System Status and Outlook Briefing Jan Oberholzer: Group Chief Operating Officer Thomas Conradie: Managing Director Generation (Act) Segomoco Scheppers: Managing Director Transmission Megawatt Park: Franklin Auditorium 15 November 2022 Group Operations Overview 2 Overview and summary of Eskom system year-to-date performance (1/3) We continue to see a varied performance by our operating divisions year-to-date, with generally good performance from Transmission, Distribution and Group Capital. The unsatisfactory performance from the Generation division continues. The Distribution technical performance is sustained at better than tolerance levels for both duration and frequency of systems interruptions. Municipal debt and Energy losses remain a challenge. Eskom is working closely with government, communities and the public to implement the strategies towards resolution. On the Transmission side, we see good performance with system reliability and maintenance execution that meets planned objectives. Koeberg Nuclear Power Station Unit 1 continues to operate safely and has been online for 380 days (to 11 Nov 2022). Unit 2 commenced with a returned to service from a short duration outage to remedy the control rod slippage issue and had been operating for 47 days (on 11 Nov 2022). Coal stock levels are healthy – average of 35.0 days of stock, 69.7 stock-days when including Medupi, which has excess coal. 3 Overview and summary of Eskom system year-to-date performance (2/3) The Generation side of the business remains a concern, specifically the availability of the coal power stations. 2022 Energy Availability Factor (EAF) at 58.53% is below the targeted performance level. A key contributor to the low EAF was high levels of planned maintenance over the summer months. Since 01 April 2023, there have been a total of 141 days of loadshedding. The high levels of unplanned outages remain a concern, however, we continue to drive our Reliability Maintenance Recovery Programme to reduce these. However, available capacity remains a challenge. The Reliability Maintenance Recovery Programme: More effort has been applied to ensure that the key funding and enabling contracts are in place to support the objectives of this critical programme within the maintenance space that can be made available – ensure 80% outage readiness. Rain Readiness plans have generally held up against high summer rainfall in the previous year and actions continue to improve the plans for this rainy season. All Coal Stations plans are being stress-tested to ensure they will be ready again for this high rainfall period. Due to the system constraints, we have used more that the anticipated levels of diesel for our Open Cycle Gas Turbines (OCGTs). 4 Overview and summary of Eskom system year-to-date performance (3/3) Environmental matters such as emissions have shown good improvement. However, the industrial action in July 2022 has unfortunately contributed to a significantly worse YTD performance with relative emissions at 0.45 kg/MWh against a target of 0.30 kg/MWh. Safety performance positive – Eskom a) employee LTIR @ 0.26, b) Eskom contractors LTIR @ 0.22 and c) Eskom combined @ 0.24 against a tolerance LTIR of 0.30. Regrettably, however, we have had one employee and one contractor fatalities On 01 June 2022, Kusile Unit 4 achieved commercial operation (CO), earlier than the expected CO target date of January 2023. In the period June - September 2022, Kusile Unit 5 successfully achieved key milestones, namely: boiler chemical clean, first fires on oil and first fires on coal. However, on 17 September 2022, whilst executing the third steam blows, the gas air heater (GAH) caught fire internally, resulting in the discontinuation of all commissioning activities. A technical investigation is underway to determine the cause and extent of the damage and to finalise the repair programme. Current forecast (without the schedule impact of the GAH incident) for the first synchronisation and commercial operation of Unit 5 is targeted for June and December 2023, respectively. 5 Distribution Division 6 Distribution Performance as at end October 2022* Electrification Connections SAIDI SAIFI 40 385 36.22* 12.39* vs. vs. vs. YTD Target of 44 764 38.00 Tolerance 19.00 Tolerance Planned Maintenance Refurbishment Restoration Time Completed Spent 85.46% R135m 92.81% vs. vs. vs. YTD Target of 93% YTD Target of R204m 90% Target ▪ Network performance, as measured by SAIDI and SAIFI is sustained at better than tolerance levels. ▪ The Electrification programme achieved 90% of the YTD target; the program delivery has been impacted by material availability however plans are in place to achieve the year-end target. ▪ Planned Maintenance and Refurbishment execution are below target but have not adversely affected system reliability. Completion of the planned programmes remains a key focus area for the business. ▪ Increased theft and vandalism of network equipment continues to impact operations, safety and system reliability. ▪ Electricity theft and non-payment continues to manifest as an operational and financial risk. *The official September 2022 and October 2022 results for SAIDI and SAIFI are not yet available due to system issues. The results reported on the slide are as per end of August 2022. 7 Transmission Division 8 Transmission Performance as at end October 2022 97.1 % Maintenance SM<1 of 1.60 vs YE target of 3.53 Execution 2 Major Incidents 21 Interruptions vs YE target of 2 vs YE target of 34 ▪ System reliability performance: Good System Minute <1 performance was achieved, supported by the relative low impact of interruptions. ▪ Two Major Incidents have occurred YTD mainly due to plant failures and restoration challenges. ▪ High level of maintenance execution has been sustained. ▪ Asset condition risks require increased asset renewal investment for future operational sustainability. ▪ Ongoing theft and vandalism has impacted operations, creating risks for interruption incidents. 