The City Power Perspective September 2016 Contents 1 City Power - - PowerPoint PPT Presentation

American Chamber of Commerce Embedded Generation The City Power Perspective

September 2016

Contents

City power approach How to engage? Evolution of distributed generation

1 2 3 4

City Power at a glance

CITY POWER AT A GLANCE

City Power at a glance

National Energy Regulator of South Africa (NERSA)

IPP: Kelvin

We are in the business of buying electricity, making it accessible to, and selling it on to customers

Generation

Eskom and/or Independent Power Producers (IPP)

Distribution

City Power

City Power at a glance…

Predicted future peak demand to reach 6 GW by 2030 R8.5b invested in infrastructure in the past 10 years Current peak demand of 3,5 GW 6 major intake points from Eskom, 32 mixed MV intakes R40b required in the next 20 years

EVOLUTION OF DISTRIBUTED GENERATION

Traditional electricity distribution business

Revenue generated by transporting electricity from Central Power Station to Customers Has been good for 100 years….

Evolving distribution business

Using the grid to support distributed generation New revenues need to be generated through integration of various distributed energy sources and flows

REIPPP program

Drivers of grid evolution

Future Electricity Networks

Smart Grid to access flexible Loads and manage peak demand Evolving DoE NERSA regulation and policy. Alternate Technologies (Rooftop PV, Energy Storage) Generation constraints & Eskom’s ageing fleet New Distributed, dispatchable Generation and co- generation

Distributed Generation

Surplus energy dilemma? No transmission loss component and distributed RE without storage does not reduce peak demand issues Power generation at the point of consumption generating power

• n-site, rather

than centrally Is this a threat or an opportunity? Opportunity? New, greener energy can be a hedge against Eskom’s power supply constraints and price increases

Why must ‘Going Green’ = Off Grid?

Grid provides the Green Energy investor a place to sell

• r trade their surplus energy and optimize investment

From a national systems point of view, the most efficient green energy solution includes the grid

Eco-Warrior approach; “to be Green means to be Off- Grid” we feel is misguided, emotionally driven thinking New value proposition from grid operators is to provide backup supply, load balancing and wheeling services

CITY POWER APPROACH

City Power Distributed Generation policy overview

Customer Generation < 1MW Customer Generation > 1MW Dedicated Independent Power Producer (IPP) Municipal Owned Entity (MOE) Generation City Power Own Generation

Aimed at facilitating, permitting and regulating Own and Private Distributed Generation within City Power’s licensed area of supply Different off-take possibilities – whole plant generation, excess only or combination of both; Different dispatch modes - self-dispatched or dispatched

City Power’s Distributed Generation Categories

Distributed Generation Policy catering for…

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Category Description Examples

Customer Generation < 1 MW (Self-dispatch)

Residential and commercial customer installations of small scale embedded generation

• PV installations at residential and

commercial establishments

• Application received for up to 1000kWp

PV at several shopping malls

Customer Generation > 1 MW (Dispatch / Self-dispatch)

Existing CP large power users installing own generators; searching for off- taker of excess power

• MTN quad generation facility @ 5.8MW
• ABSA co-generation facility @ 18MW of

which 2MW grid connected

• At least 45MW identified within City Limits

IPP (> 1 MW) (Dispatch / Self-dispatch)

Any independent producer interested in selling power to City Power

• Co/tri/quad gen plants, fuel cells, large

scale storage, PV farms etc.

MOE generation (Dispatch)

Other City subsidiaries exploring utilization of their resources to produce power

• JW’s hydro conduit
• PickitUp’s waste to energy
• City Theatre’s Utility Scale Storage

City Power Own Generation (Dispatch / Self-dispatch)

City Power’s own generating resources under the direct control of city power

• CP’s gas turbine generating sites
• PV in unused lands of CoJ and leased

rooftops

• Battery Storage Plant

We are not Eskom MFMA and NERSA regulation: Two sources of supply

3 Over a 20 year time frame, RE alternatives may already be a lower cost option to Eskom power

Grid access fee vs. price increase to high volume consumers

SAPOA reservations about the additional fixed grid access fee

• Fears of a precedent being set, and a price that can be

arbitrarily increased

• Perception of penalization although they offer a green energy initiative

City Power justification for the additional fixed grid access fee

• Revenue from grid load balancing and backup services
• Partially offsets energy sales revenue losses

Offer to explore other options

• As alternative to the additional grid access fee, rather increase in the

kWh costs for customers consuming >500kWh per month

• Would result in a price increase of 1.4 cents / kWh @ penetration of 20%
• Network charges are the key issue, identified from the NERSA required

Cost of Supply Study. All grid users will in effect contribute.

