System Status and Outlook Briefing Jan Oberholzer: Group Chief Operating Officer Rhulani Mathebula: Managing Director Generation (Act) Segomoco Scheppers: Managing Director Transmission Megawatt Park: Franklin Auditorium 11 May 2022 Contents 1 Performance Overview - GCOO 2 Generation Overview – MD: Generation 3 System Outlook: May 2022 – Sept 2022 – MD: Transmission 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 and Distribution. The unsatisfactory performance from the Generation division continues. The Distribution technical performance is positive in terms of duration and frequency of outages as well as restoration times. On the Transmission side, we see good performance with system reliability, the number of interruptions and maintenance execution that meets planned objectives. We have had no major incidents year-to-date. Municipal debt and Energy losses remain a challenge and working closely with government, communities and the public to implement the strategies towards resolution. Koeberg Nuclear Power Station Unit 1 continues to operate safely and has been online for 196 days today. Unit 2 commenced with a normal maintenance and refueling outage on 18 January 2022 during which the reactor vessel head and the three steam generators were to be replaced (SGR). • Due to the significant risk to the grid posed by delays in carrying out the SGR installation according to the outage plan, we decided to postpone the SGR to the next refueling outage. The reactor vessel head replacement continues during the current outage. 3 Overview and summary of Eskom system year-to- date performance (2/3) Kusile Unit 4 was first synchronised on 23 December 2021 and achieved full load (800 MW) on 11 January 2022. On 28 March 2022, the 72-hour full load test run was achieved and on 27 April 2022, the 30-day reliability run was successfully accomplished and declared complete, as commissioning tests continue towards commercial operation. Commercial Operation planned for 2022. On course for commercial operation by July 2022. Coal stock levels are healthy – average of 38 stock-days, 77 stock-days when including Medupi, which has excess coal. The Generation side of the business remains a concern, specifically the availability of the coal power stations. End-March 2022 Energy Availability Factor (EAF) at 62.0% is below the the targeted performance level. A key contributor to the low EAF was high levels of planned maintenance over the summer months. The high levels of unplanned outages remain a concern, however, we continue to drive our Reliability Maintenance Recovery Programme to reduce these. 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. 4 Overview and summary of Eskom system year-to- date performance (3/3) Rain Readiness plans have generally held up against high summer rainfall and with the sustained rains in April there are further opportunities identified for continuous improvement. Unfortunately, as at 10 May 2022 increasing breakdowns and low plant availability forced Eskom to implement loadshedding totaling 31 days since 01 January 2022, compared to 26 days between January 2021 and 10 May 2021. Due to the system constraints, we have used more that the anticipated levels of diesel for our Open Cycle Gas Turbines (OCGTs). Environmental matters such as emissions have shown good improvements year-to-date, but are not yet at the set targets. Safety is better than the tolerance levels. Regrettably, however, we have had 3 employee and 2 contractor fatalities by the end of the 2022 financial year. 5 Transmission Performance as at end March 2022 98.8 % Maintenance SM<1 of 2.88 vs YE target of 3.53 Execution 2 Major Incidents 26 Interruptions vs YE target of 2 vs YE target of 34 ▪ System reliability performance: A very good System Minute <1 performance was achieved, supported by a relative low number of interruptions. ▪ Two Major Incidents have occurred, which is within the planned limit. ▪ 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. 