Transcript Slide 1

Integrated Demand Management (IDM)
Performance Contracting Solution
RFP – PS(IDM)/2011/KP/01
Clarification Meeting – 19 January 2012
This presentation is not intended to be exhaustive and Eskom reserves the right to
amend its position as appropriate.
This presentation was prepared for information purposes only and does not constitute
advice and should not be relied upon for this purpose. Tenderers should seek their
own financial, commercial, legal and technical advise on the issues canvassed.
This document and any modification thereto that may arise from further discussions is
subject to approval by Eskom’s governance structures.
Agenda
• Welcome
Tom Skinner
• Evacuation Procedure
Safety Representative
• Session Objectives
Tom Skinner
• Background & Context
Tom Skinner
• RFP Scope
Tom Skinner
• Responses to Clarification Requests
Tom Skinner
• Tender Procedure
Kamini Padayachee
• SD&L
Curtis Mapuga
• Q&A
Eskom Team
• Session Closure
Tom Skinner
19 January 2012
2
Agenda
• Welcome
Tom Skinner
• Evacuation Procedure
Safety Representative
• Session Objectives
Tom Skinner
• Background & Context
Tom Skinner
• RFP Scope
Tom Skinner
• Responses to Clarification Requests
Tom Skinner
• Tender Procedure
Kamini Padayachee
• SD&L
Curtis Mapuga
• Q&A
Eskom Team
• Session Closure
Tom Skinner
19 January 2012
3
Agenda
• Welcome
Tom Skinner
• Evacuation Procedure
Safety Representative
• Session Objectives
Tom Skinner
• Background & Context
Tom Skinner
• RFP Scope
Tom Skinner
• Responses to Clarification Requests
Tom Skinner
• Tender Procedure
Kamini Padayachee
• SD&L
Curtis Mapuga
• Q&A
Eskom Team
• Session Closure
Tom Skinner
19 January 2012
4
Session Objectives
Session
Objectives
• Clarify the objective and focus of Performance
Contracting Phase 2 vs. Phase 1
• Set the context of Performance Contracting with
respect to other Eskom IDM Programmes
• The session will focus on addressing questions on
the RFP content and process to better support the
submission of comprehensive tenders by:
• Providing pro-active responses to the clarification
requests submitted in advance
• Responding on an ad hoc basis to questions raised
during the course of the session
• To clarify Commercial and Measurement and
Verification requirements
• To provide an indication of key dates and the
process going forward
19 January 2012
5
Agenda
• Welcome
Tom Skinner
• Evacuation Procedure
Safety Representative
• Session Objectives
Tom Skinner
• Background & Context
Tom Skinner
• RFP Scope
Tom Skinner
• Responses to Clarification Requests
Tom Skinner
• Tender Procedure
Kamini Padayachee
• SD&L
Curtis Mapuga
• Q&A
Eskom Team
• Session Closure
Tom Skinner
19 January 2012
6
Introduction
Performance Contracting:




Bulk buying of energy savings from project developers (ESCO / large consumers)
Project developers may contract for multiple projects / technologies at multiple sites thereby
significantly reducing administrative requirements associated with management of individual
projects
Sustainability is ensured by procuring energy savings over a 3 year period
Payment will only be made based on energy savings verified by Eskom Assurance and Forensics
ESCO Process
Standard Offer
Standard
Product
Mass Roll-Out
Performance Contracting
>1MW
50kW-5MW
<100kW
n/a
>30GWh for 3 years
Mostly Load
Reduction (MW)
focused on
evening peak
Energy (kWh)
savings focused
on day time peak
Energy (kWh)
savings 24/7
Various
Energy (kWh) savings 24/7
Payment
Value
Based on
individual
project
calculation
Standard rate per
kWh per
technology
Standard value
per rebated item
In line with
MYPD
benchmarks,
with discretion
Multiple fixed rates:
• 55c/kWh: 06AM-10PM week
• 10c/kWh: 10PM-06AM week and all
hrs weekend
Payment
Timing
Implementation
progress
payments to
ESCO’s
70% on
implementation,
10% pa thereafter
based on M&V
100% on
installation based
on deemed
