Eskom IDM Small-scale Renewable Energy

1. Eskom IDMSmall-scale Renewable Energy Pilot programme (Please contact your local Eskom regional energy services dept for more info) Danie Pienaar

2. How can Eskom help me implement an energy efficient solution? Funding Models How long is the approval process? How and when are the rebates paid? How much power will Your project save? Which technologies will you implement? (Who is it for?) Performance Contracting* Custom or hybrid solution 3-4 Months (Industrial & Commercial) 5 MW ESCO Model Custom or hybrid solution 6-18 Months (Industrial & Commercial) 1 MW 10% Limited to categories of technology on a published list Less than 2 months 70% 10% Standard Offer 10% 250 kW (Industrial & Commercial) Limited to specific products on a published list 10/50 kW Less than 2 weeks Standard Product (Residential and small commercial) 0 * Pending finalisation of offer

3. Small-scale renewable energy programme Under the IDM incentive for a renewable energy installation the consumer will be able to receive a financial incentive for offsetting electricity consumption from the network, and as a result of the intervention, will also save on electricity costs.  A renewable energy installation will further provide a green, system independent source of energy that can be used as an alternate supply to the most critical end-uses.  The proposed renewable energy incentive under the IDM programme is aimed at promoting small-scale renewable energy solutions.  The high cost of some renewable energy solutions, which is even more pronounced for small-scale installations, has been a significant consideration for the determination of an appropriate incentive offer.  It is acknowledged that a higher than average energy efficiency incentive value would be required to prompt market uptake and to unlock economies of scale benefits.  The objective of the IDM pilot is therefore to test the proposed incentive rate, the market response and the resulting market uptake

4. Background to small-scale renewable energy Small-scale renewable energy interventions have been successfully implemented internationally to promote efficient and sustainable use of energy. The Eskom IDM programme, in consultation with NERSA, will therefore be piloting (with immediate effect from 1 June 2012) the inclusion of small-scale renewable energy solutions to further broaden the scope of optimal energy usage. The initial pilot phase will target 20 MWs from small-scale renewable energy solutions that will displace or reduceexisting electricity supply requirements. The incentive will initially be exclusively available under the Standard Offer* at a rate of R1.20 per kWh to be paid over the usual Standard Offer contract period of 3 years. *In time the incentive for small-scale Renewable energy under this pilot will be extended to Standard Product and other applicable Eskom programs, depending on market acceptance and incorporating key learnings from the initial incentive offer.

5. Project Considerations • Pilot Phase only available to Commercial, Industrial, Agriculture applications • Rebate only applicable to load reduction portion with-in program specific criteria (i.e. between 06h00-22h00 weekdays only for SOP) • Not available for predominant electricity generation projects. IDM program focus on load reduction on site. • Generation projects fall outside IDM mandate and forms part of DOE programs • Not available for existing installations • For projects between 10kW and 50kW approval will be subject to M&V costs • Projects will only be considered if all required documentation is included in submission pack • This program excludes Solar water (liquid) heating • All installations > 1 MW must have NERSA licence/approval

6. What is entailed? Participating solution will be limited in size to a minimum 10kW and a maximum 1 MW installed peak capacity from a renewable energy solution. For the purpose of this initiative Renewable energy has been defined as: Energy that is derived from resources that are naturally regenerative or are practically inexhaustible, such as biomass waste/residue, heat (geothermal, solar, thermal gradient, ground source heat), moving water (hydro, tidal, and wave power), and wind energy, produced from zero or low carbon source technologies. For this purpose municipal solid waste will also be considered a source of renewable energy. * *Approval of projects between 10kW and 50kW will depend on M&V costs **Solar hot water (liquid) projects excluded – already part of SOP program

7. Small-scale renewable installations will have to meet the following qualification requirements Only equipment installed on the host customer’s side of the meter will be eligible. Systems must be new and in compliance with all applicable performance and safety standards (applicable to all components of the installation). Stand-alone systems (i.e. applications that are not grid tied) must replace an existing grid connection/supply therefore substituting energy that would have been drawn from the grid. Grid tied systems must comply with all Regulatory and embedded generation interconnection requirements.  Where relevant a letter from the relevant local authority / electricity utility will be required as part of the application to confirm their knowledge and acceptance of the (proposed/designed) connection onto the network. Where practical and accepted or approved by the relevant local authority / electricity utility, excess energy generated by SSR source, can be wheeled to other supply take-off points owned by the same customer subject to rules and conditions set by relevant local authority / electricity utility[1]. (Wheeling costs will be as per the standard Eskom/Munic wheeling procedure  if subject to GAU/Pricing approval) NB If customer qualifies for IDM program then NERSA licence requirement are waived.

