PowerGen 2015David Lipschitz

15 to 17 July 2015Start here. E&OE.

People

Septimus vanden Linden

Gas Engines, USA

Chris Yelland

Close the Al smelters

No VAT

Little PAYE

No local profits

Nodownstream

activity!

10% of SA's power

Out of date contracts

SAIEE

Chris Crone

Malcolm Folkes

Mr Cary

Eskom

Riaan SmitJonathan Nye

Erongo RED

Amy Nash

Research

McKinsey

US$ 490 bil for generationUS$ 360 for

transmission &distribution

Plenary Keynote

Mr Jacob Mbile, DOE

New IEP

IRP 2010

Expediting

Private Coal &cogen & gas

Procurement program, whichresponsive to local demand &

supply changesGrand Incaagreement

ratified

Commercialnegotiations now

13 GW to SA

A treaty

Skills, jobs (inconstruction)

Energy Statistics,detailed at User

Retrofittingpublic buildings

Shifting demand fromelectricity to gas

NEESNational Energy

Efficiency Strategy

Reducing waste &reducing energy intensity

62c and 79c for wind& PV (grid tie)

Biggest Problems

Limitedtransmission grid

capacity

Low local communityincome generation

Nigel Blakeby

Mr Brian Molefe

Mr Sicelo Xulu

MD of City Power Energy

A sector intransformation

We need to survive it

Investment

We need a biggerenergy mix

Prosumers

Empowered customers

How do utilities interact with theircustomers in this environment?

Digitisation

Eg Smart Grid

Big Data

Analytics

For

Business

Customer Service

Reduce outagesPerformance

PlanningSearching for the

Relevant dataA new driver &pressure in our

business

New competitors Eg IPPs

They must be embraced, notseen as destructive forces

Aging workforceRequires up-skilling in

younger people

Key trends

2.1% economicgrowth worldwide

4.2% world wideInvestment

US$1.8 trillion

In Africa toachieve 4%

growth

US$23.3 trillion world wide by 2040

Smart metering 9.4%growth CAGR

Energy mix ischanging

41% coal reducedto 21% by 2040

RE 21% to 33%

But fossil fuels still thelions share for decades

Engineering News

Main topics

Plenary PanelThe challenges facing the Electricity

Supply Industry in Africa

Nelisiwe Mugubane

Institutional memory

Grid constraints

How to plan so that our powersupply is what we need Interaction

betweencountries

EgDistribution

Network

How to bring centralizedpower to the consumer?

But Utilities must embracedistributed generation

Corridors where totransport this energy

"Give the risk to the people bestable to manage it". Ie IPPs!

[what aboutsolar leasing?]

We must make sure thatintergovernmental agreements

are (sustained) maintained

Monitoring &evaluation

Dr Willem de Beer

SANEDI

Taylor Ruggles

Department of State, USA

Obama's PowerAfrica program

Local finance & infrastructure is achallenge when trying to bringelectricity to 600 mil Africans

How to reduceproject risk

Takes a transactionbased approach

Project by project

Finance

Policy

Enabling environment forprivate investment

Cost reflective tariffs

Having arelevant off

taker

Strong legal &regulatory

frameworksInterconnections

To neighbors so that youcan trade electricity

Arnaud de Limburger

EPC

Operates IPPsDevelop, Build,

Operate: to reduce risk

An investor'sperspective

Governance

Relinquishingsovereignty

Because of huge financial backingfrom outside countries

[Eg in Greece today]

Reynolds BeksDagogo-Jack

Hydro power Especially smallhydro in Africa

Tax incentives notavailable in micro-hydro

Especially because of capitalintensive nature of the projects

For stabilizing the grid if connected tothe main transmission lines

Time to get permits

Not co-ordinated single point ofcontact in many governments

Lack of skills

Political willStable regulations

For a conducive, enabling,predictable, environment

Soft infrastructureAre the conditions precedent in place to

make sure power can be wheeled across thegrids and across borders?

Agreements

Technical

Regulatory

For power to flow

Wheeling charges

Power Poolagreements

To regulate thetrade of electricity

Efficient markets

Rwanda

Jacob Mblele

The biggest challenge is thefocus on mega-projects

Big distances!

DOE

The solution is in micro-grids &distributed generation

IPPs:

What about rooftop?