savings
Implementation
progress
payments
Payments based on energy saved as
per M&V certificates
Size
Type of
Saving
Performance Contracting supplements the current IDM programmes focusing
19 January 2012
mainly on large consumers and ESCOs
7
Outcomes of the Pilot Programme
Project Context
• Supply-demand balance is tight & 2011 / 2012 is the critical period
• The total system load factor is high (±76%) – such a flat profile will require energy rather than load reduction
• The current ESCO process is insufficient to support the required acceleration in DSM as it focuses on individual
projects, contracting with single customers only and mainly targets reduction of electricity load during peak
periods
• To supplement the Standard Offer and Standard Product programmes, an additional approach using
performance contracting (as per international leading practice) was developed to address the limitations of the
ESCO process
Performance Contracting
Objectives
1 April
2011
Large Blocks of Sustainable
Savings
Predictable & Rapid Delivery
of Saving
15 April
2011
• Issued RFP to the market via
and placed adverts in various
local and international
publications
24 June
2011
• Closed tender period and
gathered 21 proposals of
which 18 were deemed
eligible for evaluation
Local Market Development
Less Administration
• Received approval for a
budget request of R500m
• 6,255GWh were proposed of
which 2,904GWh were deemed
reasonable - nearly 3 times the
expected energy savings of
1,167GWh
• Due to the oversubscription of
the programme an additional
R250m was requested and
approval was granted in
September 2011
• The expected savings to be
incentivised by the R750m is
2,076GWh
The market responded well to the pilot programme and Eskom is in the process of
contracting for energy savings of 2,076GWh for R750m over a three year
19 January 2012
sustainability period ending 31 March 2015
8
Focus of RFP 2 and Revised Objectives
The key difference between RFP 1 and RFP 2 of Performance Contracting is a focus on large,
single industrial projects rather than mass roll-outs. Also, contractual mechanisms to support
SD&L and BBBEE have been enhanced.
Outcome of Objectives:
Objectives:
1
Large Blocks of Sustainable Savings
2
Predictable & Rapid Delivery of Savings
3
Reliable Savings with Large Upfront
Investments
4
Few Sites
5
SD&L and BBBEE Development
- Focus on large, mainly industrial
customers with few sites to ensure
customer commitment through large
capital investments
- Increase confidence in respondents by
adding confirmation of load profiles,
customers and financing to the
scorecard
- Increase focus on SD&L and BBBEE
development by setting firm targets
6
Less Administration
Performance Contracting is a new concept – We have applied learning from Phase 1 to enhance
the product offering in terms of objectives, scope, target market and contractual conditions.
19 January 2012
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TECHNOLOGY
KEY:
PRIORITY 1
Current Solutions
Issues Identified
PRIORITY 2
Priority 3
Industrial
ESCO
Performance Contracting
Standard Offer
Standard Product
Commercial / Agricultural
Compressed Air, Ventilation,
Lighting, Shower Heads,
Heat Pumps, SWH etc
1) Large focus on
energy solution in the
commercial market.
2) Many solutions in
same market.
3) Market preference
based on price.
Lighting, Hot Water Systems,
Solar , Renewables, IPO
Industrial Heat Pumps
downlighters
Solution per individual
technology does not
support a multitechnology, “single visit”
approach. Also requires
customer contribution, not
“free issue”.
SWH / HP Rebate
Other Mass Rollout
Demand Market
Participation
Residential
Performance Contracting
dominated by “smaller”
technologies due to need
for quick turnaround increasing risk of nondelivery.
Relative slow uptake in
SO. Customers tend to
prefer SO and SPP, most
probably due to pricing.