8. Additional provisions and requirements • A few additional provisions and requirements are applicable to small-scale renewable energy solutions applying for the Standard Offer incentive: • An electrical design incl a list of applicable standards and regulations certified by a Competent person /Professional engineer will be required as part of the application. • A structural design incl a list of applicable standards and regulations certified by a Competent person /Professional engineer will be required as part of the application. • A letter from the electricity supplier (Municipality or Eskom as relevant) confirming knowledge and acceptance of the proposed/designed network connection and registration of the project as per NERSA requirements (if applicable). • Close out and the first incentive payment will be subject to an as built confirmation and an audit of the above.

9. All issues related to feeding into the grid, selling excess power to grid owner, wheeling to other entities, using grid as storage and grid connection must be addressed and contracted with Grid Owners (Eskom/Munic) “grid access unit”, not Eskom IDM dept.

10. What qualifies? Per day Incentive payable 1 2 3 3 ‘baseline’ 0 24 ‘baseline’ 0 24

11. Possible Renewable Energy configurations The incentive will be available to isolated systems with no electricity supply from the grid (Option1) or configurations where the grid is used to supplement the electricity requirements (Option 2). Option 3 will be evaluated on an ad hoc basis, depending on the rules and regulations of relevant electricity supply authority.

12. Specifications and standards have been identified for the components of a typical RE installation C A B D A C D B Energy storage(optional) Renewable power source End use (residential, agricultural, commercial, industrial, other) Electricity network/grid (electrical utility) * The responsibility lies with the project developer to ensure that all aspects of the installation comply with all relevant quality, safety and performance standards as well as legal and regulatory requirements. A list of standards and specifications of potential relevance to the various configurations of the illustrated components are specified on the Eskom IDM website

13. How to participate? The incentive will initially be exclusively available under the Standard Offer at a rate of R1.20 per kWh to be paid over the usual Standard Offer contract period of 3 years (standard SOP contract still apply) Projects that save between 10kW and 1 MW can qualify Participation details and requirements for the Standard Offer programme is available at http://www.eskomidm.co.za/industrial/sop Alternatively contact your nearest Eskom Regional Energy Services office.

14. Standard Offer Process Overview (…1) Project Approval

15. Standard Offer Process Overview (…2)

16. Thank you!

17. Standard Offer Process for Renewables http://www.eskomidm.co.za/industrial/sop R1.20/kWh Rate for small-scale RE R1.20/kWh

18. Standard Offer Process for Renewables • Electrical design certified by a qualified engineer • Structural design certified by a qualified engineer • Letter from the electricity supplier (Municipality or Eskom as relevant) confirming knowledge and acceptance of the proposed/designed network connection and registration of the project as per NERSA requirements (if applicable).

19. Standard Offer Process for Renewables

20. Standard Offer Process for Renewables Renewable energy projects that saves between 10kW and 1MW qualifies for Standard Offer

21. Standard Offer Process for Renewables

22. Standard Offer Process for Renewables Ring-fenced budget allocation for Renewables Close out and the first incentive payment will be subject to an as built confirmation and an audit of the installation

23. Who qualifies? • Small-scale renewable installations will have to meet the following qualification requirements: • Only equipment installed on the host customer’s side of the meter will be eligible. • Systems must be new and in compliance with all applicable performance and safety standards (applicable to all components of the installation). • Stand-alone systems (i.e. applications that are not grid tied) must replace an existing grid connection/supply therefore substituting energy that would have been drawn from the grid. • Grid tied systems must comply with all Regulatory and embedded generation interconnection requirements. Where relevant a letter from the relevant local authority / electricity utility will be required as part of the application to confirm their knowledge and acceptance of the (proposed/designed) connection onto the network.

