State of the System - Winter 2024 Outlook Briefing Dan Marokane April 2024 Key Takeaways • The Winter 2023 performance was within the forecast frequency range - load shedding mostly contained between stages 2 and 4 • The Generation Recovery Plan – focusing on people, plant performance and processes & governance gained traction from the beginning of Winter 2023 and is executed by Eskom in collaboration with NECOM structures. • Between April 2023 and March 2024, the reliability of the power plants is showing improvement on the back of the of the Generation Recovery Plan, with a YoY improvement of 9% in unplanned losses, and 19% decline in unit trips • Since April 2023 to date, the frequency and the intensity of loadshedding has declined as should be expected as the Generation Recovery Plan execution progresses. • NO loadshedding for 30 consecutive days – with the diesel spend 50% lower than the spend in the same month last year. FY25 load factor of 9% compared to that of 18% in FY24. • There is a considerable shift in the unreliability assumption for Winter 2024 forecast – a 1000 MW downward revision • For Winter 2024, the likely scenario indicates that loadshedding will be limited to Stage 2 • Over the winter period, targeting a further 1.7GW from reduction in unplanned losses (1.3GW) and driving Demand management initiatives (382MW) • Ending load shedding is a collective effort and we will be counting on your support for our energy saving campaign in the month of May #WeCanEndLoadsheddingTogether 3 Our approach to this Winter 2024 outlook briefing Recap on the winter 2023 outlook and performance Set the context for this winter 2024 outlook Provide an update in tackling unreliability of the units 4 4 The actual system performance for Winter 2023 was within the forecast range Winter 2023 – 1 April 2023 to 31 August 2023 (153 days) Scenarios Base case: Base case +1500MW : Base case + 3000 MW 15 000 MW UCLF 16 500 MW UCLF 18 000 MW UCLF Number of LS days 122 Days 152 Days 153 Days OCGT costs R 12.1bn R 12.5bn R 12.5bn Highest stage of LS Stage 5 Stage 6 Stage 8 Month Peak residual Load reduction Max load Load reduction Max load Load reduction Max load forecast days reduction stage days reduction stage days reduction stage May 32 499 27 5 31 6 31 7 June 32 572 18 3 30 6 30 7 July 32 378 28 5 31 6 31 8 August 31 413 28 5 31 6 31 8 Average actual unplanned losses were around 16.5GW and the majority of the loadshedding was contained to stages 3 and 4 (with a maximum of stage 6) 5 Since last winter, Eskom’s investment in maintenance and disciplined execution of the recovery plan has resulted in a gradual reduction of unplanned losses Gx actual performance on unplanned losses2 GW Actual ~ unplanned losses -9% 18,0 16,2 16,0 16,5 15,9 15,8 16,2 14,5 13,7 14,6 14,7 14,8 Apr-23 May-23 Jun-23 Jul-23 Aug-23 Sep-23 Oct-23 Nov-23 Dec-23 Jan-24 Feb-24 Mar-24 2023 Winter outlook period 2023/24 Summer outlook period • Downward trend in unplanned losses especially at the priority 6 stations (Tutuka, Majuba, Kusile, Kendal, Matla, Duvha): • Year-on-year overall unit trips are declining, indicating the fleet is becoming more reliable – 19.2% reduction between FY23 vs. FY24 • Return of 4 Kusile units: U1-3 that were impacted by the flue duct collapse which have been recovered and U5 has been synchronised to the grid • Multiple projects are in progress to reduce Partial Load Losses – e.g. cooling tower refurbishments at Kriel and Tutuka, re-bagging at Majuba • Current unplanned losses of 14.2GW (~30%) are however still unsustainable hence the target is to reduce load losses to below 14GW1 Source: State of the system outlooks; Eskom Public Data Portal Note 1: The targets for FY25 is still under review; 2: UCLF+OCLF. Gx – Generation, UCLF – Unplanned Capability Loss Factor 6 The continuing improvement in Generation plant performance and the accompanying reduced loadshedding intensity has informed our updated outlook Overview of loadshedding intensity and frequency between April 2023 and March 2024 # of days at various stages¹ Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 2023 Winter outlook period 2023/24 Summer outlook period 30 31 30 31 31 30 30 1 1 1 1 28 29 2 2 26 1 9 1 7 7 1 10 12 20 12 22 12 1 12 22 1 14 13 13 13 4 2 19 4 17 3 3 15 9 14 3 5 6 9 8 8 5 6 2 4 0 1 2 2 Apr-23 May-23 Jun-23 Jul-23 Aug-23 Sep-23 Oct-23 Nov-23 Dec-23 Jan-24 Feb-24 Mar-24 Apr-24 ▪ Eskom implemented loadshedding on over 90% of the days between April 2023 and March 2024, though there is a clear decreasing trend and the majority of loadshedding has been contained to between stages 2-4 ▪ The return of Kusile units ahead of schedule