Lighting, Shower Heads,
LED Downlighters, & CFL
Residential Mass Roll-out
Residential Load
Management (RLM)
Demand
Solutions
Process Optimisation, Lighting
Heat Pumps, HVAC etc.
Downlighters Mass Rollout
Demand Response
Energy
Solutions
Manual business
processes and resource
intensive processes for
relative low savings.
HP & LP Solar Water
Heaters, Heat Pumps
CFL Sustainability and
Fill-ins
Unexploited opportunity for
Demand Response in the
Commercial sector.
Unexploited opportunity for
Demand
19 January
2012 Response in the
Residential sector.
Utility Load Manager/
10
Smart Metering
Proposed Solution
Unlocking value from IDM Portfolio
Industrial
ESCO
Performance Contracting
Standard Offer
Standard Product
Downlighters Mass Rollout
Residential Mass Roll-out
SWH / HP Rebate
Individual Projects with
unique requirements
Large, Capital Intensive
Industrial projects.
Residential Load
Management (RLM)
Demand
Solutions
Commercial /
Agricultural
Residential
Focus on Industrial Market, catering for individual
projects with unique requirements
Target Industrial, large capital projects to increase
commitment and reduce risk of non-delivery
Balanced Focus on Industrial and
Commercial Technologies
Extended range of Standard
Technologies
LED Downlighters & CFL
downlighters
Maintain current SWH & Heat Pumps schemes.
Provide a solution to optimise a singe site visit to
residential customers:
• Initially residential mass roll out
• Future amendment to distribute through other
channels e.g. retailers.
• Extend into industrial market by
increasing cap to 5MW (take off
ESCO process)
• Adjust pricing to increase uptake
and close gap to PC
• Improve initial funding 40%-70%
• Incorporate into SO to rationalise
solutions in Commercial market
• Amend SO technologies and
pricing to include LED’s
“Mixed Bag” of Technology
option per household
Residential Heat Pumps
and Solar Water Heaters
CFL Sustainability and Fillins
Other Mass Rollout
Demand Response
Energy
Solutions
Technology
Focus
DMP offering extended through the DRAP
and Aggregator Programme
Resolution of preferred
and expedited
19 Januarytechnology
2012
implementation.
Expand Demand response to extend to
commercial sector
Selection of technology
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for Res Load Management
Agenda
• Welcome
Tom Skinner
• Evacuation Procedure
Safety Representative
• Session Objectives
Tom Skinner
• Background & Context
Tom Skinner
• RFP Scope
Tom Skinner
• Responses to Clarification Requests
Tom Skinner
• Tender Procedure
Kamini Padayachee
• SD&L
Curtis Mapuga
• Q&A
Eskom Team
• Session Closure
Tom Skinner
19 January 2012
12
Solution Scope
Price, Bonus & Penalty
Supplier Dev and Localisation (SD&L)
1. RFP will invite proposals based on
fixed rates for high rate (55c/kWh)
and low rate (10c/kWh) periods
2. Over-performance will be
compensated but will not exceed
the maximum payment value
(contracted savings +10%)
3. If the programme is performing less
than 90% of contracted delivery
schedule then they will receive
42c/kWh in the high rate and
0c/kWh in the low rate
1. Respondents will be required to achieve a
minimum of level for BBBEE status and to
maintain and/or improve this level during the
contract period
2. Respondents will be required to provide
suitable targets for skills to be developed,
jobs to be created, and local content to be
procured for their Programmes
Measurement & Verification
1. Eskom will be(M&V)
responsible for
performing M&V and will pay for the
cost of M&V (excluding capital
costs)
2. Any measurement equipment will be
purchased and owned by either the
project developer or customer
3. M&V certificates will be done per
programme every 3 months post
the start of the sustainability period
Payment & Financing
1. Eskom will only pay for verified energy
savings (through M&V) achieved within the
sustainability period (starting 1 Jan 2013)
2. Project developers need to arrange upfront
funding
3. The contract including baseline could be
used as a “bankable” instrument
Delivery & Execution
Legal
SD&L
M&V
Commercial
IDM
• Measurement &
Verification
• SD&L
• Contract Management
• Portfolio Cost
Management
• Portfolio Performance
Monitoring
• Portfolio Risk
Management
