savings) Stretch Targets (Constraints removed) Constraints: (Legal, regulatory, policy, funding, tariffs, e.g. ) Stakeholder Landscape / Ownership © Copyright EON Consulting •Define the Wedge scope, in a standard agreed definition, to ensure category of either supply enhancement of demand reduction •Specific impact on either enhancing supply, or reduction demand, through adding actual MWs or reducing the electricity consumption, or shifting the load, outside the peak demand period •Document any assumptions required to affect the demand side reduction or supply enhancements. •Quantification of the actual parameters, through 2010 to 2016, by indicating the MW and TW/h impact. Wedges are made up from defined parameters (smaller building blocks). Supporting documentation, feasibility case or detailed calculations should be attached to this. Bankable in this case imply high probability projects / initiatives that will most likely yield an impact on either supply or demand. •Stretch targets refer to additional impact on Supply and Demand that can be achieved, by removing binding constraints, that can reasonably affected by changing energy regulation, policy, legislation or tariffs structures. •Constraints refer to policy, legislative, regulatory or economic and funding issues, that can be defined, and debated through a transparent consultation process (via normal Government procedures). •Identify all potential stakeholders involved in this wedge, identify potential duplication in effort, or areas where integration or consolidation will yield a positive outcome. Pragmatic intelligence… enabling business to succeed 18 Flight Plan (4 weeks) Week 1: June 21 Week 2: June 28 Week 3: July 5 Week 4: July 12 • Parameter Sheets out • One-on-one facilitation meeting (EON Consulting) • Review & confirm data sheets • Wedge owners engage stakeholders • Continued . . . Wedge owners engage stakeholders • Gather required data • Mile stone checks • DoE alignment & feedback session • Completed fact sheets returned to EON • Consolidated database development • Analysis of GAPs • Report back to stakeholders on Findings • Compile recommendations report to DoE, other stakeholders & IMC Workgroups • Plan and launch – programme followup phases subject to DoE guidance • Close-out meeting – phase 1 © Copyright EON Consulting Pragmatic intelligence… enabling business to succeed 19 Emergency Response and Business Continuity Plan Appendix A Wedge - Draft Definitions © Copyright EON Consulting © Copyright EON Consulting Pragmatic intelligence… enabling business to succeed Pragmatic intelligence… enabling business to succeed Demand Side Management Wedge Funded DSM Programmes DSM interventions involve technical and behavioural measures to influence the demand for electricity. SWH HVAC © Copyright EON Consulting The Eskom DSM programme is implemented under the auspices of the DoE and NERSA. Eskom is allowed to recover the costs of DSM through their tariff (the terms of the cost recovery are negotiated as part of the Multi-Year Price Determination (MYPD) process). Policy / Regulatory / Stakeholder Considerations Definition Parameters Lighting (CFL’s) Emergency Response Relevance Definition CFLs are the most commercially available, energy-efficient (EE) alternative to the regular incandescent lamps most commonly found in residential homes. A CFL is a compact (coiled) version of a standard fluorescent tube. CFLs are 75 percent more efficient and last up to 7 times longer than incandescent bulbs. Large scale promotion of CFLs to the residential market has been used extensively worldwide as an aggressive EE measure. CFL programmes have been employed in South Africa to save hundreds of Megawatts (MW) in a short space of time. A major success has been Eskom’s ability to roll-out in excess of 100 000 CFLs per day where needed. Eskom estimates that savings of approximately 1 500MW of power have been made utilising this method alone for the period March 2006 to March 2010. SWH utilises solar thermal energy for the heating of water rather than a more conventional energy source such as electricity or gas. Eskom is currently providing an incentive for the conversion of traditional, electrically-heated geysers to SWH units. Several other stakeholders, including some municipalities and the Central Energy Fund, are also pursuing SWH programmes. The DoE is currently coordinating (across all stakeholders) the development of a National Strategy for a more aggressive SWH programme HVAC, an acronym that stands for the closely related functions of "Heating, Ventilating, and Air Conditioning”, and refers to technology aimed at managing indoor environmental comfort. HVAC systems, particularly older installations, offer significant opportunities for efficiency improvements. Efficiency upgrades to HVAC systems have traditionally been one of the key focus areas of the Eskom funded DSM programme, particularly in the industrial and mining sector. Efficiency improvements to HVAC systems would qualify for funding under the traditional ESCO or Standard Offer programmes. Policies should be put