and recovery of unplanned load losses assisted in reducing the frequency and intensity of loadshedding in the FY2024 summer period ▪ Eskom has not implemented loadshedding for 30 consecutive days Source: 2023/2024 Load Shedding and Curtailment events Notes: 1: Indicates maximum stage per day 7 Winter 2024 loadshedding forecast to be within stage 2 Likely scenario Winter 2024 – 1 April 2024 to 31 August 2024 Base Case: Base Case + 1500MW: Base Case + 3000MW: Scenarios 14 000 MW unplanned outages 15 500 MW unplanned outages 17 000 MW unplanned outages Number of LS days 5 Days 65 50 Days 128 103 Days Diesel costs R 3.3bn R 8.8bn R 16.0bn Highest stage of LS Stage 1 Stage 2 Stage 5 Peak Load reduction Max load Load reduction Max load Load reduction Max load Month Residual days reduction stage days reduction stage days reduction stage Forecast April 29,354 0√ 0 15 0 20 25 0 50 May 31,205 0 0 10 1 23 2 June 32,204 2 1 8 2 22 5 July 32,182 0 0 19 2 31 5 August 31,336 3 1 13 2 27 5 Considerable change in performance showing a recovery of 1000 MW has improved our confidence With unplanned losses maintained between 14GW-15.5GW, loadshedding intensity over the Winter period is anticipated to be contained within stage 2, with a worst-case scenario of stage 5 at unplanned losses of 17GW LS - Loadshedding 8 Agenda ▪ Generation recovery overview ▪ Demand management overview ▪ Conclusion 9 Execution of the Generation recovery plan initiatives has led to a considerable improvement in plant performance Implementation complete Implementation in progress 3 World class performance 70%1 2 Execute excellence 65%1 EAF 1 Set up for success EAF Actions for FY25 onwards Actions for FY24 ▪ Return of Medupi 4 from long term forced ▪ Set-up the enabling structures ❑Successful execution of Koeberg 1 outage (Sept 2024) ▪ Turnaround plans ❑Sustain Excellent Medupi performance ▪ Commercial operation of Kusile 5 (Jun 2024) ▪ Generation recovery office ❑Embed principles of Operational ▪ Synchronisation of Kusile 6 (Oct 2024) Excellence ▪ Continuous focus on current and future ▪ Key enablers ▪ Guard performance at current flagship ❑Address internal skills gaps skills stations ❑Prevent outage slips ▪ Ensure successful implementation of Koeberg 2 steam generator and long-term ▪ Medupi, Lethabo, Matimba and Peaking ❑Return of Kusile 1, 2 and 3 operating projects (Sep 2024) ▪ Focus on the Priority stations ❑Synchronisation of Kusile 5 ▪ Tutuka, Duvha, Majuba, Matla, Kendal, ❑Review plant shutdown dates based on Arnot, Kriel, Koeberg system requirements ▪ Kusile removed from priority list ▪ Execution of Koeberg 1 Outage ▪ Source external specialized skills Continuous execution of Culture transformation and Strategic Levers as per the Generation recovery plan Note: 1. MTD for March 2024 and March 2025 10 Eskom has managed to increase plant availability and decrease spend on expensive OCGT generation, especially across Mar and Apr 2024 Unplanned losses % Planned losses % Available % Gx monthly performance: March – August 2023 Gx Weekly performance: March – April 20242 33.2 31.9 32.2 30.2 31.5 29.3 29.8 28.6 34.5 34.7 38.7 34.4 35.3 34.1 10.2 13.2 14.4 13.9 13.0 11.1 12.0 11.9 10.9 7.4 7.6 9.6 13.7 7.8 57.3 58.7 58.3 61.2 53.6 53.6 53.9 56.8 58.2 57.1 2024/03/04 2024/03/11 2024/03/18 2024/03/25 2024/04/01 2024/04/08 2024/04/15 2024/04/22 54.6 51.5 53.5 56.4 Jun’23 Jul’23 Apr’23 Mar’23 Aug’23 May’23 1.2 0.8 1.2 0.05 0.04 0.4 0.45 0.46 R’bn1 2.1 3.1 4.2 2.3 3.1 2.1 3.33 1.4 • Eskom’s plant availability has been trending upwards, especially for Mar and Apr 2024, supported by decreasing unplanned losses • The increased availability has supported decreasing spend on expensive OCGT generation • OCGT are part of the energy mix utilized for meeting peak demand as required by the system operator Notes: 1: Draft numbers, still to be audited 2: unplanned losses includes OCLF; 3: Includes 1-3 March spend xx Denotes Eskom and IPP OCGTs MTD and WTD actual costs 11 Beyond the winter period, units on long term outages and the remaining Kusile units will be brought online as part of the Recovery Plan Key insights Units on long term outage - return dates Kusile - Kusile units 1 to 3 (with temporary stacks) Kusile 6 1st were returned to service ahead of schedule by end Koeberg U1 Kusile* U1, 2, 3, 5 Tutuka 1,2, 4, 5 Medupi U4 Koeberg 2 Sync 2023. ~ 930 MW ~ 3200 MW ~ 1500 MW ~794 MW ~930 MW ~ 800 MW • Additionally, Kusile U5 synchronised to the grid on 31 December 2023. Post sync unit optimisation to full load is progressing • Kusile U6 is planned to first synchronise by Oct 2024 Nov 2023 Dec 2023 Apr 2024 Sept 2024 Sept 2024 Oct 2024 Tutuka RTS dates • Unit 4 planned outage for Low Pressure turbine rotor and HPH replacement, return to service • Units 3, 1 and 2 • Unit 1 (RTS) end April 2024 have been completed on 12 • Unit 5 on Major outage with RTS April 2024. returned to the Jan 2024 grid and are providing power • Unit 2 returned Medupi U4 is planned to be operational in up to 2400 MW on 27 December September 2024 with the second-hand stator. Stator 2023. arrived in South Africa in February and arrived at • Unit 5 post sync Medupi on 5 March. optimisation to 800 MW full load is in progress Koeberg U2 outage started on 11 December 2023, estimated completion is September 2024 1. Data as at 25 Mar 2024; LP: Low pressure; HPH: High-pressure heaters; RTS: Return to service 12 Recommendations from the independent reviews including the recent VGBe report have been incorporated into the Gx Recovery Plan Timeline for the independent reviews Initiatives in progress from independent reviews 9 Point plan approved Ministerial Technical Dec Review Team 2018 ▪ DPE led team to conduct a technical review of Eskom’s May baseload fleet Ministerial Technical Review Team 2019 performance (II) ▪ DPE led review, with a focus on Dec assessing the Eskom EAF recovery 2020 World Bank plan (9 Point plan) ▪ World Bank Sep independent review of 2022 the issues associated with declining EAF Approval of the Gx Recovery Plan performance ▪ Establishment of the Recovery office Mar to actively provide oversight to the 2023 recovery plans per station VGBE Report Aug ▪ National treasury Key successes 2023 assigned VGBE to WSP conduct an independent ▪ Improved collaboration with OEMs and NECOM for capacity building ▪ The Eskom Board appointed WSP in assessment of Eskom's Jan ▪ Optimised internal and external procurement processes March ‘23, to independently review operational situation 2024 ▪ Outage readiness improvement as a result of sufficient budget and stress test the effectiveness of the current Gx Recovery Plan allocations 13 MTRT – Ministerial Technical Review Team, WB – World Bank, VGBe – VGBe Energy IS US, NECOM – National Energy Crisis Committee Key enablers are being implemented to ensure that the Recovery Programme is sustainable Implementation complete ✓ Implementation in progress Enablers and progress status ✓ Delayered and stabilised leadership team by closing critical vacancies (Appointment of Gx GE, critical PSGM vacancies, removing cluster structure) Leadership ✓ Executive coaching and psychosocial supported via EmpowerU intervention Stability ✓ Implemented Management Development,Technical training and authorisations (GTLP and MDP implemented with over 40 individuals over three years in the program; technical training reinstated through EAL with 11 Gx artisans currently involved; Top Talent and Millennials programs instituted) ✓ Closed critical vacancies through crowdsourcing and recruitment - focus on Engineering, Operating, Maintenance, Commissioning Critical Vacancies and Procurement (since Apr 2023; over ~2500 vacancies closed either through external appointments or internal promotions) ✓ Industry support on priority stations and general technical support on valves, pumps, waste water recovery system, and coal conveyors Maintenance & ✓ Prioritised insourcing of critical maintenance with labour support and limited outsourcing to credible service providers Inventory ✓ Establishment of inventory management and recovery team for turbine, boiler, and auxiliary plant (ERI actively implementing recovery plan Management to improve quality of service; barcoding system piloted at Duvha for improved inventory management) ✓ Leveraging other SOE support - Engaging Denel to leverage state capability on security and SAA on technical support for gas turbines ✓ Gained environmental exemption to allow for Kusile U1, U2 and U3 to operate at full capacity with temporary stack (returned all 3 units to Government service during 2023 to support the grid) 14 Support ✓ Minimum emissions appeal to DFFE for multiple power stations (Awaiting DFFE feedback) ✓ Government support for Eskom’s participation in clean energy investments to support RE growth, e.g. gas and pumped hydro storage and nuclear schemes PSGM – Power Station General Manager; GTLP – Generation Technical Leadership Program; EAL – Eskom Academy of Learning; ERI – Eskom Rotek Industries 14 Agenda ▪ Generation recovery overview ▪ Demand management overview ▪ Conclusion 15 Demand management initiatives with a target of ~382 MW have been identified for the 2024 winter period Overview of Demand Management initiatives Projected MW demand reduced 382 • Beyond the winter outlook, 191 Distribution will be driving initiatives