Tender Process & Evaluation Approach
1. Normal tender process held open 3 months
2. Proposals evaluated on gatekeepers and a weighted scorecard including,
technical, confidence and SD&L evaluation criteria
3. Proposals will be stacked based on overall rating and awarded in order of the
highest ranking until allocated budget is reached
Formal design of the solution took into account lessons learnt from the pilot
19 relevant
January 2012 functional areas and processes
programme and have addressed all
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Agenda
• Welcome
Tom Skinner
• Evacuation Procedure
Safety Representative
• Session Objectives
Tom Skinner
• Background & Context
Tom Skinner
• RFP Scope
Tom Skinner
• Responses to Clarification Requests
Tom Skinner
• Tender Procedure
Kamini Padayachee
• SD&L
Curtis Mapuga
• Q&A
Eskom Team
• Session Closure
Tom Skinner
19 January 2012
14
Responses to Clarification Requests
Clarification Request 1
The rates are the same as the first Performance Contract RFP. Is that possible that in 2012 the
same rate is being offered?
Eskom Response
Yes, the same rate applies for this round of Performance Contracting
19 January 2012
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Responses to Clarification Requests
Clarification Request 2
Is decentralised generation using gas-fired engines be considered.
Eskom Response
No, it is not considered under Performance Contracting. This falls within Eskom’s Co-gen
programme. The Eskom approval processes are currently being followed and information will be
provided at a later stage.
19 January 2012
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Responses to Clarification Requests
Clarification Request 3
Is motor replacement considered under Performance Contracting?
Eskom Response
Yes, motors are considered under Performance Contracting; however note that fuel switching does
not.
19 January 2012
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Responses to Clarification Requests
Clarification Request 4
Is the new concept of liquid thermal insulation coating considered under Performance
Contracting?
Eskom Response
Eskom is willing to consider the technology; however the M&V complexity of the programme will be
taken into account. During evaluation Eskom will check the technology and test for
reasonableness.
19 January 2012
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Responses to Clarification Requests
Clarification Request 5
Can the technology to be used in the projects be described as a broader solution encompassing
several different technologies, the specific details of which would differ from site to site (as long as
all technologies are Eskom approved)? This is because there’s a lot of upfront investment (time
and resources) required to specify the project detail required in the Technical Questionnaire, and all
technical project detail may not be available by the tender submission date.
Eskom Response
Yes, a mix of technologies can be proposed under one programme. It is to the benefit of the Project
Developer to provide as much detail required for evaluation on the proposal.
19 January 2012
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Responses to Clarification Requests
Clarification Request 6
Does the following interventions fall within the scope of Eskom approved technologies:
HVAC - VSD on Supply Air Fan ilo
vortex dampers
HVAC - Chilled water temperature
reset
HVAC - Condenser water
temperature reset
HVAC - VSD on cooling tower
fans
HVAC - Economy Cycle
HVAC - Variable primary flow
chilled water system
HVAC - Night purging
HVAC - Fresh air / exhaust air
heat recovery
HVAC - Operating hours
optimisation
HVAC - Recommission
HVAC - Reduction Air Changes in
theatres
HVAC - Tumble drier heat reclaim
Hot Water - Recommission
Hot Water - Improve Gas Boiler
Plant
Hot Water - Replace Steam
Calorifier with Direct Gas
Hot Water - insulation
Lighting - High efficiency lamps
and control gear
Lighting - Occupancy control
Hot Water - Circulation pump
timer control
Tenant Equipment - Reduce
Autoclaves
Hot Water - Solar Heating
Ceiling - Insulate
Hot Water - Heat Pump heating
Eskom Response
Yes, provided it is clarified during M&V planning phase.
