Financial
Instruments for
Large Power Users
Lodine Redelinghuys
Energy Marketing Manager
Eskom
2011/04/05
1
Content
Financial Instruments for Large Power Users
• Background
• Consumption Breakdown
• Our Key Delivery Channels
• Conclusion
Background
 Current and projected supply-demand gap shows an
electricity shortage in SA
 Urgent need to accelerate energy efficiency projects to
reduce the energy shortfall
 MYPD2 application allows for R5.45bn to be utilized on
DSM initiatives in a 3 year window
 IDM has targets over the next 3 years of:
 Demand
1074 MW
 Energy
4.1
TWh
Consumption breakdown
Our Key Delivery Channels
ESCO Process
Size
Eskom Payment
Value
Projects > 1MW
Based on
individual project
calculation
Funding
Customer and
Eskom (up to
NERSA
benchmark)
Payment
Progress
payments to
Esco’s
Risk
Eskom risk
Investment
Decision
Procurement
Decision
Individual IC
approval
Price evaluation
based on
submitted
approval
Esco - Definition
•
Projects must be:
• Sustainable
• Economically justifiable (NERSA approved criteria)
•
Process:
• Appoint an Esco to plan and maintain the project
• The Esco must be registered on the IDM database
• Project will be evaluated by IDM technical experts
• Ongoing measurement and verification process
Esco – Process flow
Esco proposal (project concept, design
& submission to IDM)
Legal
(IDM Agreement)
Project Registration
(IDM Database)
Technical & Financial
Evaluation (PEC)
+ M&V Request
Investment
Committee (CIC)
Procurement (PTC)
(NEC Negotiations)
Pre M&V
Project Implementation
(ESCO,IDM & Customer)
Measurement & Verification
Post M&V
Handover to Customer-Start of the
IDM Agreement Term (5 years) with
Periodical Performance Assessments
Our Key Delivery Channels
ESCO Process
Standard Offer
Projects > 1MW
50kW<Project<1MW
Based on
individual
project
calculation
Standard value per
kWh saved per
technology
Funding
Customer and
Eskom (up to
NERSA
benchmark)
Market price per
technology (up to 85%
of NERSA benchmark)
Payment
Progress
payments to
Esco’s
40% on
implementation, 20%
pa based on M&V
Risk
Eskom risk
Limited Eskom risk
Individual IC
approval
Bulk IC approval per
technology
Price evaluation
based on
submitted
approval
Streamline individual
project approvals
Possibly no
requirements if
outsourced
Size
Eskom Payment
Value
Investment
Decision
Procurement
Decision
Standard Offer (SO)
•
Pre-determined rebate
•
The current rebate payable is 42c/kwh over 3 years
•
The new SOP is applicable to:
• Energy Efficient Lighting Systems
• Building Management Systems
• Electrical Hot Water Systems
• Process Optimisation
• Industrial & Commercial Solar Hot Water System (70c/kWh)
SO - Requirements
•
Minimum project size: 50 kW
•
Maximum project size: 1 MW
•
Rebate is applicable to energy reduction between 6am and 10pm Monday
to Friday only
•
The project developer shall ensure that the approved technology complies
with all laws and regulations relating to the installation, working environment
and lux levels
SO - Payments
•
Payment to the project developer
•
Maximum Standard Offer rebate to R5.04m per project site or single
metered entity
SO – Process flow
SO - Payment Schedule
•
Initial payment price = Number of kWh saved (pa) x 3 years x 0.42
•
Installation Payment – Upon the completion of the installation and verification of the
achievable energy savings (M&V Report), Eskom shall pay 40% of the initial
Payment Price to the project developer on the Measure Acceptance Date (MAD)
•
Performance Payment – Eskom will issue 3 performance payments of 20% the
Annual Adjusted Purchase Price. First payment would be 12 months from the
Measure Acceptance Date. The second payment would be 12 months from the first
performance payment. The third payment would be 12 months from the second
performance payment.
SO - Performance Payment
Savings from initiative
100
MAD - M&V
416000
kW
kWh/annum
Rebate
42
c/kWh
Payment Term
3
years
Total Payment Price
R
524,160
Initial Payment of 40%
R
209,664
Performance Payment 1 - 3
R
104,832
Our Key Delivery Channels
ESCO Process
Standard Offer
Standard Product
(incl rebate)
Projects > 1MW
50kW<Project<1MW
Projects <100kW
Based on
individual project
calculation
Standard value per kWh
saved per technology
Standard value per
item calculated
based on savings
potential
Funding
Customer and
Eskom (up to
NERSA
benchmark)
Market price per
technology (up to 85%
of NERSA benchmark)
Market price per
technology (up to
NERSA benchmark)
Payment
Progress
payments to
Esco’s
40% on implementation,
20% pa based on M&V
100% on installation,
based on M&V
Risk
Eskom risk
Limited Eskom risk
Limited Eskom risk
Individual IC
approval
Bulk IC approval per
technology
Bulk IC approval per
technology
Price evaluation
based on
submitted
approval
Streamline individual
project approvals
Possibly no
requirements if
outsourced
Streamline individual
project approvals
Possibly no
requirements if
outsourced
Size
Eskom Payment
Value
Investment
Decision
Procurement
Decision
Standard Product (SP)
•
An “Application Specific Standard Product” (ASSP) is a specific technology
that satisfy a specific requirement that appeals to a wider market. ASSPs
are available as off-the-shelf components.