worth 2282MW in the next 12 – 18 months, which include: 150 o Residential load management from Metros (432 MW) o Load Limiting (1850 MW) 7 34 Energy Efficiency Load Management Load limiting Additional Supplemental Total additional DSM Demand Response (SDR) in 2024 winter period • Eskom is focusing on 4 areas to deliver 382MW of demand reduction during the 2024 winter period which will assist to alleviate pressure on the electricity system. This is over an above the cumulative demand savings of 4 800 MW achieved since the program was initiated in 2005 • Some progress to date includes: o Successful deployment of 50MW load limiting through smart meters and to achieve + 150MW within the 2024 winter period o An incentivised demand management programme launched April ’23 - R3m/MW for load management and R0.41c/kWh for energy efficiency o Deployment of Eskom Energy Efficiency Programmes and Power Alerts driving behaviour change • Working together with municipalities to address ongoing infrastructure theft, vandalism and overloading – over 1000 isolated/ failed transformers throughout the country. 16 In addition to demand reduction, Eskom is also focusing on five additional initiatives to relieve pressure on the electricity system Initiative Description • Incentivising customers to export excess energy and receive a credit to add energy to the grid Small Scale Embedded • Efforts being undertaken to encourage customers to make safe inverter installations by registering Generation (SSEG) with the utility - 429 systems with an equivalent capacity of 254 MW has been authorised to date • Battery energy storage commissioned with another 5 under construction and 2 in procurement • Deploying microgrids as an alternative to grid-tied solutions, providing further relief to the system Microgrids • 20 microgrids installed over 2023/4 with a target of 33 over 2024/5 financial year • Driving virtual wheeling and traditional wheeling solutions to incentivise establishment of, and Wheeling investment into generation facilities • Developed Standard Offer program that allows customers to sell excess energy to Eskom – 16 Standard Offer projects with a total capacity of 66 MW in the pipeline Community • Driving collaborative partnerships with various communities in all the provinces to manage their electricity supply and infrastructure with the aim of reducing electricity theft and vandalism, providing Co-ops further relief to the system 17 Eskom is working with the IEC to ensure that adequate plans are in place to ensure electricity supply Election Preparations Operational plan • Distribution Tactical Command Centre is co-ordinating • Outages and Maintenance Distribution preparedness for the elections. o Unplanned outages affecting voting stations will be escalated and prioritised in terms of dispatching. • Distribution Provincial Elections co-ordinators • Emergency Response Structures will be activated when necessary appointed. o Provincial Joint Command Centre's (PJCC’s). • Engagements with external stakeholders (National and o Distribution Tactical Command Centre. Provincial IEC) have commenced. • Situational awareness structures and Eskom’s presence at IEC results centres o Situational awareness structures at Provincial and National levels will be activated during election • Memorandum of understanding between Eskom and IEC period to provide information to stakeholders in relation to total systems capacity and continuity concluded and has been signed off from Eskom side. of supply at the voting stations Voting Station Dashboard Link Voting Stations Per Province Agenda ▪ Generation recovery overview ▪ Demand management overview ▪ Conclusion 19 In Conclusion • We have seen a positive trend in the reduction of unplanned load losses leading to the reduction in loadshedding intensity and frequency over the FY24 summer period • The winter outlook likely scenario indicates loadshedding will be limited to stage 2, given improvement in the generation fleet performance since last winter outlook • Through disciplined execution and single-minded focus on our Generation Recovery Plan, we expect loadshedding intensity to continue to reduce • We appreciate the efforts of our employees and the NECOM partnership for their contribution towards reducing the intensity of loadshedding • The biggest impact we can all make as a nation is to use electricity sparingly and encourage participation in the energy saving initiatives during the month of May (Energy saving month) • We understand and apologise for the negative impact that loadshedding has had on the South African people, but we remain steadfast in our plan to overcome it 20