19 January 2012
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Responses to Clarification Requests
Clarification Request 7
Clarify the difference between base rate and reduced rate. When does each apply?
Eskom Response
The base rate is R0.55c/kWh which will be paid to the Project Developer for Verified Energy
Savings. The reduced rate of R0.42c/kWh applies when the Project Developer underperforms
meaning that the accumulated Verified Energy Saving for the Programme, at a given date of
evaluation, has not achieved at least 90% of the accumulated and agreed Forecasted Energy
Saving for the same given date of evaluation.
19 January 2012
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Responses to Clarification Requests
Clarification Request 8
The examples in the technical questionnaire point towards equipment replacements, old for new. A
proposed programme entails customised re-design and modification of equipment, mainly HVAC
equipment. Does re-design and optimisation qualify under the Eskom / NERSA approved
technologies?
Eskom Response
Yes, provided it is not a new installation. (It cannot be a new installation in a new building)
19 January 2012
22
Responses to Clarification Requests
Clarification Request 9
Load profiles are available for 8 out of 54 sites, and propose to use this as a basis for estimation.
Is this adequate, or are individual load profiles for each site a pre-requisite?
Eskom Response
Yes, provided there is synergy between sites, it is acceptable but it may have a negative impact
during evaluation.
19 January 2012
23
Responses to Clarification Requests
Clarification Request 10
What will be the effects of variation against the proposed delivery schedule, in particular, are there
incentives or penalties for early or late delivery? (Other than a gain / loss of savings)
Eskom Response
If the contracted Forecasted Energy Savings exceed the Verified Energy Savings by more than
10% on a cumulative basis, Eskom will apply the reduced rate for the delivered savings until
delivery is restored in line with the contracted delivery schedule. If the contracted size of savings is
reached earlier, Eskom will pay up to 10% for over performance and then the contract will end.
19 January 2012
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Agenda
• Welcome
Tom Skinner
• Evacuation Procedure
Safety Representative
• Session Objectives
Tom Skinner
• Background & Context
Tom Skinner
• RFP Scope
Tom Skinner
• Responses to Clarification Requests
Tom Skinner
• Tender Procedure
Kamini Padayachee
• SD&L
Curtis Mapuga
• Q&A
Eskom Team
• Session Closure
Tom Skinner
19 January 2012
25
Tender Procedure: Overview
• RFP is available on Eskom’s tender bulletin
• Last date to submit clarifications: 27 February 2012
• Ensure clarification requests are clear and concise
• Indicate if the question posed is unique to your proposal (confidential)
• Tenders close: 09 March 2012 at 10:00
• Tenders submitted to the email address will not be accepted
• No late submissions will be accepted
• Delivery: Eskom Holdings Tender Office, MWP
19 January 2012
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Tender Procedure: Response Format
• Three separate files:
 Component 1: Commercial and Financial proposal
 Component 2: Technical proposal
 Component 3: Supplier Development and Localisation proposal
• Number of copies:
 Hardcopies – 1 original & 2 copies
 Electronic copy – 1 Compact Disc (CD)
• Clearly marked: “PS(IDM)/2011/KP/01”
• Tender returnable meeting: 15 February 2012
19 January 2012
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Tender Procedure: Communication
• Email all communication / clarifications to [email protected]
• Addressed to: Kamini Padayachee
• One point of contact between Eskom’s Representative and the
tenderer
• No individual separate discussions will be allowed
• Use the format provided (Annex 8.2)
19 January 2012
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Gatekeepers & Evaluation Criteria
• Gatekeepers:
• Achieve minimum energy savings of 30GWh within High-rate Periods
over the Sustainability Period.
• All technologies must be Eskom approved in line with NERSA guidelines
• Proposed savings must be realised within South African borders.