9 Nuclear Operating Unit 10 Nuclear – Koeberg Performance end October 2022 1 UAGS Trips vs. YTD target of 1 for FY23 61.36% 11.08% EAF Actual YTD vs. Forced Loss Rate vs. YTD Target of 76.78% YTD Target of 4.12% ❑ The lower than planned EAF is primarily due to the delays experienced in returning Unit 2 to service during the refuelling and maintenance outage completed in August 2022. The original outage plan included replacing the three steam generators (SGRs) and the reactor pressure vessel head (RPVH). ❑ Due to a significant risk of outage overrun, a decision was taken in March 2022 to defer the SGR from the outage scope to the next Unit 2 refuelling and maintenance outage, without impacting Koeberg’s LTO programme. Inspections to justify continued operation of the unit with the current steam generators for another cycle were carried out successfully. The RPVH has been replaced. ❑ The high Forced Loss Rate is mostly due to two forced shutdowns following the Unit 2 outage, due to reactor control rod slippage events associated with the RPVH replacement, one of which resulted in a reactor scram and the UAGS trip reflected above. 11 Koeberg Nuclear Power Station ▪ Koeberg Long-Term Operation (LTO): ▪ The LTO activities to enable Koeberg to operate for another 20 years beyond 2024/25 continue. The formal application to extend the operating license was submitted to the National Nuclear Regulator and accepted for further processing during 2021. ▪ On schedule, Eskom submitted the safety case for LTO in support of the application on 21 July 2022 to the NNR for their evaluation. As expected, no safety concerns have been identified that would preclude long term operation. The NNR has 2 years to conclude the review and provide an outcome. The NNR will assess the Eskom safety case for Koeberg NPS LTO to ensure that it meets the national and international regulatory requirements, standards and practices for LTO before issuing a License variation enabling operation beyond July 2024. The NNR review will most likely include a public participation process. ▪ As part of the review of Koeberg life extension progress, an International Atomic Energy Agency team of nuclear experts carried out a review of the life extension activities during March 2022. The IAEA expert team reported good progress on the work to extend the life of the plant and the final report has been provided to Eskom and has been unrestricted, enabling the report to be accessible to the public. Both recommendations and the suggestions contained in the report are included in the scope of work that needs to be completed. ▪ Upcoming Unit Outages and Steam Generator Replacement (SGR): ▪ Unit 1 will commence a long refuelling and maintenance outage in December 2022 during which the three steam generators will be replaced. ▪ Unit 2 will undergo a similar long SGR refuelling and maintenance outage towards the end of 2023. ▪ Preparation activities, including completion of the required facilities for SGR, have been completed and the outage plans finalized to enable successful implementation. 12 Generation Division 13 Generation performance for FY2023 to October 2022 reflects the challenges being faced with plant availability and reliability 468 UAGS Trips vs 392 58.53% YE target for FY23 Availability vs 65% YE target for FY23 30.76% 5 930MW Unplanned load losses vs 22% YE target for FY23 Partial load Losses vs 3 695 MW YE target for FY23 9.24% R11.2bn* Planned maintenance Open Cycle gas remains on track for 10.5% turbines cost vs YE YE target FY23 provision of YTD R11.0bn Technical Targets as per FY23 SHC * Eskom OCGTs only as at end Figures as at end Oct 2022, though it must be noted that figures are still to audited October 2022 14 The FY2023 performance continues to be lower than the aspiration resulting in regular load shedding The FY2023monthly Generation performance and YTDcontinues to be lower than the aspiration resulting in regular load Contributing factors performance shedding • Slips, trips, boiler tube EUF OCLF UCLF PCLF EAF failures, partial and full load losses all contributed to the Percentage (%) high UCLF. 2 2 3 2 3 3 2 2 2 1 2 1 1 2 1 1 1 1 3 3 3 • Although August MTD EAF 23 25 22 21 22 25 is the highest for this 26 27 27 29 27 27 28 30 33 29 33 30 31 29 31 financial year, it is still below the same period last 6 8 11 11 7 12 10 year. 12 11 11 11 12 12 7 9 12 7 7 11 9 12 • Gx fleet YTD EAF at 58.53% is below the YE Business Plan target of 65%. 64 64 67 67 66 63 58 58 58 59 59 59 62 60 60 59 61 58 59 57 55 • During the year, a delicate balance was required to giving the plants opportunity for planned maintenance and the having the plants available Sep’21 Aug’22 Sep’22 Aug’21 Nov’21 Dec’21 Apr’21 Jun’21 Jan’22 Mar’22 Apr’22 Jun’22 FY22 YTD FY23 YTD Jul’21 Jul’22 May’21 Feb’22 May’22 Oct’21 Oct’22 to support the system. The ratio of short-term to long- term is about 1:2 15 Long term maintenance in FY2023 is marginally higher than FY2022 with short term maintenance being lower due to the lower space available Long term maintenance in FY2023 is higher than FY2022 with short term maintenance FY2022 Oct YTDbeing FY2023 Oct YTD lower due to the lower space available Short term PCLF % 2.91 2.70 Long term PCLF % 6.61 6.54 Overview The maintenance is still showing seasonal trend which is typical for planned outages, reducing in the winter and increasing in the summer period. However short term is fluctuating depending on the space available in the system. 16 Eskom’s plant availability (EAF) was better than or in line with peers until 2012 • The general trend, for both Eskom and the VGB benchmark* units is that of reducing availability. • This is consistent with the expectation due to ageing fleet with few or no new units being commissioned in this period. * Note: 2021 VGB benchmark is in process and may be available in the coming month 17 Eskom plant’s planned maintenance time (PCLF) below peers 18 • The general trend, for the top quartile, for both Eskom and the VGB benchmark units is that of increasing PCLF. This is consistent with the expectation, due to ageing fleet with few or no new units being commissioned in this period. • Since 2012, Eskom PCLF for top quartile units increased significantly * Note: 2021 VGB benchmark is in process and may be available in the coming month 18 From 2002 there simply was insufficient generating capacity. In response Eskom created ‘virtual capacity’ by running coal units harder than those of VGB members since 2002 19 • EUF measures “how hard” the units are being run – an indicator of stress on systems and components. From 2003 Eskom’s median stations were running at similar or higher EUF than VGB best quartile, and since 2012 Eskom’s lowest quartile stations have been running at higher EUF than VGB best quartile • High utilisation means plant systems are required to operate at their limits, leading to strain, increased wear-and-tear, decreasing plant reliability and requirement for increased