in place for providing minimum performance criteria for heating, ventilation and air conditioning (HVAC) systems, including specific requirements for furnaces, heat pumps or air conditioning units. <Insert Date> Pragmatic intelligence… enabling business to succeed 21 Demand Side Management continued… Compressed air (air kept at pressures higher than atmospheric) has an extensive range of applications in industry (e.g. power sources for tools and equipment used for pressurizing, atomizing, agitating, and mixing applications). It is believed that optimization of compressed air systems can improve energy consumption of 20 to 50 percent. Eskom has recently identified Compressed Air as a focus area for efficiency interventions and a newly structured programme targeting compressed air applications is expected. A heat pump is a device which moves heat energy from one place to another and from a lower to a higher temperature. A domestic refrigerator is an example of a heat pump. Heat is removed from the contents of the refrigerator (the source) and discharged elsewhere (the sink). In heating applications, heat is removed from ambient air and delivered to where it is needed. Heat pumps provide a good alternative efficient water heating particularly where solar water heating technology is not suitable. Heat Pumps are included in the Eskom’s DSM Water Heating Programme that is currently being refined and restructured. Other suitable applications for heat pumps should also qualify under the traditional Eskom ESCo and new Standard Offer programmes. There remain opportunities for policy to guide the appropriate use and set performance standards for heating and cooling equipment including heat pumps. Efficient showerheads and regulators combine a ratio of water and air, thus aerating the water flow. The ratio of the air/water mixture is dependent on the rating of the showerhead or regulator as well as the water system pressure. The use of a shower regulator instead of a complete showerhead provides more flexibility to the end user, as it can be installed in the current showerhead fixture and therefore still provides the aesthetic look the owner prefers. Given the water efficiency and electricity benefits, showerheads have been incorporated into Eskom’s DSM water heating Programme. A long-term objective should be to put in place national regulation to mandate the installation of water and energy efficient showerheads. Consideration should be given by Government Agencies and the South African Building Codes Board as to whether this can be accomplished through perhaps a National Plumbing Code and SA Standards. In the short term other nonregulatory options should be explored Compressed Air Heat Pumps Shower Heads © Copyright EON Consulting Policy / Regulatory / Stakeholder Considerations Definition Parameters Efficient shower heads improve water usage and electricity used to warm water. <Insert Date> Pragmatic intelligence… enabling business to succeed 22 Demand Side Management Wedge Energy Efficiency Improvement Supply Side Management EE includes those actions that reduce the overall consumption of electricity over all hours of the day, effectively shifting the load duration curve down without impacting service levels. These actions may include the installation of more efficient appliances and lighting as well as employing new processes that use less energy. Parameters Industrial Process Improvement Water losses management © Copyright EON Consulting Emergency Response Relevance Definition The Eskom DSM programme incorporates EE initiatives covering an extensive range of interventions and technologies for residential, commercial and industrial applications. EE is, however, not limited to that funded by Eskom and is also driven by municipalities and leading businesses amongst many others. Policy / Regulatory / Stakeholder Considerations Definition These are comprehensive tailored solutions to improve the energy use of industrial processes. These include process optimisation and efficiency upgrades to lighting systems, electric motors, pumps, compressed air and Heat, Ventilation and Air Conditioning systems, amongst many other solutions. Process improvements also incorporates principles/philosophies such as lean production, aimed at optimising processes for value add, minimising any activities not aligned with this purpose. Water loss management deals with the water not accounted for such as unmetered and illegal connections and leakage. Consists of a review of a utility’s distribution system and development of numerous control zones with a single source of water (if possible). These zones are referred to as DMA s or District Metered Areas. Each DMA requires a meter as well as a pilot-operated control valve. <Insert Date> Industrial process improvements are funded as part of the Eskom DSM programme. Many businesses are, however, pursuing efficiency improvements on their own initiative. Process optimisation is typically internally implemented and funded by industries/businesses. ? Pragmatic intelligence… enabling business to succeed 23 Demand