6 Distribution Performance as at end March 2022 Electrification SAIDI SAIFI 97 948 35.46 12.34 vs. vs. vs. YTD Target of 99 724 38.00 Tolerance 19.60 Tolerance Planned Maintenance Refurbishment Restoration Time Completed Spent 95.15% R286m 93.39% vs. vs. vs. YTD Target of 93% YTD Target of R540m 91% Target ▪ Network performance has been sustained, as measured by SAIDI and SAIFI. ▪ Restoration Time was better than target, while Planned Maintenance was completed as scheduled. ▪ The Electrification programme was hindered by material availability during the latter part of the year. ▪ Key Refurbishment projects not completed during the year will be rolled over into the new financial year. ▪ Increased theft and vandalism of network equipment continues to impact operations and system reliability. ▪ Electricity theft continues to manifest as an operational, financial and public safety risk. 7 Group Capital Performance as at 30 March 2022 Execution of Major Plant 1 594 MW YTD Defects Correction vs YTD target of 1 594 MW vs plan (Jan 2021 to April 2022) ▪ Kusile Unit 4 first synchronised on 23 December 2021 and achieved full load (800MW) on 11 January 2022. On 28 March the unit achieved the 72-hour full load run, and on 27 April 2022, the 30-day reliability run was successfully completed. Commissioning tests continue towards commercial operation. ▪ The recovery programme on Medupi Unit 4 has progressed well. The targeted return date is August 2024. ▪ Major plant defects correction: At Medupi, boiler plant modifications have been implemented on all six units, except for the long lead time milling modifications and the duct erosion modifications on Unit 6. At Kusile Units 1 & 2: the boiler plant modification outages have been completed. In February 2022 commenced on Unit 3, to end during May 2022. ▪ Execution of emissions control projects: Steady progress achieved in the projects; however, some construction, commercial challenges and COVID-19 constraints have impacted execution. ▪ Execution of ash dam projects: Significant progress achieved with ashing at Camden and Majuba. However, some construction, commercial challenges, inclement weather and COVID-19 constraints have impacted execution ▪ Battery Energy Storage Systems (BESS) Project: In March 2022, pre-contract award discussions were held with the two recommended bidders for Phase 1. Draft contract documents were shared with the bidders. Medupi Flue Gas Desulphurisation (FGD): Functional specification completed for sign-off. Contract Strategy draft document finalised and being signed off. 8 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 Latest Eskom Board Approved Completed Units Target Dates FY 2015 – FY 2022 FY 2022 – 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 ✓ Jan-23 May-24 Mar-15 ✓ Jun-16 ✓ Aug-16 ✓ Apr-17✓ Aug 17 ✓ Oct-20 Jul-21 100 333 333 794 800 800 794 800 800 794 333 333 794 794 794 800 800 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 … 2 400 MW to be 8 596 MW installed since 2015 & installed over the next 4 14 733 MW installed since 2005 …. years 9 Nuclear – Koeberg Performance end March 2022 2 UAGS Trips vs. YTD target of 2 for FY22 76.24% 2.86% EAF Actual YTD vs. Forced Loss Rate vs. YTD Target of 82.70% YTD Target of 3.47% ❑ The lower than planned EAF is primarily due to the delays experienced in returning Unit 1 to service during the refuelling outage during 2021. ❑ The high reliability of Koeberg is reflected in the low forced loss rate, which remains below the target even though there have been two unit trips during FY22. . 10 Koeberg Nuclear Power Station Recent noteworthy items related to Koeberg: ▪ Unit 1 has since been on-line for 196 days (as of today). ▪ Unit 2 had been on-line for 454 days when it was shut down for a 155-day outage on 18 Jan 2022 with an uninterrupted run since completing its last refuelling outage in October 2020. ▪ 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 has been submitted to the National Nuclear Regulator and accepted for further processing. ▪ Eskom will by June 2022 submit the required supporting submissions to the NNR for evaluation. The required studies and reports remain on track and as expected no safety concerns have been identified that would preclude long term operation. ▪ 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 was satisfied with the safety aspects of the life extension project. ▪ Upcoming Unit Outages and Steam Generator Replacement: ▪ Unit 1 will commence a long outage in the last quarter of 2022 during which the three steam generators will be replaced (excluding reactor vessel head replacement which has already been completed on Unit 1). ▪ Unit 2 SGR will undergo a similar long outage towards the end of 2023. 