Cooperation between City of Joburg policy and private sector

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Driving Policy and Tariff Evolution

Utility service offering is to provide grid for energy balancing and back-up services (grid access, fixed fee) Net metering cannot be supported without losing revenue; however City Power can offer avoided Eskom cost for the surplus that generators produce Customer generation is viewed as future IPP partners; micro-sized and distributed within the City The deeper the distributed generation penetration , the higher the revenue impact; CP revenue model and tariffs need to be transformed to more fixed and less variable charges

Are the Metro grids ready?

City Power has an abundance of load and can disperse significant distributed generation as is (owing to its distribution network structure) Eskom Vs Private generation including SSEG

• Private distributed generation can be built faster
• Private generation pricing can be escalated by CPI
• Private generation can position as micro-IPPs;

provided long term PPAs are be allowed;

• Generally cleaner and can count as greener

energy to fulfill the City of Joburg’s environmental commitments Eskom’s tariffs are increasing while alternate technology costs are decreasing; the cross over is likely to happen within the next decade

Load profile challenge Jo’burg also has a ‘Duck Curve’

Dispatched vs Self dispatched

• Self-dispatched power does not eliminate morning and evening peaks
• Most PV installations are self dispatched unless an element of battery storage
• Hybrid Photovoltaic Electricity System is the preferred option and meets

customer + utility needs

• Dispatched generation is mainly gas fired but is restricted by the limited

availability of gas City Power is still liable for the morning and evening peak energy costs and any excessive network demand charges

Complimenting self-dispatched generation with flexible load

Load Management is enabled by smart metering technology On demand flexible loads are being created through load limiting and demand response programmes Load profiles can be shaped by implementing dynamic pricing or time of use tariffs Flexible load can be sold as an ancillary service in future to enable the emerging electricity trading market Smart Meter investment today is useful to mitigate load shedding. In the future, the same functionality will have ancillary services value as more self- dispatched renewable energy is put onto the grid. (16 GW by 2030 – IRP 2010). There is great potential for a new industry – home automation.

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City Power applied to the Regulator for feed-in tariffs for embedded PV generators that have day time production capacity higher than that required for their own consumption, and who are connected to the grid Regulator has adjusted and approved the tariffs on a pilot/interim basis for 2016/17: In terms of the provisions of the Electricity Regulation Act, (Act 4 of 2006) (ERA) the generation of electricity is a licensed activity, unless exempted by the Minister of

• Energy. The tariffs are therefore subjected to the provisions of the ERA and are

currently interim / pilot City Power will permit connection to the grid subject to the rules and requirements on the following slides, together with a signed undertaking that the future decisions of NERSA and the DoE shall be binding on all parties

Embedded PV Generator Tariff

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All Large Power Users and Business Customers who would be willing to invest in embedded generation with the purpose of of supplementing their electricity supply from City Power will have to be on a conventional tariff structure. If they are currently

• n a pre-paid structure, they will be required to migrate to a conventional tariff

structure.

The approved commercial / business rate is 36,14 Cents per kWh

Embedded Generator Rules and Requirements

All Residential Customers who would be willing to invest in embedded generation with the purpose of supplementing their electricity supply from City Power will have to be

• n a time of use conventional tariff structure. If they are currently on a pre-paid

structure, they will be required to migrate to the time of use conventional tariff structure.

The approved residential rate is 42,79 Cents per kWh

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This tariff will only apply to customers that are net consumers of City Power and who have invested in embedded generation capacity, are grid-tied and comply with all regulations regarding grid connection. 3) All Embedded Generators are required to register with City Power and the equipment used must comply with the technical standards required by City Power. Embedded generators that are at any time capable of feeding energy back into the grid will require meters with bidirectional metering capability.

Embedded Generator Rules and Requirements

All parties that would invest in generating electricity capacity and who would elect to only feed into the grid (and never draw from the grid) will be treated as an additional supplier under a negotiated power purchase agreement.

HOW TO ENGAGE?

Current rules of engagement

Investors must apply to distributors for connection as per the distribution grid code; applies to all forms of distributed generation sources Future DoE and NERSA guidelines shall be binding on all parties, acknowledgement letter to be signed to this effect Distributor responsibilities:

• To approve or decline, based on technical issues that may impact

QoS

• Use the NRS 097 guidelines for simplified connection, where

relevant

• Recover costs where network modifications are required
• Manage registration process with NERSA and furnish information
• Make necessary metering and billing alterations

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distributedgeneration@citypower.co.za

Thank you

And we will hook you up!