maintenance 19 • * Note: 2021 VGB benchmark is in process and may be available in the coming month Eskom plant’s Unplanned Capacity Loss Factor (UCLF) was in line with or better than peers up to 2011, from which point the 10 years of high EUF and EAF started taking its toll • The general trend, for both Eskom and the VGB benchmark* units is that of increasing UCLF. This is consistent with the expectation, due to ageing fleet with few or no new units being commissioned in this period. • Many influencing factors, but main root cause is consistently running at high utilisation over many years due to late start in building new capacity. * Note: 2021 VGB benchmark is in process and may be available in the coming month 20 Generation Performance in context - root cause is shortage of both system capacity and funding 1. First contributor to capacity shortage is the delay of adding new capacity to the system: a. 1998 Energy White Paper stated that investment decision to build new capacity was needed by not later than 1999 “to ensure that demand does not exceed available supply capacity”. b. Investment decision (business case) was only made in June 2007 => needed capacity not available in time. This was exacerbated by delays in commissioning of both Medupi and Kusile. c. Therefore from 2002 onwards ‘virtual’ capacity was created by running existing plant above normal design parameters to ‘Keep The Lights On’. In addition, particularly since 2008, necessary philosophy maintenance was delayed to avoid loadshedding caused by lack of capacity as units would have to be taken offline for maintenance. 2. As a result, plant performance and availability started deteriorating from 2nd half of FY 2012/13: a. Caused by the mechanism of creating virtual capacity from 2002, thus for 10 years by 2012 . This led to even higher utilization and less time available for maintenance outages: b. High utilisation of deteriorated plant and deferred maintenance created cycle of deteriorating availability c. Cycle could only be broken with adequate funds and system space in which to perform required maintenance. 3. Third contributor was sub-cost-reflective regulated revenues thus insufficient funds to create system space and to perform the required maintenance. 4. Summary: Underlying cause of deterioration in fleet’s performance is lack of sufficient generation capacity, aggravated by equipment age, insufficient funds for maintenance and additional system space. 21 Ten focus areas being addressed to ensure a holistic approach to improving Generation performance 10 Focus areas What we are doing Increased maintenance within limitations. Establish War room, accelerated spares Plant Condition Successes made thus far sourcing. Establish long term contracts. Defer maintenance. Engaged to expedite IPPs, Risk Mitigation, etc. Planned 1. National Treasury has relaxed some Inadequate Capacity repowering of stations shutting. requirements which will speed up procurement Appointing Plant Managers. Engaging experienced external experts. Ramping up 2. The allocation of Outage budgeting has Skills & Experience improved, seeing signs of improved training and development. Skills/competency audit. Outage Readiness 3. Receiving a lot of collaboration among Eskom has increased governance controls and performs trending analyses on external stakeholders with a willingness to Fraud & Corruption volumes and prices. Investment in technology, QSs, training. assist Eskom 4. On the 9 Point plan we have seen success in the following areas: Policies & Procedures Engaged government (DPE, NT) for relaxation of some requirements. I. The new build defect repair. Medupi performance is improving Funding Aggressive cost cutting. Making funds available for outage and midlife refurb II. Achieving coal stock days and rain readiness program in place Environmental Compliance Proposed an emission reduction plan that is achievable. Appealed DFFE decision. Additional focus to prioritise maintenance at the Top Six Stations; Duvha, Kendal, Kusile, Majuba, Matla & Tutuka, Engaging mines re quality & quantity. Renegotiating agreements. Investing in cost- Coal plus mines. Increasing verification and monitoring. These stations where specifically selected as they are amongst the highest contributors to unplanned load losses. Any improvement in Solutions for some areas developed and tested on Medupi 3. Rolled out to other these stations will result in massive gains New Build Defects units. Additional solutions to be rolled out to achieve desired performance. in EAF for Generation as a whole OEM engineering support and oversight on turbine centreline. Improved Quality Assurance process. Eskom Rotek Industries De-scoping ERI contracts and approach OEMs on specific plant areas, e,g, Kusile FGD, 22 Progress Regarding Medupi Unit 4 Recovery ▪ All Assurance and Forensic investigation technical recommendations have been closed; ▪ The consequence management was concluded and two employees that were under investigation have since been dismissed. ▪ The property damage assessment commenced on 15 August 2022 and the bill of quantities based on the assessment of the components has been submitted to the OEM mid-September 2022 with the response expected before end November 2022. ▪ The generator rotor refurbishment has commenced. The contract for the assessment of the generator stator has been awarded and work to remove and inspect the stator is in progress. The scope will entail the dismantling, transport, technical assessment and proposal of the technical solutions for repair; ▪ The preservation of the major balance of plant components is in an advanced stage of completion; ▪ The Insurer (ESCAP) has accepted the admissibility of the claim report issued by the Loss Adjuster; Sedgwick South Africa (Pty) Ltd; ▪ Based on preliminary results from the property damage assessment and long-lead items, the commercial operation of Medupi Unit 4 remains on track for August/September 2024. 23 Kusile Unit 1 Duct Structural Failure - Background • On Sunday, 23rd October 2022 while Kusile unit 1 was on a forced outage, the flue gas duct experienced a structural failure of the steel bend connecting the horizontal and vertical ducts at the 55m level. • The collapsed duct on Unit 1 is currently resting on the windshield, supported by the Unit 2 and Unit 3 ducts housed in the same chimney. • Due to the collapse, Unit 2 and 3 ducts are compromised and are at the risk of collapsing, as the support platform for U1 is the same as for the other units. As a result, a decision was taken to keep Unit 2 off, which was scheduled to return to service. • Unit 3 was running at a stable load but has since tripped on 3rd November due to a recycle pump issue. Assessments are currently ongoing to determine whether Unit 3 can be returned to service. 