11 Generation performance for End March 2022 reflects the challenges being faced with plant availability and reliability 697 UAGS Trips vs 392 for 62.02% YE target for FY22 Availability vs 74% YE target for FY22 25.36% 4 851MW Unplanned load losses vs 14% YE target for FY22 Partial load Losses vs 3 969MW YE target for FY22 10.23% R6.4bn* Planned maintenance vs Open Cycle gas 10.5% YE target FY22 turbines cost vs projected R8.5bn * Eskom OCGTs only as at end March 2022 Technical Targets as per FY22 SHC Figures as at end March 2022, though it must be noted that figures are still to audited 12 The FY2021 EAF performance was lower overall compared to the FY2020 performance. The FY2022 performance continues to be lower than the aspiration resulting in intermittent load shedding. Generation monthly and YTD performance Contributing factors Percentage (%) OCLF UCLF PCLF EAF • Slips, trips, boiler tube failures, partial and full load 2 1 1 1 losses all contributed to the 2 3 2 3 2 3 3 3 2 2 2 high UCLF. • Generation fleet end-March 22 21 23 22 26 25 27 27 29 27 27 28 25 30 30 EAF at 62.02% is below the Year-End target of 74%. 8 11 • During the year, a delicate 6 11 7 12 10 balance was required to giving 11 12 12 12 11 11 12 12 the plants opportunity for planned maintenance and the having the plants available to support the system. The ratio of short-term to long-term is about 1:2 67 67 66 64 64 63 62 58 58 58 59 59 59 57 57 Mar’22 Aug’21 Sep’21 Oct’21 Feb’22 Nov’21 Dec’21 FY22 YTD FY23 YTD Apr’21 May’21 Apr’22 Jul’21 Jun’21 Jan’22 13 YTD Figures as at End April 2022 (Prelim) Long Term maintenance decreased from mid May to end June 2021, which is typical for the winter period, and increased for the summer months Short term YTD PCLF: 3.43% Long term YTD PCLF: 7.20% 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. Updated as at End March 2022 (Prelim) for Commercial Units 14 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. 15 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. 16 Eskom plant’s planned maintenance time (PCLF) below peers 17 • 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 17 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 18 • 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 18 Eskom plant’s Unplanned Energy 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. 19 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 have key turnaround plans in place to improve performance and these are being drive hard ▪ There is a current capacity gap of at least 4 000MW in order to service the countries 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. 20 Conclusion - GCOO • We see a continuation of the strong performances from our Transmission and Distribution businesses. • Summary Our Group Capital of Eskom division system is making steady progress on the new build performance programme, with Kusile Unit 4 now adding up to 800MW of additional capacity to the grid during testing prior to commissioning. • The process to address the design defects of Medupi and Kusile is progressing well, and we are looking at additional enhancements. • South Africa desperately needs additional generation capacity of 4 000MW to 6 000MW. Bringing on new capacity onto the grid is critical. With power stations reaching the end of their operational life, the gap will increase. • This gap will need to be closed by external power suppliers to provide Eskom the space to effectively execute on the Reliability Maintenance Programme. • We hope to see positive progress on government’s emergency capacity procurement programme to close the generation capacity gap in order to fully service the country’s demand. 21 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! 22 Contents 1 Performance Overview - GCOO 2 Generation Overview – MD: Generation 3 System Outlook - MD: Transmission 23 FY2022 System Performance (and up to May 2022 Commercial units) EAF, % FY2021 FY2022 FY2023 System Performance -5,7 Commercial System EAF -6,5 -1,3 72,1 -0,2 -2,2 -1,4 70,7 -6,0 -4,0 -2,4 • Financial year Mar 2022 MTD was 68,9 67,6 +1,1 -1,0 66,4 66,4 66,2 65,3 -1,3 +0,9 59% which was one percentage 64,5 64,2 64,6 64,2 points lower (actual: 60.2%) 63,1 63,0 62,9 60,2 61,8 compared to last financial year 60,1 58,9 57,6 58,8 59,7 59,2 57,9 58,6 58,9 58,8 March actual. 