South Africa Electricity Shortage Response Plan

1. National Electricity Shortage Response PlanPresentation to PPC on Minerals ad EnergyMarch 2008

2. South Africa: Electricity Demand vs. Supply (Facts & Figures)

3. South Africa: 2006 vs. 2007Week-on-Week Peak Demand Year-on-Year Peak Growth = 4.90% (1 706 MW)

4. Declining Reserve Margin

5. 7 Year Forecast of Capacity Margin Note that this does not take into account any Demand Side Interventions or Demand Market Participation or Interruptible Loads (Figures from study done early-2007)

6. Security of Supply Crisis (January 2008)

7. January 2008: Supply/Demand Situation Historic Target for Unplanned was 3% or 1 176MW (01/2008 average = 11%) After Load Shedding

8. Key Drivers: Unplanned Outages • What is driving the high level of unplanned outages: • Coal Quality (less power output from station) • Coal Quantity (the export price is so high that the miners prefer to export the coal and pay the associated penalties) • Running Plant too Hard which results in equipment failure such as boiler tube leaks

9. What has been achieved System back into balance by: • Restoring a workable reserve margin, thereby, • Alleviating the strain on the generation assets and the primary energy supply chain, and, • Allowing “breathing space” for maintenance to be done.

10. GAP DEMAND ►Mitigation Plan • DSM • DMP If Demand + Reserve Margin> Supply (Demand includes capacity & energy) DEMAND REDUCTION OPTIONS • Intensified DSM • Power Rationing/Power Conservation • Dramatically increase Notified Maximum Demand penalties • Prioritisation of new load • Load shedding • Rolling blackouts Intervention Options Various Scenarios for growth and supply capacity SUPPLY ►Build Plan ►Mitigation Plan • RTS (’08/900MW) - Co-generation • Medupi (2011) - Imports • Ingula (2012) - Self generation • OCGT (2009) - Standby generation • CCGT - IPPs Reduce Demand

11. Supply Side Intervention Plan

12. SUPPLY SIDE INTERVENTIONS (Normal) Currently approved projects *Projected

13. Supply Side Fast-tracking • Possible implementation of an additional 1 000MW of Gas-fired Power Plant within 12 months • Co-generation, new target is 3 500MW, from 900MW previously • Focus on the reduction of unplanned outages (maintenance practices) • Focus on the improvement of coal quality and supply • Introduction of 3 000MW of IPP Base-load by 2012

14. SUPPLY SIDE INTERVENTIONS (Fast-tracked) *Projected

15. 7 Year Forecast of Capacity Margin (After Power Conservation and Fast Track Supply Side Interventions) Note: Demand Side Management Impacts are not included

16. Demand Side Intervention Plan

17. Demand Side Intervention Plan Timeframes • Immediate (6 months) • Medium Term (18 months) • Long Term (more than 18 months)

18. Demand Side Interventions (Immediate) • Phased Demand Reduction • System Security Recovery/Load Shedding • Power Rationing – Fixed Scheduled Load Shedding (<4 Months) • Power Conservation Programme – Quota allocations (<24 months) • Demand Side Behavioural Change programs • Aggressive Energy Efficiency in Government and State-Owned Enterprises’ Buildings • Restrict Sale of Incandescent Lightbulbs • National Housing Specifications (Water Heating and Building Standards) • Solar Water Heating Programme • Intensive Consumer Awareness Campaign (proper Load Shedding communication as well as general energy savings)

19. Demand Side Interventions (Medium Term) • Residential Time-of-Use Tariffs • Residential Cooking Load to Gas • Traffic Lights to Solar • Public Lighting • Pro-poor Cost Reflective Tariffs • EIA Fast-tracking

20. Demand Reduction Phasing (Power Conservation)

21. Demand Reduction Phasing

22. Overall savings target Target 10% Constraint relief Growth allowance Quota allocations (DTi/DME) Designed to achieve overall target Differentiated by customer class Special cases @ 100% Penalty & Incentive scheme Penalty energy rates for energy > quota Cut-offs and/or “Name and Shame” for Repeat offenders Special cases excluded from penalties, initially at least Savings/technology incentives > overall target (only smaller consumers) Power Conservation Programme • Trading scheme • Unused portion of quota allocation • Only larger consumers (practical reasons) • Possible take-or-pay provisions • Built-in flexibility • Modular roll-out possibilities • Adjust quotas, penalties etc. (changing needs) • Estimated Yield • 23 000GWh per annum • ~3 500MW (75% Load Factor) • Implementation Timeframe • 02 April 2008 Inception • 24 month timeframe

23. Power Conservation ProgrammePenalty and Incentive Scheme • Penalty energy rates – for energy above quota • First month – 75 c/kWh (TOU differentiated where applicable) • Second month - +50% of above to max. of ~ 250 c/kWh • Disincentive – not to make money • Persistent repeat offenders: • “Name and Shame” and/or Cut-offs • Special cases excluded from penalties, initially at least • e.g. hospitals, traffic lights – to avoid disrupting essential services • For smaller consumers: • Look at inclining block tariff structures as disincentive • DSM technology-based incentives or savings incentives (if savings > overall target) • Baseline consumption period: Oct ’06 – Sep ’07 • Savings effort now will not influence allocation

24. Proposed Regulations

25. Proposed Energy Efficiency Regulations (1) • Requirements for water heating in commercial and residential buildings • Installation of an electric geyser that incorporates solar water heating in all new dwellings with a value exceeding R750 000 or greater than 300sqm in size. • Installation of additional geyser insulation in all new dwellings with a value exceeding R750 000 or greater than 300sqm in size. • These regulations in respect of water heating in commercial and residential buildings, will be in place not later than year 2010. • In addition, installation of an electric geyser that does not incorporate solar heating facility to office blocks, hostels, resorts and shopping complexes feeding from centralised water heating systems will be prohibited. • All electric geysers will be required to be fitted with a facility for the licensee to remotely control the supply of electricity to it.

26. Proposed Energy Efficiency Regulations (2) • Prohibitions in respect of lighting • Use of incandescent lights • Lighting of unoccupied buildings especially after working hours • Lighting of streets and highways during broad day light • Disposal of lights that contain mercury in a manner which adversely impacts the environment • Prohibitions in respect of space heating, ventilation and cooling in commercial and residential buildings, to be completed not later than the year 2010 • Heating, ventilation and cooling system without a facility for the licensee to remotely control its supply of electricity • A swimming pool drive and heating system without a facility for the licensee to remotely control its supply of • Norms and Standards for reticulation services • All streets must be fitted with an energy efficient bulbs • A municipality may pass by-laws prohibiting any other activity in respect of energy efficiency complementing these regulations • End user or customer with monthly consumption of 500kWh and above must be on time of use tariff not later than the year 2010

27. Thank you