•
Eskom pays customer a rebate based on standard technologies, predetermined savings per load factor, post implementation and after disposal
of old technologies
Savings and Eskom rebate per technology change will be pre-determined
•
SP- Requirements
•
Applicable to savings of 1kW to 100kW:
• Min Project size
• Demand Savings > 1kW and
• Energy Savings > 2MWh.
• Load factor > 15%
•
M&V methodology will be confirmed per project
SP- Payments
•
Payment to customer
•
Payment limited to least of 85% of actual cost or calculated rebate or actual
saving
•
Maximum Standard Product rebate of R750,000 per project site or single
metered entity
SP – Process flow
System
generated
savings
Input
current
technology
System
gives
approved
DSM
options
Input
number
of units
Energy Advisor input
System generated
Technology
payment
factor(TPF)
Technology
benchmark
Maximum
value that
could be
paid
Final value
after
invoice &
actual
costs
assessed
Our Key Delivery Channels
ESCO Process
Standard Offer
Standard Product
(incl rebate)
Mass Roll-out
Size
Projects >
1MW
50kW<Project<1MW
Projects <100kW
Large Scale
Roll-outs
Eskom
Payment
Value
Based on
individual
project
calculation
Standard value per
kWh saved per
technology
Standard value
per item
calculated based
on savings
potential
In line with
MYPD
benchmarks,
with discretion
Funding
Customer and
Eskom (up to
NERSA
benchmark)
Market price per
technology (up to
85% of NERSA
benchmark)
Market price per
technology (up to
NERSA
benchmark)
Eskom or
Fiscal
Payment
Progress
payments to
Esco’s
40% on
implementation,
20% pa based on
M&V
100% on
installation,
based on M&V
Progress
payments
Risk
Eskom risk
Limited Eskom risk
Limited Eskom
risk
Low risk
Individual IC
approval
Bulk IC approval
per technology
Bulk IC approval
per technology
Individual IC
approval
Price
evaluation
based on
submitted
approval
Streamline
individual project
approvals
Possibly no
requirements if
outsourced
Streamline
individual project
approvals
Possibly no
requirements if
outsourced
Individual
tender
processes
Investment
Decision
Procurement
Decision
Our Key Delivery Channels
ESCO Process
Standard Offer
Standard Product
(incl rebate)
Mass Roll-out
Performance
Contracting
Substantially
larger than
ESCO process
>10MW
Projects > 1MW
50kW<Project<1MW
Projects <100kW
Large Scale
Roll-outs
Based on
individual
project
calculation
Standard value per
kWh saved per
technology
Standard value
per item
calculated based
on savings
potential
In line with
MYPD
benchmarks,
with discretion
Bid price per
kWh saved
limited to set
value
Funding
Customer and
Eskom (up to
NERSA
benchmark)
Market price per
technology (up to
85% of NERSA
benchmark)
Market price per
technology (up to
NERSA
benchmark)
Eskom or
Fiscal
Customer and
Eskom (up to
NERSA
benchmark)
Payment
Progress
payments to
Esco’s
40% on
implementation, 20%
pa based on M&V
100% on
installation, based
on M&V
Progress
payments
Progress
payments with
retainer
Risk
Eskom risk
Limited Eskom risk
Limited Eskom
risk
Low risk
Financial risk
Technical risk
Individual IC
approval
Bulk IC approval per
technology
Bulk IC approval
per technology
Individual IC
approval
Bulk approval of
individual
projects
Price
evaluation
based on
submitted
approval
Streamline individual
project approvals
Possibly no
requirements if
outsourced
Streamline
individual project
approvals
Possibly no
requirements if
outsourced
Individual
tender
processes
Size
Eskom
Payment Value
Investment
Decision
Procurement
Decision
RFI
Tender
In Conclusion
•
IDM has a budget of R5.45 billion to achieve 1074 MW savings over the
next 3 years
•
IDM has developed new product offerings to shorten turn around/approval
•
IDM awaits your project –
contact us on 08600-ESKOM
Thank you