57,6 • Financial year YTD Mar 2022 is 61.8% which was about two percentage points (actual: 64.2%) lower than last financial year YTD figures. Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar YTD • FY2022 YE EAF budget was 70% versus 61.8% YTD +369 Eskom OCGTs 1 826 Eskom OCGTs, GWh • MTD: Mar 2022 was 141 GWh 1 457 (7.9% load factor) compared to 306 GWh actual for Mar 2021. • YTD: Mar 2022 was at 1826 GWh +335 -130 -164 compared to 1457 GWh YTD +188 +152 +251 -115 +131 -83 actuals for last financial year. -72 -94 -27 340 306 269 • 245 251 145 216 211 164 160 198 185 139 141 FY2022 YE budget was 211 GWh 115 14 28 50 60 92 66 68 41 5 0 70 (1% load factor) versus 1826 GWh Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar YTD YTD (8.7% load factor). 24 24 YTD Figures as at May 2022 Lower Generation performance largely driven by high UCLF Build-up of Unplanned Losses for FY2022 March 22 Y-End from major contributors Other Losses ME OCLF 30 0.8 0.9 25 0.7 20 10.7 15 3.8 27.7 3.0 0.8 25.4 10 2.2 6.1 2.4 5 3.4 0 2.8 FLLs BTLs Trips Outage PLLs Total Camden Coal Other Total Slip UCLF Ash OCLF OCLF Unplanned Constraints Key insights • Plant performance is highly unpredictable with multiple failures experienced continuously • Current UCLF of ~28% is unsustainable for the business resulting in loadshedding incidents • Partial Load Losses (PLLs) continues to be the biggest contributor to UCLF for FY2022 • Resolving the issues sustainably requires extensive maintenance Outages and implementation of refurbishment projects 25 YTD Figures as at end March 2022 Station Contribution to Total UCLF FY2022 March 22 Y-End – 25.36% Average MW loss YE March 2022 2,400 Fleet Impact Other 2256 10% Boiler 2,200 Ash Plant 44% 20% 2,000 4% Electrical 1,800 5% 1613 1,600 Gas Cleaning 6% 1,400 94% 1,200 1139 1017 1,000 879 Feed Water 7% 17% 800 760 759 642 600 Turbine 495 488 8% 391 367 Mills 400 278 200 178 150 10% 14% 21 20 0 Generator Draught Plant TT KD DV MD MJ AR KR ML HN MT KS LT CD KB GV PK KM Key Insights • Tutuka, Kendal and Duvha contributed about 44% of the total UCLF YTD. • Boiler, Turbine, Draught and Generator were the main contributors (61% contribution) for the period of FY2022 Y-end. YTD Figures as at end March 2022 26 The Generation Improvement Plan focus areas and initiatives Improve Energy Availability 9-Point plan and Address PLL’s Coal Quality Fill critical vacancies Outage preparation Reduce trips Power Station through the improvement drive in Leadership, Ops, improvement through EAF Commitment established through regular maintenance, Implement identification of root Plans recovery teams mine interactions engineering and maintenance causes and outages effectiveness initiatives Furthermore Leadership and Culture 7 Strategic Initiatives Key priorities 1. People • Leadership accountability 2. Training and competence development • Drive technical focus 3. Technical excellence • Improve housekeeping 4. Station Rhythm • Active risk management 5. Supply Chain Management • Power station assessment drive 6. Focus on the Future • Change management strategies 7. Supplier Management 27 The biggest opportunity to fix the plant is during Outages – hence the importance of the RMR Programme Reliability Maintenance Recovery (RMR) Programme Status at 31 March 2022 84 ▪ Impacted negatively by funding and capacity constraints, as well as 47 execution challenges 7 29 47 1 FY2022 Completed Executing Cancelled Deferred Additional Base plan to FY2023 outages Key insights ▪ Status of Reliability Maintenance FY2022: ➢ As at 31 March 2022, of the 84 outages 47 have been completed, 7 are in execution, 1 was cancelled and 29 were deferred to the next financial year. An additional 47 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 ▪ There will be a 3-year lag period to have completed MGO’s or GO’s on the coal fleet units ▪ The RMR programme requires adequate capital funding, expeditious procurement process to be in place to ensure the successful implementation, as well as the support of a motivated and resourced workforce. The latter has become a key focus area driven through Generation’s Human Resources to improve employee morale on site 28 28 Critical Outage Performance Indicators Generation Outage Performance Outage Readiness Indicator Due Date Performance 82% 80% 75% 80% 80% 70% 67% 78% 60% 76% 50% 50% 47% 43% 74% 40% 40% 72% 72% 30% 70% 71% 71% 71% 70% 20% 68% 66% 10% 64% 0% FY22 (Q1) FY22 (Q2) FY22 (Q3) FY22 (Q4) FYE22 FY22 (Q1) FY22 (Q2) FY22 (Q3) FY22 (Q4) FYE22 ORI Gx Target DDP Gx Target 29 Outage Duration Reduction Post-outage UCLF 7% 45% 40% 6% 38% 40% 6% 35% 5% 29% 30% 4% 25% 3% 22% 3% 3% 20% 14% 15% 2% 2% 2% 15% 10% 1% 1% 5% 0% 0% FY22 (Q1) FY22 (Q2) FY22 (Q3) FY22 (Q4) FYE22 FY22 (Q1) FY22 (Q2) FY22 (Q3) FY22 (Q4) FYE22 ODR Gx Target PO-UCLF Gx Tolerance • Proper outage planning remains a high focus with the Outage Readiness Reviews directing sites to meet the minimum 80% target. • Outage Readiness Indicator Performance has remained steady quarter on quarter but remained below target in all quarters. • Post Outage UCLF showed better performance in quarter 2, but the gains have since been erased by quarters 3 & 4 performance. 29 Progress regarding Medupi U4 Recovery ▪All Assurance and Forensic investigation technical recommendations have been closed. ▪Management expects to conclude consequence management actions by the end of May 2022. ▪Continued planning and execution of activities for property damage assessment to generate bill of quantities and quantification thereof is planned for completion by 31st of May 2022. ▪The commercial process and award of the first contract for the refurbishment of the generator stator is expected no later than 15th of June 2022. The high level scope of work of the first contract entails: ▪The decommissioning, dismantling and stripping, loading and offloading, transport, technical assessment, engineering and technical solution. ▪Based on preliminary results from the property damage assessment and long-lead items, the commercial operation of Medupi Unit 4 is expected by August 2024. ▪The Insurer (ESCAP) has accepted the admissibility of the claim report issued by the Loss Adjuster, Sedgwick South Africa (Pty) Ltd. ▪Preservation of 23 plant systems (non-damaged property) is ongoing. 30 Overall Non-fuel O&M Benchmark 31 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” 32 32 The maintenance backlog remains a substantial risk to performance Maintenance issues cutting across multiple stations (deep dive on next slides) A. Vacuum issues at various power stations B. Late Control and Instrumentation Refurbishment projects C. Maintenance backlog in preventing Boiler Tube Leaks D. Overdue environmental projects E. Water Treatment Plants refurbishment projects 33 The maintenance backlog recovery plan update (1/2) Maintenance issues cutting across multiple stations Description Recovery plan Vacuum issues at various power • Scaling/fouling affect Condensers • Clean condenser tubes during every stations and Cooling Tower performance outage • Replace cooling tower fill at Tutuka, Matla 4-6, Kriel and Duvha Late Control and Instrumentation • Increasing failure rate of obsolete • Expedite procurement and funding Refurbishment projects systems, lack of OEM support and allocations for high priority C&I spares and loss of skilled resources refurbishment projects. to maintain the DCS leading to • Contracting skilled resources higher risk of unit trips, load losses • Procurement of Critical Spares and extended outages. Overdue environmental projects • Particulate Reduction is progressing • Funding is revised to reflect latest market at a slower rate than expected costs and schedules. units to be completed largely due to tenders coming in by 2025 with the remaining by 2027. higher than approved budget and • Risk remains at Tutuka and Kriel feasibility longer execution durations. considering the shut-down by 2030. • SOx and NOx reduction projects are • Contracts placed for High Frequency Power on hold primarily due to funding Supplies (HFPS) on precipitators at several constraints stations (KD, KR, ML, LT, TT 4-6) • Awaiting review of the appeal process of the Oct 21 MES Application Record of Decision. 