Side Management Wedge Eskom Internal Efficiency EE includes those actions that reduce the overall consumption of electricity over all hours of the day, effectively shifting the load duration curve down without impacting service levels. These actions may include the installation of more efficient appliances and lighting as well as employing new processes that use less energy. Eskom has launch various internal processes to reduce electricity consumption and improve overall energy efficiency. Internal awareness campaign © Copyright EON Consulting The Eskom DSM programme incorporates EE initiatives covering an extensive range of interventions and technologies for residential, commercial and industrial applications. EE is, however, not limited to that funded by Eskom and is also driven by municipalities and leading businesses amongst many others. Internal targets as derived and being reported on. Policy / Regulatory / Stakeholder Considerations Definition Parameters Generation input Energy Efficiency Emergency Response Relevance Definition As much as 30% of global energy use is consumed by Power Generation (assumed to include transmission losses). Efficiency improvements at Generation facilities will make more energy available for supply to end users. The current EEDSM Policy excludes the Power Generation Sector undertaking to give it further consideration at a later stage. As a result of policy exclusion one of the largest consumers of electrical energy in South Africa has remained largely unaffected by the energy efficiency drive. This has been partly addressed more recently by Eskom’s internal efficiency drive (billion kilowatt hour project) Refers to programs that are aimed at reducing the energy used by specific end-use devices and systems, typically without affecting the services provided. These programs reduce overall electricity consumption (reported in MW-hours), often without explicit consideration for the timing of programinduced savings. Such savings are generally achieved by substituting technologically more advanced equipment to produce the same level of end-use services (e.g. lighting, heating, motor drive) with less electricity. Examples include high-efficiency appliances, efficient lighting programs, highefficiency heating, ventilating and air conditioning (HVAC) systems or control modifications, efficient building design, advanced electric motor drives, and heat recovery systems. ? <Insert Date> Pragmatic intelligence… enabling business to succeed 24 Supply Side Management Wedges Renewable generation RE harnesses naturally occurring non-depletable sources of energy, such as solar, wind, biomass, hydro, tidal, wave, ocean current and geothermal, to produce electricity, gaseous and liquid fuels, heat or a combination of these energy types (this definition is as per the DoE). Concentrated Solar Bio Mass © Copyright EON Consulting NERSA have published the REFIT as well as the Power Purchase Agreements and Guidelines for wind, small hydro, landfill gas methane, concentrated solar power, PV units, biomass and biogas technologies. The tariffs are set to top up the earnings of the IPPs. This establishes building blocks for the development and purchasing of RE with the hope of promoting a market for the development of RE to meet the government target of 10 000 Gigawatt hours of power produced from renewable sources by 2013. Policy / Regulatory / Stakeholder Considerations Definition Parameters Wind Energy Emergency Response Relevance Definition Kinetic energy present in wind motion that can be converted to mechanical energy for driving pumps, mills, and electric power generators. A solar energy conversion system characterized by the optical concentration of solar rays through an arrangement of mirrors to generate a high temperature working fluid. Also see Solar rough, Solar power tower, or Solar dish. Concentrating solar power (but not Solar thermal power) may also refer to a system that focuses solar rays on a photovoltaic cell to increase conversion efficiency. ? ? ? Organic non-fossil material of biological origin constituting a renewable energy source. <Insert Date> Pragmatic intelligence… enabling business to succeed 25 Supply Side Management Wedges IPP generation Emergency Response Relevance Definition (Also referred to as Non-Utility Generator (NUG)) An IPP is an entity, which is not a public utility, but which owns facilities to generate electric power for sale to utilities and end users. Definition Parameters The South African Government (DoE) has stated their intent to fast-track the development of capacity by IPPs. The DoE procurement of Open Cycle Gas Turbines at Coega was, however, not concluded successfully. The DoE have published new generation procurement regulations (August 2009) under the Electricity Regulation Act, 2006 (Act No. 4 of 2006), that are expected to clarify market entry for IPPs. Policy / Regulatory / Stakeholder Considerations ??? © Copyright EON Consulting <Insert Date> Pragmatic intelligence… enabling business to succeed 26 Supply Side Management Wedges Own generation DER are parallel