24 Group Capital Division 25 Group Capital Performance as of 30 September 2022 Execution of Major Plant 800 MW YTD Defects Correction vs YTD target of 1 594 MW vs plan (April to September 2022) ▪ Kusile Unit 4 commercial operation achieved on 01 June 2022 ▪ Kusile Unit 5 successfully achieved the boiler chemical clean, first fires on oil and coal fires milestones. Whilst executing the third steam blows, the gas air heater (GAH) experienced a fire incident, resulting in a discontinuation of all commissioning activities. Investigation underway to determine schedule impact ▪ Major plant defects correction: Rollout of the major boiler plant defect solutions agreed with the contractor in 2020 for Medupi and Kusile have been completed. At Medupi, the gas air heater, pulse jet fabric filter (PJFF) and boiler plant modifications by the boiler contractor have been implemented on all six units, except for the long-lead milling modifications on all units and the duct erosion modifications on Unit 6. ▪ First phase of the roll-out (PJFF, GAH mechanical, mill short-lead items) has been completed for all Medupi units and for Kusile Units 1, 2, 3 and 4. At Kusile, the major boiler plant modifications have been completed on four units (Units 1 to 4). Modifications on Units 5 and 6 are being rolled out during construction before commercial operation. ▪ Execution of emissions control projects: Steady progress achieved in the high frequency transformer (HFT) and electrostatic precipitator (ESP) projects; however, some construction, commercial challenges and earlier impact of COVID-19 constraints have impacted execution ▪ Execution of ash dump facility (ADF) projects: Good progress achieved on Majuba and Kendal ADFs. Construction commenced at the Kusile 10-year ADF and early civil works contract placed for the Kusile 60-year ADF. ▪ Battery Energy Storage Systems (BESS) Project: Contracts awarded for three of the four packages of Phase 1 (800MWh), with contract placement for the fourth package forecasted by end of the current financial year (FY2023). NERSA licenses approved for the various packages. PFMA pre-notification documents for Phase 2 (640MWh) have been signed-off and sent to DPE. ▪ Medupi Flue Gas Desulphurisation: Change in strategy from technology agnostic to approaching the market, using a single stage procurement strategy with an option of wet FGD 26 Status of GCD New Build Programme (inception to date): Focus is on bringing new capacity online and driving plant defect corrections ✓ Achieved CO on or Target schedule earlier than target Completed Units Latest Eskom Board Approved Target Dates FY 2023 – FY 2015 – FY 2023 FY 2025 Sere Wind Ingula Ingula Medupi Kusile Kusile Medupi Kusile Kusile Farm Unit 4 Unit 2 Unit 5 Unit 1 Unit 2 Unit 1 Unit 4 Unit 6 Mar-17 May-17 Mar-18 May-18 Jan-21 ✓ Jul-21 ✓ May-22✓ May-24 Mar-15 ✓ Jun-16 ✓ Aug-16 ✓ Apr-17✓ Aug 17 ✓ Oct-20 Jul-21 Jan-23 100 333 333 794 800 800 794 800 800 794 333 333 794 794 794 800 800 Medupi Ingula Ingula Medupi Medupi Medupi Kusile Kusile Unit 6 Unit 1 Unit 3 Unit 4 Unit 3 Unit 2 Unit 3 Unit 5 Jun-15 Jun-19✓ Dec-19 ✓ Mar-21✓ Dec-23 Aug-15✓ ✓ ✓ Jul-17 Jan-17 Jul-18 Aug-16 Jan-17 Nov-17 ✓ Jul-19 Nov-19 Mar-21 … 1 600 MW to 9 396 MW installed since 2015 & be installed over 15 533 MW installed since 2005 …. the next 3 years • The process to address the design defects of Medupi and Kusile is progressing well, and we are looking at additional enhancements 27 Use Electricity Sparingly : Together we can make a difference Minimise workplace energy use with these six super savings tips • Don’t leave machines and equipment in standby mode; switch off at the power button. • Use natural light where possible • Use efficient light bulbs. Replace failed light bulbs with energy efficient lights / LEDs. • When you leave the facility or building, remember to switch off the lights, printers and air- conditioners. • Set air-conditioners’ average temperature in summer to around 23ºC • Encourage staff to rather use the cold water taps to reduce the energy consumption by geysers Please Use Only What You Need! 28 Generation 29 We remain committed to improving Generation performance – however the external market can play a key role in addressing the current capacity gap Despite interventions - South Africa is short of capacity, it will get worse, and the current capacity as envisioned in the IRP will not be sufficient to close the gap ▪ Generation has key turnaround plans in place to improve performance and these are being driven hard ▪ There is a current capacity gap of at least 4 000MW in order to service the country’s demand ▪ This gap will need to be closed by external power suppliers to provide the space to effectively execute on the Reliability Maintenance Programme ▪ Due to the backlog in maintenance, this shortage of generating capacity in the country and the age profile of Eskom’s generation fleet, the risk of load shedding will remain until there is adequate capacity in the country ▪ Eskom will continue to drive performance improvement of its fleet within the constraints of an inadequate system and inadequate funding, which is negatively impacted by below prudent and efficient cost reflective tariffs. However, this, on its own, will not be enough to fully mitigate the risk of load shedding. 30 FY2023 Generation System Performance EAF, % FY2021 FY2022 FY2023 System Performance -9% Commercial System EAF -6% 72 -13% 71 -8% -8% 69 -13% -1% -5% • Financial year Oct 2022 MTD was 68 66 66 66 65 57.84% which was ~1 percentage 65 64 65 64 63 63 63 62 points lower (actual: 58.6%) 60 60 61 60 59 59 59 59 59 60 compared to last financial year 58 59 58 58 58 59 59 actual. 55 • Current financial year YTD October 2022 is 58.6% which is lower than last financial year YTD figures. • FY2023 YE EAF budget is 65% Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar YTD versus 58.6% YTD Eskom OCGTs, GWh +369 Eskom OCGTs 1 912 • End October 2022 is 304 GWh 1 826 (16.9% load factor) compared to +152 340 GWh actual for October 2021. +251 -164 +188 -27 +335 1 457 • YTD: October 2022 is currently at +131 -130 1 912GWh 325 -72 373 -94 340 304 -83 -115 306 245 251 269 231 145 216 211 164 160 167 198 185 139 141 • FY2023 YE budget is 1 466GWh 60 92 115 (7% load factor) versus 1 912GWh 14 28 50 66 68 41 0 70 5 YTD (15% load factor). Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar YTD 31 31 YTD Figures as at end October 2022 Lower Generation performance is largely driven by high UCLF Build-up of Unplanned Losses for FY2023 October 22 YTD from major contributors Other Losses Major Events (>300GWh*) OCLF 34 32 0.6 0.6 30 0.3 28 26 24 12.8 22 20 18 16 2.4 32.2 30.8 14 3.1 2.7 12 9.7 2.5 0.6 10 8 4.4 6 4 2 5.3 0 FLLs Outage Slip BTLs Trips PLLs Total UCLF Industrial Other OCLF Coal OCLF Total Action Unplanned Key insights • Plant performance is highly unpredictable with multiple failures experienced continuously • Current UCLF of ~31% is unsustainable for the business resulting in loadshedding incidents • Partial Load Losses (PLLs) continues to be the biggest contributor to UCLF for FY2023 • Resolving the issues sustainably requires extensive maintenance Outages and implementation of refurbishment projects YTD Figures as at end Oct 2022; *300GWh is equivalent to energy from 600MW generated for a 3-week period 32 While Generation has a myriad of challenges to resolve, the greatest impact is in load losses concentrated in five coal stations Average MW loss YTD October 2022 Others Electrical Nuclear 7% Boiler 2494 Ash plant 2% 21% 2,500 Fleet Impact 5% 2% Feed water 2,000 5% 55% 1558 1,500 1361 1354 Gas cleaning 7% 86% 1065 1028 992 1,000 948 20% 815 634 9% Turbine Mills 500 423 416 373 345 236 158 35 9% 0 14% TT KD DV MJ MD KS KR AR ML HN MT CD LT KB PK GV KM Generator Draught plant Key Insights • Tutuka, Kendal, Duvha, Majuba and Medupi contributed about 55% of the total UCLF YTD. These stations together with Kusile and Matla form the Top 6 stations of focus. Medupi not included due to signs of improvement and the focus on recovering Unit4 to yield greatest benefit. • This implies that these stations contribute ~8600 MW of the unplanned load losses – based on the average UCLF of ~14200MW. • Boiler, Turbine, Draught Plant and Generator were the main contributors (63% contribution) for October 2022 YTD. YTD Figures as at end Oct 2022 33 The Generation Improvement Plan incorporates key areas of the 9 Point Plan as well as strong focus on improving the culture 1. OPS Improvement Levers Reliability 9-Point Plan and Primary Energy New Build Partial load Maintenance Station EAF Strategy and performance and loss recovery and Technical Improvement Coal quality operationalizatio and turnaround Plan Projects actions improvement n of remaining of unit trips drive units Furthermore 2. Culture Transformation - 1.1.6.10. 3. 7-Strategic Initiatives Six Culture Cornerstones 1. People • People Prioritisation 2. Training and competence development • Operational Excellence 3. Technical excellence • Financial Prudency 4. Station Rhythm • Customer Centricity 5. Supply Chain Management • Accountability 6. Focus on the Future • Values Driven (ZIISCE) 7. Supplier Management 34 Interventions directly linked with the Presidential plan to improve the 1 availability of existing supply and increase generation capacity Action Description Responsible Bring outstanding • Bring the remaining units at Medupi and Kusile online as quickly as possible • Kusile Projects GM Medupi and ‒ Kusile Unit 4 reached commercial operation on 1 June 2022. 1 Kusile units ‒ Unit 5 will come online in December 2023 (Air heater fire), and Unit 6 in online November 2023 ‒ Return of Medupi 4 from long term forced Outage on 31 August 2024 • Medupi GM • Continue implementing reliability maintenance across the fleet during the next 12 • Maintenance GM months to prevent a further decline in its energy availability Implement • Recruitment of experienced former Eskom staff and offers of support from the • Generation GE 2 Reliability private sector Maintenance • Procurement improvement – better availability of spare parts and expertise • Power Station GMs from Original Equipment Manufacturers (OEMs) through more agile procurement. • National Treasury working on a sustainable solution to deal with Eskom’s debt • CFO in a manner that is equitable and fair to all stakeholders 3 Address Debt • Solution should be finalised before the Budget Statement in February 2023 and will provide Eskom with the space that it needs to undertake necessary investments • Use climate funding provided through the Just Energy Transition Partnership to • Climate Change invest in the grid and repurpose decommissioned power stations GM 4 JET Projects • Implement solar and battery storage projects at Komati, Majuba, Lethabo and • Projects GM several other power stations will result in over 500MW being added to the system. 5 Law Enforcement • A coordinated effort with law enforcement agencies to address sabotage, theft • Security GM and fraud at Eskom 35 The coal stations have been categorized to ensure focus and 1 optimal allocation of resources Category Criteria #1 Strategy MW installed Ave. MW unavailable • Stations that are: • Sustain current interventions 11 565MW 1 861MW Good – Performing above 70% 3 • Ensure lessons learnt are a Performers EAF, or shared with other stations in (sustain/ – Showing good the fleet improve) improvement over time • Stations that have: • Focused interventions to 19 642 MW 8 610 MW – large installed capacity 6 address UCLF (>3000MW) • Prioritising outages and – consistently high UCLF budget allocation Priority – More than 5 years • Ensure new build remaining b Stations remaining life including in units are commissioned (focused construction address defects interventions) Prepare For • Stations that are: • Safety and statutory 3 263 MW 1 243 MW Repurpose – Shutting down by 2025 4 compliance c – Small, expensive to • Risk based inspections operate and maintain • Preparation of repurposing plans Focus on Top 6 stations is for prioritization purposes. Generation will also continue to conduct maintenance on the entire fleet as the current electricity constraints requires as much megawatts as possible 1 - Number of stations (coal stations only) ; 2 stations Kriel and Arnot to be next focus of priority interventions 36 By recovering capacity, commissioning New Build, ~6000 MW can be 1 delivered by Generation in the next 24 months Capacity that can be recovered by Eskom generation within the next 24 months MW Tutuka Kendal Duvha Majuba Matla Kusile Medupi 4 6,284 1 886 1 898 794 276 568 1,600 1 361 100 500 3,890 200 1 138 330 912 310 330 344 576 261 661 310 620 800 800 794 761 360 360 Total UCLF Kusile New Medupi U4 Total 6 months 12 months 18 months 24 months recovery Unit Commissioning Notes: • Numbers are based on UCLF reduction committed, given the current YTD performance levels, and resultant availability factoring in planned maintenance. • Total of 1 960MW from Kusile (360MW performance improvement and 1 600MW commissioning of 2 units) • Medupi to return unit 4 from long term forced Outage by 31 August 2024 • The plan with timelines is being developed to address the Kusile U1 duct failure and consequent damage to Unit 2 and 3 and will offset the potential gains in the near term and until the units are fully recovered. 