34 The maintenance backlog recovery plan update (2/2) Maintenance issues cutting across multiple stations Description Recovery plan Maintenance backlog in • A tube failure is considered to have • Preventative maintenance by executing full preventing Boiler Tube Leaks occurred when a boiler tube’s repair scope of work during planned pressure boundary is broken and outages. cause a leak or rupture. Water Treatment Plants • Most of the Demin Water Production • Refurbishment of the demineralised-water refurbishment projects Plants are in much need of production plants at the highest priority refurbishment. stations is in progress. • Remaining stations will be expedited according to the refurbishment plan. 35 Enablers required for improved Generation performance Enabler Description Current Situation Support Required Contracting of OEM Majority of Generation’s maintenance is A review of Generations Engagements with major contracts to and Capable performed by contractors. Poor Outage indicators shows address performance issues and strict contractors performance by the contractors has a below target performance adherence to release of outage with direct impact on Eskom’s overall due to project overruns and ORI>80% performance quality issues Timeous and Full funding required for all outages at T-7. All outage fully funded T-0 to To secure at least an additional R2bn in in adequate outage Late release of funding poses a risk on T-3 . the short term funding outage readiness All outages funded 85% for Budget required R10, 532bn (to be outages between T-4 to T-6. challenged and optimised internally) Outages from > T-7 only Long Released to date R6,171bn Lead spares released . Space for planned Deferral of critical planned reliability Current shortfall of at least Market Operator contracting 4000 MW maintenance maintenance leads to delay in recovering 4000MW new capacity shortfall (DMRE plant performance and predictability engagement as needed) Managing change in A balancing act is required between Drive JET investments and DMRE to ensure adequate IPP build. energy environment managing current supply and shutting roll out of projects to off-set Eskom allowed to build clean energy new down stations in line with the JET Strategy the Generation capacity capacity going off-line Pricing Policy to be considered to ensure: • A level playing field for Generation fleet and new build vs IPPs • Cost reflective / value related process for ancillary services (unbundled tariffs) Reach mutual Eskom submitted a postponement DFFE rejected the Request a formal conciliation process to agreement on application demonstrating key postponement and Eskom resolve, environment, socio-economic, environmental sustainability issues. has appealed supply and tariff increase required statutory compliance requirements 36 36 Komati: Eskom’s flagship site to demonstrate our R&R1 ambitions for a Just Energy Transition Independent Assessments of Repowering & Repurposing Potential @ Komati P/S 1. Repowering Initiatives: • Solar (~100MWp) + 50MWp Ash Dam • Battery Storage (150 MW = 600MWh) • Gas (possible 500MW, not cost competitive at this stage) • Wind (50MW) • SCO 2. Repurposing Initiatives: • Microgrid Assembly • AgriVoltaics (500kWp) • Ash Geopolymer Manufacturing 3. SEIM Initiatives to support 1 & 2: Enabling, Empowering, Reskilling, Upskilling • Microgrid Assembly • Farming (Aquaponics, Raised beds) • Enterprise Development • SMME Incubator • Digital Hubs Areas suitable for solar arrays, batteries, and possible gas power plan 37 1. Repurposing and Repowering Eskom celebrated two noteworthy environmental achievements at Ingula in February 2022 1. The proclamation of the 8 000+ ha surrounding the station as the Ingula Nature Reserve 2. The international recognition of the wetlands on site as the 27th Ramsar certified site in SA 38 • These achievements are the product of close collaboration between the Ingula Partnership (BirdLife SA & Middelpunt Wetland Trust), local and national government and key environmental stakeholders. • The coffee table book “Of Watts and Wetlands’ was launched which tells the story of how Eskom successfully built the largest pumped storage scheme in Africa and finely balanced construction, and now operations, with solid nature conservation efforts that will leave a lasting legacy for our country. 