Aggregated demand with anintegrated & co-ordinated

need across Africa

Are IPPs the fastest way ofgetting energy onto the grid?

Can we have low cost &reliable energy in Africa?

Nelly: it must be high costto get it to be reliable

Taylor: we must putup prices first

Jacob: it doesn't needto be expensive!

How do we get regionalnetworks working? And what

about an Africa wide grid?

Questions

LocalisationEspecially know how

Me

Building vs maintaining themachine & what is the machine

for? 8,000 jobs vs 1 mil jobs

Key Challenges & OpportunitiesCity Power

Mr Sicelo Xulu

A local list

Theft

Load shedding

Economic downturn &increasing elec costs

Skills &servicedelivery

Illegal connections

Infrastructure &developmentaffordabilityNEM, etc

Whilst we are trying to build a newinnovative system, there are a whole

bunch of disruptive technologies

Utilities must turn disruptivetechnologies into opportunities

A global list

Electricitygrowth 2/3 by

2040DR & home energy mgt

EG andEmbedded

Storage

Big Data

Improve investor relations &investor confidence

Gas EngineGas Turbine Technologies

panel discussion

PowerPhase

Makes turbine 20%more efficient

Brian Foley

Can run a 2 MWstandby or black start

Loses power at highertemperature and humidity

Alstom

Matt Hiddemann

Energy market needs

Siemens & GESiemens Frank Richter

GE

Robert Colwell

Chaired by Septimus van der Linden

Startup times

Hot

After running overnight

Warm

After weekend

ColdAfter 2 weekmaintenance

Fast

Ramp rate

Required forrenewables

But maybeemissionsproblems

Ramp rate

Jargon

Wobble Index

What is your turn down whilstmeeting emissions?

35% to 45%

Siemens can operate at 5%, but thennot emissions compliant

Gasify methanolfor example

As an input to agas engine

StrategyEnergy Planning

Transitioning the Power SystemPanel Discussion

Regional power market PreconditionsNational control

is required

Customer will have achoice of supplier

There will be a retailer in themarket of the future

Missing capacity

SA 33 out of 42 GW,but what about 48

SAPP built 14 GW in the past 10years, but wants to build 24 GW

in the next 10 years

Need to createvarious markets

Financial

NEM & DR & TOU &Storage costs

Especially for EG

Wheeling

Power pools in Africa

SAPP

COMELEC

Etc

SpeakersEng Musara Beta SAPP Chief Market Analyst

Matthew Ultimo

Rodin Consulting

Mthunzi Luthuli

Chairman of panel discussion

We shoulduse our coal

Professor Philip Lloyd

Rodin Consulting

Looking at theUrban Scale

100 to 500 units

Prosumers

Much greater awareness of EE andproduction requirements

Population growth of 2.5%;Urbanisation at 4%

Australia

1 million houses achieved in 5years; 10% penetration

Cost of capital

If we had COC like Germany,capex costs would halve

Examples

Hudson Yards70% of baseload supply

Freiburg

Higashimata Japan

Garden City, Nairobi

TsumkweMenlyn Maine; BlackRiver Park: SA

Accra

26 hectares

Why isn't ithappening?Ownership

Matthew Ulterino

"Real estate is central tothe energy transition"

New technology -development

[Grubb Curve]Eg battery vs diesel

Low / high capex vsHigh / low ops cost

Requires a financial innovation in theselling / financing model

Cell phonesales analogy It's like a PPAEvery time PV production doubles,

PV prices come down 22%

Technology disruption Battery R6per kWh now

House R2.14 Generator R5 House PV R1.50

A system with multipleopportunities to create value

How will SA grow its electricity supplyPhilip Lloyd

"The future willlook like today"

Energy intensity

It's dropping, butit's an illusion

Shortage

20 tWh per yearWe need 5 tWh

more per year to meet our growth targets

Renewables

Big costs

Eg intermittency

Spinning reserve costs

"South Africa'sfuture is nuclear"

Gas is nice, but notavailable in SA (yet)

Mozambique has lots

Currently 1% of ourelectricity is from gas

80 tWh from nuclear for R500 bil vs 8tWh from RE for R200 bil

Check the numbers

Coal1/3rd of our exportearnings is from coal

Means paradoxin our policy

SA wants to reducecoal production

The Californian DuckCurve in RE systems