ELECTRIC SECTOR INSTITUTIONAL

ARRANGEMENTS AND GOVERNANCE

Owen Zinaman

Technical Lead

21CPP – South Africa

April 22, 2016

ENERGY ISSUES AND

IMPLICATIONS FOR

MACROSTABILITY

WORKSHOP

SOUTH AFRICA, NREL AND THE

21ST CENTURY POWER PARTNERSHIP

• The South Africa program connects South African stakeholders

with an international community of expertise.

• Activities: demand-driven technical assistance program; network

building and information exchange; sharing of global best

practices; collaboration on Reports by multi-country author teams

to advance global dialogue

EVOLVING DEFINITIONS OF POWER

SECTOR ECONOMIC EFFICIENCY

• Technology disruption driving evolution in the

meaning of (and means to)“efficiency”

• Increasing need to:

– Account for technology disruption, price evolutions, and

uncertainty/risk

– Align utility interests with system cost efficiency

– Ensure generation investment bankability

– Develop new concepts for cost recovery

– Address stranded assets

EVOLVING PROJECT BANKABILITY

REQUIREMENTS

0.0

1.0

2.0

3.0

4.0

Land-based Wind Solar Photovoltaics CSP

Average Tariff for REIPPPPZAR / kWh (May 2015 ZAR)

Bid Window 1

(4 Nov 2011)Bid Window 2

(5 Mar 2012)

Bid Window 3

(19 Aug 2013)

Bid Window 4

(18 Aug 2014)

78%

52%

33%

20%16%

11% 10%5%

22%

48%

67%

80%84%

89% 90%95%

0%

20%

40%

60%

80%

100%

Variable Costs Fixed Costs

EVOLVING PROJECT BANKABILITY

REQUIREMENTS

0.0

1.0

2.0

3.0

4.0

Land-based Wind Solar Photovoltaics CSP

Average Tariff for REIPPPPZAR / kWh (May 2015 ZAR)

Bid Window 1

(4 Nov 2011)Bid Window 2

(5 Mar 2012)

Bid Window 3

(19 Aug 2013)

Bid Window 4

(18 Aug 2014)

78%

52%

33%

20%16%

11% 10%5%

22%

48%

67%

80%84%

89% 90%95%

0%

20%

40%

60%

80%

100%

Variable Costs Fixed Costs

ENERGY EFFICIENCY

Thought Experiment: Large-scale rollout of customer energy

efficiency program

UTILITY COST RECOVERY

APPROACHES

Ag Res Com Ind

Customer Class

ZA

R /

kW

h

Ag Res Com Ind

Customer Class

Treasury

Real

Cos

t

WHERE IS ESKOM GOING?

~40,000 MW ~120,000 MWToday (2015) Future (2050)

WHERE IS ESKOM GOING?

95%

~40,000 MW ~120,000 MWToday (2015) Future (2050)

WHERE IS ESKOM GOING?

In a “wires-only” future, can

Eskom be a growing and

profitable enterprise?

Source: McKinsey: Brighter Africa

ISMO AND AN ESKOM DEVELOPMENTAL

ROLE – IS IT IRRECONCILABLE?

• Not all “ISMO” futures are

created equal

• Large diversity of end points that

meet the definition of ISMO

ISMO AND AN ESKOM DEVELOPMENTAL

ROLE – IS IT IRRECONCILABLE?

• Example: Mexico