38 Contents 1 Performance Overview - GCOO 2 Generation Overview – MD: Generation 3 System Outlook - MD: Transmission 39 Summary of system status for FY21/22 Financial year-to-date energy sent out from dispatchable plant is 1.6% lower than for the same period last year. (0.2% lower for dispatchable and renewable) IPP OCGT load factor is 10.8%, Eskom OCGT load factor is 15.6% (Financial year to date) There were two wind generation curtailment events in the financial year. There has been 31 days of loadshedding so far since January 2022. The highest residual demand (demand supplied by dispatchable generation) for Calendar 2022 so far was 30 838MW on 25 April 2022 The highest contracted peak demand (demand supplied by dispatchable and renewable generation contracted to SBO) for 2022 so far was 31 930MW on 25 April 2022 40 41 Unplanned Outage Performance: Summer 2021-22 Summer UCLF+OCLF Frequency (01-Sep-2021 to 31-Mar-2022) Total view unplanned outages: Wed 01-Sep-2021 to Thu 31-Mar-2022 Base Plan Assumption Summer 25,0% 100 23,5% 22,6% 20,3% 90 20,0% 80 70 15,0% 12,9% 60 12,1% 50 10,0% 40 30 5,0% 4,1% 3,6% 20 0,6% 10 0,0% 0,1% 0,0% 0,0% 0 9,000 to 10,000 10,000 to 11,000 11,000 to 12,000 12,000 to 13,000 13,000 to 14,000 14,000 to 15,000 15,000 to 16,000 16,000 to 17,000 17,000 to 18,000 18,000 to 19,000 8,000 to 9,000 39.7% of the time we operated above the maximum assumption for the Summer Plan The average UCLF+OCLF over evening peaks was 14 318 MW over the summer period 41 42 Loadshedding and load curtailment summary YTD for Calender Year 2022 Stage 4; 4 Stage 1; 3 Stage 3; 2 Stage 2; 21 In general, some of the following conditions led to the above • For FY2022, there have been a total of 65 days of load reductions: loadshedding, with 22 days of load curtailment at • Shortage of generation; Stage 1&2 • Increased unplanned unavailability; • Limited fuel availability at peaking stations; • Since 1 January 2022, there have been 30* days of • The need to conserve and replenish depleted emergency loadshedding, with 13 days of load curtailment at resources; Stage 1&2 • 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 * As at 9 May 2022 42 43 Unplanned Outage Performance: Winter 2022 Winter UCLF+OCLF Frequency (01-Apr-2022 to 31-Aug-2022) Total view unplanned outages during Winter Fri 01-Apr-2022 to Sun 08-May-2022 Base Plan Assumption 50,0% 100 45,0% 43,6% 90 40,0% 80 35,0% 33,4% 70 30,0% 60 25,0% 50 20,0% 16,6% 40 15,0% 30 10,0% 20 5,0% 3,1% 3,3% 10 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0 9,000 to 10,500 12,000 to 13,500 21,000 to 22,500 10,500 to 12,000 13,500 to 15,000 15,000 to 16,500 16,500 to 18,000 18,000 to 19,500 19,500 to 21,000 6,000 to 7,500 7,500 to 9,000 Outage Level (MW) 36.7% of the time we operated above the maximum assumption for the Winter Plan The average UCLF+OCLF over evening peaks was 14 588 MW over the winter period 43 Power System Outlook (Winter Plan 2022) Planning process 18-month Capacity UCLF + Winter Plan residual plan uses OCLF uses 12 10 000MW demand 000 MW forecast UCLF forecast UCLF Eskom Schedule Generation maintenance maintenance and optimise Include IPP Optimised Plan with requirements Optimised Capacity Plan dispatchable available with UCLF assumption generation and stress tested UCLF for 18 months scenarios capacity emergency reserves ahead excluding (Capacity 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 (Winter Plan) is that the Capacity Plan contains risks in the assumptions while the System Outlook Plan shows the consequences should those risks materialize. 45 Components of the Plan Four critical components make up the Plan and determine the need for OCGT generation usage and load shedding: 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. 46 Cumulative Monthly Unplanned Outage Levels Cumulative Monthly Unplanned Outage Levels Monthly OCLF % Monthly UCLF % UCLF+OCLF % Trend - Jan 2017 to Mar 2020 UCLF+OCLF % Trend - Apr 2020 to-date Monthly OCLF MW Monthly UCLF MW 50,0% 25 000 • Unplanned unavailability has been steadily increasing since 2017. 45,0% 22 500 • There was a step change in the levels during the COVID-19 lockdown when unplanned unavailability decreased. 40,0% 20 000 • Since then, the unplanned unavailability has steadily increased Average Monthly Outages (MW) again, albeit at a slightly slower rate. 35,0% 17 500 30,0% 15 000 25,0% 12 500 20,0% 10 000 15,0% 7 500 10,0% 5 000 5,0% 2 500 0,0% 0 May-2017 May-2018 Jul-2018 May-2019 May-2020 May-2021 Jul-2017 Jul-2019 Jul-2020 Jul-2021 Mar-2019 Jan-2017 Mar-2017 Nov-2017 Mar-2018 Nov-2018 Nov-2019 Mar-2020 Nov-2020 Mar-2021 Nov-2021 Mar-2022 Sep-2017 Jan-2018 Sep-2018 Jan-2019 Sep-2019 Jan-2020 Jan-2021 Sep-2021 Jan-2022 Sep-2020 47 Critical success factors All resources and funding must be made available as needed to execute this plan. Any changes to this will have a knock-on effect that will influence the plan from that point forward. The success of the plan relies on sufficient diesel to support the power system during periods of high UCLF. Without sufficient diesel to power the 3 000 MW of OCGT, 3 additional stages of load shedding could be added to the scenarios shown below. Prolonged diesel usage may result in delays in getting fuel to the OCGT stations (approval of funds, procurement of product & logistics to move fuel). Failure to supply sufficient diesel will lead to further load shedding. 