Eskom’s Electrification Programme

1. Eskom’s Electrification Programme Presented By Ms Ayanda Noah Group Executive: Distribution Division 15 March 2012 National Electrification Indaba

2. Eskom at a glance Average cost per unit of electricity Generation c/kWh + Transmission (at high voltages) Contribution for asset use and technical losses + Mining, Metros and large industry High voltage Distribution (at high to lower voltages) Contribution for asset use and technical losses + Medium voltage Industry, commercial and farming Administration and billing (service) By type of service received Low voltage NERSA approved costs and returns recovered from tariffs Residential

3. Contents Looking back, what have we achieved and what have we learnt?

4. . Electrification – There has been two distinct eras of installation: pre-2000 and post-2000 Number of annual grid connections Thousand Cost per connection R '000 13.4 12.4 12.4 11.8 9.0 8.7 8.7 8.6 8.1 7.0 6.3 6.1 5.9 6.0 5.2 5.0 4.5 4.1 2011 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 • Self-funded and managed programme • Eskom exceeded the government's target of 1.75M connections between 1994 and 2000 • Connection every 30 seconds, pole every 10 seconds, 200M cable every minute • Connection costs steadily came down • Government funded programme • Energy White Paper (1998) • The numbers of annual connections by Eskom have dropped, partly due to • Increased investment in infrastructure • The stringent processes that need to be followed Total investment from 1991 – 2011 to date: R7.5 bn and 4.1 m people electrified

5. Close to 400 clinics electrified since 1991 More than 11 000 schools electrified since 1991 Electrification – schools and clinics The improvement of local infrastructure through strong impact projects is a key corporate social investment priority for Eskom

6. Summary of key learning points

7. Summary of key learning points

8. Key Learning Points Lessons learnt when Eskom was given a target of 1,75m connections in the 90’s

9. Key Learning Points (Cont.) • Optimal design and technology options were employed to reduce cost per connection, especially for deep rural areas • planting of poles to be optimal by increasing spans to allowable technical standards • Full loading of transformers planned • Revenue management and metering, we are installing split metering in problematic areas currently (only ready-board and keypad installed in the house)

10. Key Learning Points (Cont.) LOAD REQUIREMENTS • Rural demand was initially planned at 3kVA/household, this was later revised to 1,5kVA initial ADMD and 3kVA final ADMD • Load research was conducted over a number of years in different areas which resulted in further reductions to 0,6kVA initial ADMD and 1,5kVA final ADMD for rural areas • The Division of Revenue Act of 2010/11 prescribed that the minimum load to be planned per household should be 1kVA SUCCESS • The success of achieving 300,000 connections per annum is attributed to up-front planning which entailed • Identification of projects up-front (enabling fast tracking and/or deferment) • Flexibility

11. Contents Going forward, what is the picture?

12. NATIONAL ELECTRIFICATION BACKLOG 3,4million backlog in the country- % per province indicated on map, Source DoE LIMPOPO 9% GAUTENG MPUMALANGA 7% NORTH WEST 6% NORTHEN CAPE 1% FREE STATE 6% KZN 24% EASTERN CAPE 19% WESTERN CAPE 6%

13. d There is still a significant backlog of between 3.4 million households, of which 1.8 million are in proclaimed Eskom areas APPROXIMATE FIGURES There are estimated 3.4m households without electricity1, 2.5m of which are in Eskom’s areas Of the 2.5m households in Eskom’s areas, 1.8m are in proclaimed areas Number of households without access to electricity1 Millions, 2011 Number of households without access to electricity in Eskom areas1 Millions, 2011 Total = 2.5m 3.4 Proclaimed areas Municipalities 1.8m (72%) Eskom 2.5 0.7m (28%) Unproclaimed areas Households without electricity 1 The figure is based on an assumed increase in households without access at a rate of between 2-5% per annum, from 2.5 million in 2005, including Eskom’s areas of supply. The certainty in these figures is low and checks will have to be done in the pre-engineering.  SOURCE: Eskom

14. Electrification Funding and Social Impact In terms of the White Paper on Energy, the responsibility for funding and planning of the Integrated National Electrification Programme is the function of the Dept. of Energy (DoE) with Eskom being the implementing agent in own areas of supply. • With current DoE funding of ~R1.7bn p.a., universal access will only be achieved in SA in 2033/4 (proclaimed and un-proclaimed), against the original government target of 2014 • Past experience shows that this can be achieved much sooner given the Eskom’s National Electrification programme experience of the 90’s • Availability of adequate upfront funding is key for facilitation of National Planning and Implementation • Positive social impact • Economic development – electricity creates value-adding opportunities and improves the GDP • Health impact, e.g. reduced exposure to smoke from fires used for cooking • Education impacte.g. improved ability to study after dark • Improving gender equalitye.g., women not having to spend hours a day collecting firewood • Better public safety e.g. street lighting and reduced illegal connections

15. Contents How could we move forward?

16. Electrification Challenges • Expectations exceed available funds - Current funding levels allow for connections of 150,000 households per annum • Universal Access to electricity by 2014 – funding inadequate • Integrated planning involving all stakeholders (Provincial, DME, Eskom & Municipalities) – delays implementation • Aligned policies to facilitate implementation process not in place(e.g. un-proclaimed, land usages) • Harmonisation of government initiatives e.g. electrification and housing programmes

17. Electrification Challenges (Cont.)

18. Way Forward

19. Siyabonga