and stand-alone electric generation units located within the electric distribution system at or near the end user. DG or DER can be beneficial to both electricity consumers and, if the integration is properly engineered, the energy utility. There are several applications and technologies that can be utilized including co-generation and renewable energy sources, as described below. Parameters © Copyright EON Consulting For the consumer the potential for lower cost, higher service reliability, high power quality, increased EE and energy independence are all reasons for interest in DER. The use of renewable distributed energy generation involving ‘green power’, such as wind, photovoltaic (PV), geothermal or hydroelectric power, can also provide a significant environmental benefit. Incentives in the form of public or private subsidies are offered to lower capital costs and accelerate the payback period. Rebates on installations of renewable energy electric generating systems are offered with eligible technologies including PV tubes, small wind turbines, fuel cells that use renewable fuels, and solar thermal electricity systems. Incentives for renewable fuels or energy sources are generally higher than those for non-renewable sources. <Insert Date> During 2008 Eskom initiated a Pilot National Co-generation Programme (PNCP) inviting expressions of interest from industry to develop Co-generation capacity. Several responses were received from industry from which a short list of qualifying parties was identified. The programme was however suspended in September 2009. Policy / Regulatory / Stakeholder Considerations Definition Distributed Generation (DG) / Distributed Energy Resources (DER) / Embedded Generation (EG) Emergency Response Relevance Definition The National Energy Regulator of South Africa (NERSA) has published a guideline for the regulation of Co-generation and the Department of Energy (DoE) has indicated their intent to develop a Co-generation Feed In Tariff (COFIT) similar to the recently published Renewable Energy Feed In Tariff (REFIT). Eskom initiated a Medium-Term Power Purchase Programme (MTPPP) during 2008 so that they would be able to purchase energy from qualifying industry sources. From numerous industry responses a shortlist of possible participants had been identified before the programme was suspended in 2009. Pragmatic intelligence… enabling business to succeed 27 Supply Side Management Wedges Co Generation Co-generation is the simultaneous production of electric power and another form of useful energy (such as heat or steam) from the same fuel source. The energy (electrical and other) can be produced from a power generator directly (i.e., manufacturing processes, space heating, water heating, etc.) or by a thermally-activated device (chillers, dehumidifiers, bottoming cycles, etc.). Parameters © Copyright EON Consulting Co-generation typically entails permitting customers to generate power while serving their thermal and/or cooling loads and thus reducing overall electricity consumption by using highly efficient power generators in lieu of gridpurchased power. Co-generation may also be used to supply energy into the grid (refer also to Distributed Generation). <Insert Date> During 2008 Eskom initiated a Pilot National Co-generation Programme (PNCP) inviting expressions of interest from industry to develop Co-generation capacity. Several responses were received from industry from which a short list of qualifying parties was identified. The programme was however suspended in September 2009. Policy / Regulatory / Stakeholder Considerations Definition ?? Emergency Response Relevance Definition The National Energy Regulator of South Africa (NERSA) has published a guideline for the regulation of Co-generation and the Department of Energy (DoE) has indicated their intent to develop a Co-generation Feed In Tariff (COFIT) similar to the recently published Renewable Energy Feed In Tariff (REFIT). Pragmatic intelligence… enabling business to succeed 28 Supply Side Management Wedges Municipal Generation This term covers all the existing generation capacity not belonging to the national power utility. This includes a few municipal power plants. The process by which a municipal entity assumes responsibility for supplying utility service to its constituents. In supplying electricity, the municipality may generate and distribute the power or purchase wholesale power from other generators and distribute it. Parameters ?? © Copyright EON Consulting Emergency Response Relevance Definition Policy / Regulatory / Stakeholder Considerations Definition ? <Insert Date> ? The National Energy Regulator of South Africa (NERSA) has published a guideline for the regulation of Co-generation and the Department of Energy (DoE) has indicated their intent to develop a Co-generation Feed In Tariff (COFIT) similar to the recently published Renewable Energy Feed In Tariff (REFIT). Pragmatic intelligence… enabling business to succeed 29 Supply Side Management Wedges Emergency Response Relevance Definition Willing Buyer & Willing Seller The