37 The biggest opportunity to fix the plant is during Outages – hence the 1 importance of the RMR Programme Reliability Maintenance Recovery (RMR) Programme Status at end September 2022 79 16 15 13 7 16 8 19 FY2022 Completed Executing Cancelled Deferred Deferred Remaining Additional Base plan within FY23 to FY24 outages Key insights ▪ Status of Reliability Maintenance FY2022: ➢ At the beginning of FY22 a total of 79 outages were scheduled from April 2022 to 31 March 2023. ➢ As at 31 October 2022 16 outages have been completed, 13 are currently in execution, seven have been cancelled and 16 have been deferred to later within the current financial year, eight to the next. An additional 15 short-term outages have been executed. ➢ The main work impacting plant reliability and predictability is carried out during Mini-Overhauls (70 days) and General Overhauls (86 days). There are on average 20 MGO’s and GO’s per annum for coal fired power stations ▪ Proper outage planning remains a high focus with the Outage Readiness Reviews directing sites to meet the minimum 80% target 38 1 Eskom system maintenance overview Maintenance remains a challenge: (It would be difficult to argue our regime is effective given the current performance and current PO-UCLF, much is still to be done) We currently have 2 station out of 14 Coal stations that are performing above 70% EAF. This results in unpredictability of current plant (high UCLF) that limits the space/opportunity on the system to invest in PCLF. There has also been an extended period of underinvestment in maintenance that cannot be addressed in a short period of time. Benchmarking the coal fleet against Industry Maintenance Effectiveness Standards has also identified other areas in the Maintenance value chain that require attention: (These are all part of the recovery program as can be seen in next slide) - Depth and stability of Maintenance Leadership and Management (PLOC) - Supply Chain Management - Human Capital investment - Revision of Maintenance Strategies and Work instructions given age and circumstance of plant. (MS& MW) - Use and integration of Centralized Computerized Management Systems (CCMS) Lack of secured capital funding to cater for Maintenance over the last 2 years (and the years ahead) is a challenge. Affordability budgets have required that reliability maintenance scope be sacrificed to allow for safety and statutory maintenance. The timely release of funds once made available has also compromised the ability to plan appropriately for required outages as per capacity plant. This leads to Outages being differed also impacting the expected speed of fleet recovery. Currently this remains a challenge for FY24 which is being addressed by the new Eskom Board. 39 1 Key actions to improve delivery of improved outage performance Actions in support of and supplementing Gx Strategic Initiatives led by Outage Strategic Initiatives addressing critical Sponsor in Support of Outage CoE (RMR) risks in the Outage value chain… • Expedite approval of site Outage Blue-Print structure so that stations can address issue 1. Establishment of Generation Outage of under-resourcing Steering Committee • Drive JIT spares for outages with 2. Enhance functioning of Site Outage procurement warehouse management Implementation Committees • Improve Outage post-mortems to have 3. Improved outage planning with specific lessons learnt incorporated in future outages focus on critical spares measurement in ORI • Funding release 24 months prior to breaker process open 4. Conduct deep dive into Post Outage UCLF • Facilitate improvement of outage scope (Deep dive will initiate Corrective Action reviews with Engineering CoE Plan) • Hold contractors to account 5. Implement Project Controls methodology • Improve contract administration / across stations management 6. Enhance Outage Execution & monitoring of • Completion of MSMW to have scopes drawn Outage Performance from SAP in the future • Use transversal contracts where there is a need to expedite services and spares • Contract commissioning resources for skill transfer Key Factor to consider: Above initiatives have detailed project plans with due dates and accountable individuals, monitored in Gx Turn-around and Gx Outage Steering Committee 40 1 Capex profile & projected funding requirement LOWER PRIORITY Capex spend profile (R ' Bn) 30 COMMON PLANT ELEC and C&I TURBINE 25 BOILER Pressure parts & Headers MES Compliance BOILER PM, NOX & SOX 20 BOILER Mills & Combustion System Growing gap between BOILER Fans & Airheaters full capital requirement and execution Capital Actual 15 Full Capital Requirement Capex Budget EAF increased to above 78% FY16 & FY17 10 5 0 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 • Prioritisation of funds allocated for production performance (sustainment and betterment) needs to be effectively managed, over and above the essential requirements for safety & environmental compliance. • Development to support plant refurbishment will improve availability/ EAF and reliability/ UCLF going forward. 41 1 Overall Non-fuel O&M Benchmark 42 1 Maintenance Cost Benchmark How does Generation compare to benchmark? Generation’s recent and planned maintenance spend is consistently < benchmark lower range Extracts from reports: ➢ “…. common knowledge that spending too little is to operate a wasting asset; spending too much is hurting profitability; … you can bet if it is either 1% or 6% you are in the process of putting yourself out of business”; ➢ “… a few brand new facilities running in countries with cheap labor that claim to be operating as low as 1.75% of RAV per year, but ..