48 Summary of the Plan All reliability maintenance required in the 12-month planning period has been accommodated in the plan. This has resulted in a “full” plan with little room to move, extend or add outages. This outage plan was stress-tested with 3 scenarios by the System Operator to estimate the OCGT usage and level of load shedding. For winter 2022, 12 000MW, 13 500MW & 15 000MW of UCLF + OCLF provision was used. For the most part the System Operator will need to source operating reserves from Demand Response (DR) products as well as from emergency reserve sources such as Interruptible Load Shedding (ILS) and OCGTs. The Plan requires OCGT usage over weekdays, and low diesel usage on some weekends. The failure of Medupi 4 has increased the dependency on diesel generation to manage the power system. 49 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. This is equivalent to four stages of load shedding. In practical term it mostly means we operate in the range of having 2 000 MW of reserve to needing Stage 2 load shedding to create sufficient reserves. There is a ± 2 000 MW variance in UCLF (4 000 MW). This is often the variance in one week (168 hours). This cannot be predicted and makes planning uncertain. The uncertainty of the Plan must be clearly understood by all stakeholders including government and the public. 50 System Operator Capacity Outlook for next 12 Months - 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 Winter UCLF Summer UCLF 43000 Assumption: Assumption: 12 000 MW 13 000 MW 41000 39000 37000 35000 Operating Reserve 33000 PCLF 31000 29000 27000 Gas 25000 Available Capacity (Excl Gas) 23000 21000 19000 Jun 2022 Oct 2022 Apr 2022 Jul 2022 Jan 2023 Mar 2022 Sep 2022 Dec 2022 Feb 2023 Mar 2023 Aug 2022 May 2022 Nov 2022 Month 51 51 52 Monthly System Status Outlook to April 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) April 2022 29,837 12,000 0 49,517 R174.30 8 ❶ 194,421 R684.36 21 ❷ 520,160 R1,830.96 May 2022 33,236 12,000 0 54,499 R191.83 6 ❷ 161,670 R569.08 22 ❸ 368,069 R1,295.60 June 2022 32,884 12,000 0 47,680 R167.83 6 ❶ 150,715 R530.52 19 ❸ 340,568 R1,198.80 July 2022 33,450 12,000 0 53,921 R189.80 9 ❶ 161,480 R568.41 20 ❸ 358,753 R1,262.81 August 2022 31,924 12,000 0 68,466 R241.00 8 ❶ 198,832 R699.89 22 ❷ 437,741 R1,540.85 September 2022 30,883 13,000 0 132,080 R464.92 18 ❷ 348,968 R1,228.37 25 ❸ 781,229 R2,749.92 October 2022 30,308 13,000 0 109,614 R385.84 17 ❷ 370,663 R1,304.73 26 ❸ 895,611 R3,152.55 November 2022 29,689 13,000 3 ❶ 225,752 R794.65 23 ❷ 721,950 R2,541.27 30 ❸ 1,269,518 R4,468.70 December 2022 28,837 13,000 0 212,083 R746.53 15 ❷ 712,471 R2,507.90 26 ❸ 1,359,114 R4,784.08 January 2023 28,461 13,000 4 ❶ 321,692 R1,132.36 21 ❷ 871,049 R3,066.09 28 ❸ 1,370,501 R4,824.16 February 2023 29,208 13,000 9 ❶ 256,238 R901.96 18 ❸ 744,524 R2,620.72 27 ❹ 1,163,166 R4,094.34 March 2023 29,585 13,000 0 222,222 R782.22 20 ❷ 733,360 R2,581.43 29 ❸ 1,338,642 R4,712.02 Note: The base-case unplanned unavailability provision (UCLF+OCLF) has been increased to 12 000 MW for winter and 13 000 MW for next summer based on the performance over the past year. The scenarios stress tested are at 1 500 MW intervals above the base-case. 52 Summary of the plan Base case Base case + 1 500MW Base case + 3 000MW Winter 2022 Number of LS days 0 Days 37 Days 104 Days Highest stage of LS N/A Stage 2 Stage 3+ OCGT costs R 1.0bn R 3.1bn R 7.1bn Summer 2022/23 Number of LS days 16 days 132 days 191 days Highest stage of LS Stage 1 Stage 3+ Stage 4+ OCGT costs R 5.2bn R 15.9bn R 28.8bn Significant increase in load shedding days and OCGT cost for only 1 500MW change in UCLF History has shown that it is not possible to use more than about R 1.2bn 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 Winter: 1 April 2022 – 31 August 2022. UCLF+OCLF: 12 000 MW – 15 000 MW Summer: 1 September 2022 – 31 March 2023. UCLF+OCLF: 13 000 MW – 16 000 MW 53 Thank You