24. Small and Micro Generation Programme • Embedded, grid tied and island systems are allowed. • Customers will have to pay all costs associated with making the grid connection compliant to the Grid Code. • Customers will have to sign a connection and use of system agreement. • All customers that have generation that synchronises with the grid need to contact Eskom to apply for a grid connection. • The customer should provide for a technical design which should include fault levels and protection on their side of the installation. The customer has to also provide a certified copy of the test report and installation equipment in the case of PV as per the NRS 097 -2 standards. It is the responsibility of the customer to ensure that the certificate of compliance for the installation is valid/up-dated and this will need to also be provided to Eskom on request/commissioning.

25. Small and Micro Generation Programme • Off-setting and banking of generated capacity (export onto the grid for credit on the electricity account) are supported under the following conditions: • No “turning back” of meters are allowed. The customer should have a meter installed that is capable of recording export and import in separate metering channels and the customer will have to pay for metering changes required. • If the customer wants to export onto the grid, in addition to the above requirement they will have to be on one of Eskom’s large power tariffs (Megaflex, Miniflex, Nightsave Urban Large and Small, Ruraflex and Nightsave Rural). It is to be noted that Eskom is in the process of having the Genflex tariff approved which caters for the import and export of energy at the same point. Once approved customers will be required to convert to this tariff. • Eskom is in the process of getting a policy approved to allow month to month banking of energy, so month to month banking is subject still to Eskom approval.Customer can be zero export or up to 1MW export in the case of small and micro generation. • The customer can also be single phase but in this case we will only allow offset to take place but the Pricing policy for remaining on a SPU tariff in this regard is not yet in place. • There is a lot of responsibility on the customer for export as the customer gains a benefit of having an established grid for which the pricing policy of charges related to the use of installed assets, do not cater for as yet. •  No “advertising” of selling please. The WEPS policy is being rewritten to exclude any smaller customer. If you want to put selling in this, then you need the permission of the single buyer office as all funding comes from them. •  Note the contract is with Eskom – not Eskom divisions

26. Small and Micro Generation Programme Eskom Grid Access • Receive applications for grid connections – embedded and grid tied systems and facilitate and manage the customer relationship management (the life cycle of the customer will go beyond the IDM program and it is the responsibility of GAU to manage the relationship of customer as IDM is only offering a single product). The process to apply can be found at www.XXXXX • Track the status of applications • Obtain the technical compliance from Distribution • Provide input to the rest of business in terms of volume and level of generation penetration • Provide a budget quote which can include cost of Grid Code compliance, tariff change, metering etc. • Assist the Customer Exec to amend the Main Supply Agreement. • Compile a connection and use of system agreement and provide a letter of no objection to Eskom customers for IDM projects. • Facilitate operational connectivity requirements as defined by Distribution •  If the customer has a customer exec then this is done by the customer exec not GAU

27. Eskom Pricing • Provide tariffs and policy for all tariffs and charges related to import and export of energy. • Provide inputs into the amendment agreement and the connection and use of system agreement • In terms of the DOA vet the connection charges and the budget quote

28. Eskom Reticulation Planning • Eskom reticulation planning needs to conduct a study to determine if the planned generation system can be accommodated on the Eskom network. • All applications go to the TEF to ensure compliance with all the relevant standards. (The engineer who designed the system must be present) • Some of the critical aspects in the codes: • Power factor operation & Operating voltage • Disconnection switching unit (ensures that inverter gets disconnected from the grid in the event of loss of grid, must be 2 in series for redundancy) • Isolation – visible gap for safety & Earthing • Prevention of island system • Metering

29. Quality of Supply conformance • Get a baseline of the system health before generation and after (in case of disputes or other customers complaints) • In the Eskom application for micro generation it states that the application must have  a certificate of assurance from a registered professional engineer or certificate from accepted testing house which states compliance to NRS 097-2-1 and Renewable grid code. • Note: compliance to SA standards, registered professional engineer of accepted testing house • This must be updated on the SCADA system / RENI diagrams so that control is informed of the location of the generation.