[we].. have [n]ever seen it sustained without serious problems” 43 43 Eskom has recently launched the 1.1.6.10. Culture Transformation 2 Programme in recognition of the need to establish a High Performance Culture 44 3 Generation Strategic Initiatives Programme has been rolled out and progress is being made in action implementation Completed In progress Not FY23 Strategy Roadmap Initiative Risks Implementat Submitted Initiatives KPI Status status status Owner Identified ion Description • Improve employee morale and productivity • Reward and recognise employee good performance People • Drive change management strategies • Implement findings from Organisation Effectiveness Survey • Implement actions from Gx Operations Excellence and Gx Board • Drive Technical and Non-Technical training Training and • Minimum required training to be compulsory Competency • Institutionalise the use of EAL development • Drive supervisory, managerial and leadership training, development and assessments • Improve Operating and Maintenance indicators • Improve Outage Planning as per ORI Score • Set Quarterly targets and assurance for the above Technical • Re-establish engineering function Excellence 45 • Measure effectiveness assessments at each site • Develop and drive operational plans • Security – NEW ADDITION Station • Establish power station guidebook Rhythm • Establish daily plant status checklist for sign-off by each PSGM • Mandate established institutional knowledge • Drive placement of long-term contracts Supply chain • Improve cataloguing of spares and management management • Improve buyer productivity • Stores management and digitisation (bar coding) Focus on the • Align all actions with Eskom 2035 Strategy Future • Ensure Gx has a sustainable role to play in the future energy market Supplier • Supplier performance management • Contracts management capability 45 A crowdsourcing digital platform developed by Eskom, was 3 launched and aims to attract a talent pool of highly skilled and experienced persons • Crowdsourcing differs from recruitment in that it is triggered by specific technical challenges, is not linked to a permanent position • To date, the database includes 238 individuals, of which 153 have been shortlisted as potentially active, skilled, and willing candidates. • Approximately 25 individuals have been selected for the first phase of the crowdsourcing intake. These individuals will commence work between November and December 2022. • Additional recruitment will take place as and when required by the business, to meet specific technical needs. To ensure sustainability and to maximise the impact of these skills, each crowdsourced individual is required to transfer skills to the permanent Eskom team that they will work with. • The platform aims to attract people meeting the following criteria: – Highly skilled electricity generation expert or technical professional (e.g. engineer, power plant operator/controller, artisan, technician) – More than 10 years of related experience – Able and willing to support Eskom – Willing to transfer your skills and expertise 46 Generation’s Operational Recovery plan is geared towards improving EAF from 59% YTD to at least 70% from FY 2025 onwards 3 World class performance 2 +70% Execute excellence 65% EAF 1 Set up for success EAF 31 Mar 24 onwards 31 Mar 23 ❑Kusile fully operational ❑Set-up the enabling structures ❑Focus on the next priority and return of Medupi 4 ‒ Turnaround plans stations from long term forced ‒ War Room outage ‒ Reliability maintenance ‒ Kriel & Arnot ❑Successful execution of ❑Closure of old stations as ❑Guard performance at current flag per the approved dead stop ship stations Koeberg unit 1 Steam dates ‒ Medupi, Lethabo, Matimba and generator project Peaking ❑Sustain Excellent Medupi ❑Continuous focus on current and future skills ❑Focus on the Top 6 priority stations performance – Tutuka, Duvha, Majuba, Kusile ❑Embed principles of ❑Ensure successful implementation of Matla, Kendal Operational Excellence Koeberg 2 steam ❑Return of Koeberg unit 2 (complete) ❑Address internal skills gaps generator and long-term and planning of next Outage operating projects ❑Drive skills development through internal and external recruitment Continuous execution of Culture transformation and 7 Strategic Initiatives 47 Transmission 48 Summary of system performance (2023) Financial year-to-date energy sent out from dispatchable plant is 0.9% lower than for the same period last year. (0.4% lower for dispatchable and renewable) IPP OCGT load factor is 11.0%, Eskom OCGT load factor is 17.5% (Financial year to date) There were 25 wind generation curtailment events in the financial year. There have been 141 days of loadshedding so far since April 2022 and 155 days of loadshedding so far since January 2022 up to 11 November 2022. The highest residual demand (demand supplied by dispatchable generation) for Calendar 2022 so far was 33 136MW on 23 June 2022 The highest contracted peak demand (demand supplied by dispatchable and renewable generation contracted to SBO) for 2022 so far was 35 005MW on 23 June 2022 Currently there is 6 280 MW of renewable generation contracted to the Single Buyer Office. 500 MW of CSP, 2 287 MW of PV and 3 443 MW of wind 49 50 Unplanned Outage Performance: Summer 2022/23 Summer UCLF+OCLF Frequency (01-Sep-2022 to 31-Mar-2023) Total view unplanned outages during Summer Thu 01-Sep-2022 to Sun 06-Nov-2022 Base Plan Assumption Base Plan + 1000MW Risk Base Plan + 2000MW Risk 50,0% 100 45,0% 43,7% 90 40,0% 80 35,0% 70 30,0% 60 Frequency in % 26,9% 25,0% 50 20,0% 18,0% 40 15,0% 30 10,0% 20 5,6% 5,3% 5,0% 10 0,0% 0,0% 0,0% 0,4% 0,1% 0,0% 0,0% 0 5,500 to 7,000 7,000 to 8,500 8,500 to 10,000 10,000 to 11,500 11,500 to 13,000 13,000 to 14,500 14,500 to 16,000 16,000 to 17,500 17,500 to 19,000 19,000 to 20,500 20,500 to 22,000 Outage Level (MW) 23.4% of the time we operated above the maximum assumption for the Summer Plan The average UCLF+OCLF over evening peaks was 15 182 MW over the summer period 50 51 Loadshedding and load curtailment summary (Up to 11 November 2022) Number of days and stages of loadshedding for the financial year to date Stage 6; 6 Stage 1; 5 5 Stage 5; 9 65 15 Stage 4; 41 Stage 2; 65 41 9 6 Stage 3; 15 In general, some of the following conditions led to the above load reductions: • Since 01 January 2022, there have been 155 days of loadshedding, with 51 days of load curtailment • Shortage of generation; • For FY2023, there have been a total of 141 days of loadshedding, with • Increased unplanned unavailability; 44 days of load curtailment • Limited