• Evaluation criteria:
• Technical: 70%
• Size & time, actual load profiles, savings per site and confirmed customers and
finance.
• B-BBEE and Supplier Development & Localisation: 30%
• B-BBEE verification and localisation
19 January 2012
29
Agenda
• Welcome
Andrew Etzinger
• Evacuation Procedure
Safety Representative
• Session Objectives
Tom Skinner
• Background & Context
Tom Skinner
• RFP Scope
Tom Skinner
• Responses to Clarification Requests
Tom Skinner
• Tender Procedure
Kamini Padayachee
• SD&L
Curtis Mapuga
• Q&A
Eskom Team
• Session Closure
Tom Skinner
19 January 2012
30
We have a mandate to contribute positively to the
development of the country
Our mandate is to achieve maximum and sustainable
local development impact through leveraging Eskom’s
procurement spend in a manner that allows flexibility within
the business in order to accommodate government local
development initiatives and policies
19 January 2012
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We have aligned our focus with the government’s
objectives…
Initiative
ASGI-SA
Supplier Development
B-BBEE
Industrialisation
NIPP
Localisation
CSDP
Job creation
IPAP
Skills Development
NIPF
NGP
Development Objectives
ASGISA
NIPF
IPAP
CSDP
NIPP
B-BBEE
NGP
Accelerated and Shared Growth Initiative for South Africa
National Industrial Policy Framework
Industrial Policy Action Plan
Competitive Supplier Development Programme
The National Industrial Participation Programme
Broad-Based Black Economic Empowerment
New Growth Path
We have aligned along local development objectives rather than
policy and other government initiatives, thus we can address the
requirements of multiple programmes simultaneously and without
having to develop new organisations or functions
19 January 2012
32| 32
Local development opportunities should be
identified in all procurement transactions
Project
Sourcing
Commodity
Sourcing
Primary
Energy
Tactical
Sourcing
Supplier Development and Localisation
Local development
opportunities should be
identified in all
procurement transactions
19 January 2012
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Eskom’s B-BBEE Recognition
Contribution Level
B-BBEE Recognition Level
Level 1
135%
Level 2
125%
Level 3
110%
Level 4
100%
Level 5
80%
Level 6
60%
Level 7
50%
B- BBEE Companies
OTH
Level 8
10%
Non - compliant
0%
19 January 2012
3
4
B-BBEE and SD&L requirements
• The evaluation criteria seek to increase SD&L evaluation score allocation in
the overall scoring and to ensure all dimensions of local development are
considered:
‒ Technical (70%)
‒ B-BBEE and Supplier Development & Localisation (30%)
 B-BBEE level contribution
- points only given level 1 - 4 contributors
 Local content (and sub-contracting to BWO, LBS and SBE where
applicable)
• 2% retention will be applied
• B-BBEE: meet and maintain minimum requirement (Level 4)
• SD&L: commitment against job creation, skills development and
Localisation
19 January 2012
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Agenda
• Welcome
Tom Skinner
• Evacuation Procedure
Safety Representative
• Session Objectives
Tom Skinner
• Background & Context
Tom Skinner
• RFP Scope
Tom Skinner
• Responses to Clarification Requests
Tom Skinner
• Tender Procedure
Kamini Padayachee
• SD&L
Curtis Mapuga
• Q&A
Eskom Team
• Session Closure
Tom Skinner
19 January 2012
36
Q&A
Questions?
19 January 2012
37
Agenda
• Welcome
Tom Skinner
• Evacuation Procedure
Safety Representative
• Session Objectives
Tom Skinner
• Background & Context
Tom Skinner
• RFP Scope
Tom Skinner
• Responses to Clarification Requests
Tom Skinner
• Tender Procedure
Kamini Padayachee
• SD&L
Curtis Mapuga
• Q&A
Eskom Team
• Session Closure
Tom Skinner
19 January 2012
38
Thank you