concept of willing buyer-willing seller means a completely voluntary transaction between a buyer and a seller. The underlying assumption is that there are willing buyers and willing sellers who are involved in transaction processes in the market place on an equal basis. The concept of willing seller willing buyer fully protects the interests of existing energy owners, as neither compels to sell against their will nor at a price with which they are not fully satisfied. Parameters Policy / Regulatory / Stakeholder Considerations Definition ?? © Copyright EON Consulting <Insert Date> Eskom has a policy of “willing buyer, willing seller”, and therefore endeavours to purchase land where ever possible or necessary. However, the State and State-owned-enterprises can acquire the rights to use or possess the requisite land through the Expropriation Act (No 63 of 1975). The Expropriation Act requires the determination of compensation based on the principle of market value (i.e. what would the value be in the event of both a willing buyer and a willing seller trading the land). There is a suite of additional legislation, which, in conjunction with the Expropriation Act, would be used to determine the compensation value. The National Energy Regulator of South Africa (NERSA) has published a guideline for the regulation of Co-generation and the Department of Energy (DoE) has indicated their intent to develop a Co-generation Feed In Tariff (COFIT) similar to the recently published Renewable Energy Feed In Tariff (REFIT). Pragmatic intelligence… enabling business to succeed 30 Energy Conservation Wedge Energy Conservation Management ECM is a broad term used to describe the mechanisms to achieve and equitably manage energy conservation in South Africa. The conservation scheme consists of a number of different components including Self Managed Conservation (a cap and trading mechanism that allows buying and selling available energy quotas), Rationing (energy reduction targets set against established baselines) and a Virtual Power Station (refer to the definition given herein). Parameters Self Managed Conservation Cap and Trade System This term covers the establishment of a trading mechanism that allows the buying and selling of available energy quotas. (Also referred to as Demand Response) DMP is an initiative whereby a utility compensates electricity consumers for reducing their load on notification (dispatchable). Consumers will receive an energy allocation based on their consumption over a baseline period, adjusted with a savings target. Should consumers exceed their monthly energy allocations, excess energy tariffs will be charged to discourage excessive use. The ULM is an intelligent load limiting system aimed at the residential market. It incorporates advanced / smart metering and load limiting capabilities. The ULM empowers consumers to manage their own consumption through improved understanding of use patterns and allows prioritisation of loads during periods of supply constraints. It also enables load curtailment by the utility during emergencies. Intelligent algorithms furthermore accommodate the selective exclusion from load limiting of priority services and consumers, e.g., life support systems, etc. Rationing / Penalty System Utility Load Management (ULM) © Copyright EON Consulting A VPS is a System Operator-managed program that integrates and optimises all dispatchable demand reduction. It allows the operator to schedule and dispatch load as needed <Insert Date> Energy efficiency offers a no regrets solution; it is the fastest, cheapest, and cleanest way to stretch energy supplies. A kilowatt saved always cheaper than a kilowatt generated. There is also a growing interest in renewable energy and energy efficiency from the international community. Policy / Regulatory / Stakeholder Considerations Definition Demand Market Participation Virtual Power Station Emergency Response Relevance Definition Policy should be long term in nature, with proper pricing signals for investors, should be accompanied by legal and institutional frameworks that remove market distortions, as well as consider demand and supply aspects. The Eskom DMP programme contracts and dispatches customers with flexible load, to reduce the customer’s energy consumption levels in order to lower the impact on the grid. This occurs on Eskom’s instruction during periods of system constraints. Political will and commitment will be important to successfully implement such a system, with the participation and commitment of provincial and local governments being as important as that of national government. LM programmes involve reducing loads on a utility system during periods of peak power consumption by deliberately moving electricity utilisation to off peak periods. These projects therefore exhibit energy neutrality, but have potential to influence consumer behaviour by providing real time consumption information. Such an initiative is likely to incorporate DMP, Advanced Metering Infrastructure and ULM, amongst others. Pragmatic intelligence… enabling business to succeed 31