fuel availability at peaking stations; • The need to conserve and replenish depleted emergency resources; • Poor coal and compromised emissions performance. Load curtailment is the load reduction obtained from customers who are able to reduce demand on instruction and satisfy the requirements of NRS048-9 for load curtailment 51 Power System Outlook (Summer Plan 2022/23) Planning process 18-month Capacity UCLF + Summer residual plan uses OCLF Plan uses 10 000MW demand 13 000 MW forecast UCLF forecast UCLF Eskom Schedule Generation Include IPP maintenance Optimised maintenance Optimised dispatchable and optimise Plan with requirements Capacity Plan generation available stress tested for 18 months with UCLF and capacity UCLF ahead assumption emergency excluding scenarios (Capacity reserves OCGTs Plan) • Power stations determine their • Gx Production and System Ops in • IPP dispatchable generation included • Estimated diesel requirement maintenance requirements consultation with other by System Operator • Estimated stage and frequency of • Environmental outage requirements stakeholders iteratively optimise • Emergency reserves such as ILS, load shedding are included the plan VPS included by System Operator All reliability maintenance outages are catered for in the 12-month planning period The maintenance outage optimization is done in the Capacity Plan using an unplanned unavailability provision of 10 000 MW. Anything higher than this does not make sense because there would be no room to schedule maintenance. The difference between the Capacity Plan and the System Outlook (Summer Plan) is that the Capacity Plan contains risks in the assumptions while the System Outlook Plan shows the consequences should those risks materialize. 53 Components of the Plan • System Operator and Generation do a detailed plan (updated weekly) for 18 months ahead. • Four critical components make up the Plan and determine the need for OCGT generation usage and load shedding. • Due to the 4 000MW uncertainty in UCLF, scenario planning is necessary to determine the likely outlook. Installed generation capacity: This includes new build non-commercial generators and dispatchable IPP OCGTs but excludes self-dispatch renewable generation. Demand forecast: The residual demand forecast (total demand less demand supplied by renewable generation) is used. PCLF: Planned generation outages for maintenance. UCLF + OCLF (Unplanned unavailability): Unplanned generation outages. 54 Risks & uncertainty The plan is “tight” and any significant outage slips will have a knock-on effect that will influence the plan from that point forward. The plan does not cater for difficulties that could arise at power stations due to industrial action or other employee protests. There is a ± 2 000 MW variance in UCLF (4 000MW). This is often the variance in one week (168 hours). This cannot be predicted and makes planning uncertain. This is equivalent to four stages of load shedding. In practical term it mostly means we operate in the range of having 2 000MW of reserve to needing Stage 2 loadshedding to create sufficient reserves. The uncertainty must be clearly understood by all stakeholders including government and the public. 55 System Operator Capacity Outlook (Base Case) System Operator Capacity Outlook (Base Case) MW Available Capacity (Excl Gas) Gas Reserve Requirement Planned Outages Unplanned Provision Peak Residual Forecast Installed Capacity 51000 49000 47000 45000 UCLF Assumption: 43000 13 000 MW 41000 39000 37000 35000 Operating Reserve 33000 PCLF 31000 Gas 29000 27000 25000 23000 Available Capacity (Excl Gas) 21000 19000 Oct 2022 Jun 2023 Jan 2023 Apr 2023 Jul 2023 Sep 2022 Dec 2022 Feb 2023 Mar 2023 Aug 2023 Nov 2022 May 2023 Month 56 56 Monthly System Status Outlook to August 2023 System Status Including 2200MW Operating Reserves Base Case Base Case + 1500 MW Risk Base Case + 3000 MW Risk Load Max Load Estimated Estimated Gas Load Max Load Estimated Estimated Gas Load Max Load Estimated Estimated Gas Peak Residual Unplanned Reduction Reduction Monthly Gas Generation Reduction Reduction Monthly Gas Generation Reduction Reduction Monthly Gas Generation Month Forecast Provision Days Stage Generation Cost (Rm) Days Stage Generation Cost (Rm) Days Stage Generation Cost (Rm) September 2022 30,109 13,000 0 138,392 R770.84 20 ❷ 408,889 R2,277.51 28 ❸ 913,265 R5,086.89 October 2022 29,223 13,000 0 142,880 R795.84 18 ❷ 412,494 R2,297.59 30 ❸ 968,202 R5,392.88 November 2022 28,922 13,000 0 134,711 R750.34 18 ❷ 540,441 R3,010.26 27 ❸ 1,095,845 R6,103.86 December 2022 28,402 13,000 0 190,365 R1,060.33 16 ❷ 668,154 R3,721.62 24 ❸ 1,303,407 R7,259.98 January 2023 28,311 13,000 2 ❶ 361,783 R2,015.13 19 ❷ 917,114 R5,108.32 29 ❸ 1,400,601 R7,801.35 February 2023 29,058 13,000 5 ❶ 192,288 R1,071.04 18 ❷ 655,377 R3,650.45 27 ❸ 1,075,496 R5,990.51 March 2023 29,185 13,000 0 156,917 R874.03 17 ❶ 654,993 R3,648.31 28 ❸ 1,262,501 R7,032.13 April 2023 31,621 13,000 0 86,867 R483.85 12 ❶ 292,521 R1,629.34 21 ❸ 677,690 R3,774.73 May 2023 34,267 13,000 2 ❶ 110,911 R617.77 18 ❷ 266,842 R1,486.31 26 ❸ 541,066 R3,013.74 June 2023 33,710 13,000 0 110,976 R618.14 16 ❷ 275,611 R1,535.15 28 ❸ 574,378 R3,199.28 July 2023 33,397 13,000 0 102,838 R572.81 16 ❷ 264,076 R1,470.90 28 ❸ 561,276 R3,126.31 August 2023 32,111 13,000 0 86,912 R484.10 12 ❷ 242,619 R1,351.39 23 ❸ 548,376 R3,054.45 Note: The basecase unplanned unavailability provision (UCLF+OCLF) has been increased to 13 000 MW for summer based on the performance over the past year. The scenarios stress tested are at 1 500 MW intervals above the basecase. 2022/11/14 57 Summary of the Outlook Basecase Basecase + 1500 MW Basecase + 3000 MW Summer 2022/23 Number of LS days 7 Days 126 Days 193 Days Highest stage of LS Stage 1 Stage 2+ Stage 3+ OCGT costs R 7.3bn R 23.7bn R 44.7bn Winter 2023 Number of LS days 2 days 74 days 126 days Highest stage of LS Stage 1 Stage 2 Stage 3+ OCGT costs R 2.8bn R 7.5bn R 16.2bn Dramatic increase in load shedding days and OCGT cost for only 1 500 MW change in UCLF History has shown that it is not possible to use more than about R 2.4bn of diesel in a month due to the physical limitations of moving the diesel to the OCGT stations. Where the Plan shows a diesel usage greater than this, additional stages of load shedding should be expected Summer: 1 September 2022 – 31 March 2023. UCLF+OCLF: 13 000 MW – 16 000 MW Winter: 1 April 2023 – 31 August 2023. UCLF+OCLF: 13 000 MW – 16 000 MW Thank You