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DSM ESCO FUNDING STANDARD OFFER PACKAGE STANDARD PRODUCT PACKAGE Presented by : Clive Nicosia Designation : Energy Service Manager Eastern Region Date.

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Presentation on theme: "DSM ESCO FUNDING STANDARD OFFER PACKAGE STANDARD PRODUCT PACKAGE Presented by : Clive Nicosia Designation : Energy Service Manager Eastern Region Date."— Presentation transcript:

1 DSM ESCO FUNDING STANDARD OFFER PACKAGE STANDARD PRODUCT PACKAGE Presented by : Clive Nicosia Designation : Energy Service Manager Eastern Region Date : February 2011

2 22 Medupi Financial & Economic Impact Project Schedule Project Summary ►Greenfields Project – Lephalale (Limpopo Province) ►6 Unit Coal Fired Power Station ►Planned capacity 4,764MW ►Projected project cost to completion ~R125.5bn ►Estimated 95% impact on Lephalale town GDP ►~ 70% contracts awarded ►Construction commenced March 2007 ►First Unit planned to be handed over April 2012 ►Subsequent Units at 8 month intervals thereafter ►Last Unit planned for handover during August 2015 Kusile Financial & Economic Impact Project Schedule Project Summary ►Greenfields Project – Delmas (Mpumalanga Province) ►6 Unit Coal Fired Power Station ►Planned capacity 4,800MW ►Projected project cost to completion ~R141.5bn ►Estimated 25% impact on Delmas town GDP ►~ 41% contracts awarded ►Construction commenced Mid 2008 ►First Unit planned to be handed over June 2014 ►Subsequent Units at 8 month intervals thereafter ►Last Unit planned for handover during October 2017 Ingula Financial & Economic Impact Project Schedule Project Summary ►Greenfields Project – Ladysmith (KwaZulu Natal Province) ►4 Unit pumped storage power station ►Planned capacity 1,352MW ►Projected project cost to completion ~R21.8bn ►Estimated 1% impact on Ladysmith town GDP ►~ 75% contracts awarded ►Construction commenced Mid 2006 ►First Unit planned to be handed over January 2013 ►Subsequent Units at 3 month intervals thereafter ►Last Unit planned for handover during November 2013 Build Programme Project Summaries: Medupi, Kusile & Ingula SOURCE: Eskom Build Programme; 30 April 2010 Project Assurance Reports

3 3 Eskom Funding (1) ESCoStandard OfferStandard Product Turnaround time6-18 months<1 month<1 week SizeProject > 1MW50kW < Project<5MW1kW < Projects < 100kW Eskom Payment Value Individual project calculation Standard value per kWh saved (per technology) Standard value per item calculated based on savings potential Contract price Customer & Eskom (< NERSA benchmark) Pre-determined price per technology (Rebate Calculator and subject to NERSA guidelines) Pre-determined price per technology (subject to NERSA guidelines) Payment mechanismProgress payments 40% on implementation 20% pax3 (based on M&V) 100% on installation (based on pre-determined “standard” savings) Investment committee decision Per project approval Bulk approval per technology (Technology List – TESCOT approved) Bulk approval per technology Individual calculation per item by TESCOT Procurement decision Per project based on submission Bulk approval for IC approved programme N/A (rebate paid as per delegation of authority) Legal agreementNEC Standardised, simplified legal agreement No legal contract Commitment letter from client

4 4 ESCoStandard OfferStandard Product Awarding of “contract” Per project based on submission “First come first serve basis” Conditions of legal contract NEC (with negotiable conditions) Standard SOP customised contract No legal contract Commitment letter from client Customer financial evaluation Per project based on submission Only for projects above R400k N/A Customer technical evaluation Per project via IDM PEC based on submission IDM PEC evaluation per project Not applicable (based on pre-approved technology list) Major difference Project based (each submission is a project) Contract based (bulk approval in principle) Contract based (bulk approval in principle) Eskom Funding (2)

5 DSM ESCO FUNDING Appoint an Energy Services Company (ESCo) to identify opportunities, compile proposal for submission to Eskom DSM for funding, implement and maintain DSM project in the customer’s plant. Commercial entities may also, on the other hand, register a project directly with DSM. The ESCo must be registered on the DSM database before any project will be accepted. ESCos need to be technically competent and financially sustainable to enter into performance contracts and maintain projects over the long-term. Preliminary task are performed at no cost to the client. Letter of intent to be issued to the appointed ESCo.

6 Project Evaluation Eskom DSM will undertake: Technical evaluation of the project Financial evaluation of the project Prepare documentation and present to Eskom investment committee for approval Prepare documentation and present to Eskom Tender committee for approval DSM agreement and NEC placement Pre Measurements and Verification Eskom DSM evaluation lead time is up to 10 months

7 STANDARD OFFER PACKAGE Pre-determined rebate 0.34c/kWh for the delivery of verified energy savings Rebate shall be payable over a period of 3 years This does not replace the existing EEDSM process. The ESCo can therefore elect to propose a project using the normal EEDSM process or the Std Offer Process Applicable for Industrial & Commercial end users Reduce energy consumption between 6am and 10pm Monday to Friday only. This reduction must undergo M&V Energy reduced after 10pm and before 6am on weekdays and on weekends will not be considered towards the payment for energy reduction. The pre-approved technology that will be piloted for the std offer will be the replacement or retrofitting of old luminaries (fitting) lamps and inefficient ballasts to the efficient luminaries and efficient ballast's. The project developer shall ensure that the approved technology complies with all laws and regulations relating to the installation, working environment and lux levels

8 Requirements: Reduce energy consumption between 6am and 10pm Monday to Friday only. This reduction must undergo M&V Energy reduced after 10pm and before 6am on weekdays and on weekends will not be considered towards the payment for energy reduction. The pre-approved technology that will be piloted for the std offer will be the replacement or retrofitting of old luminaries (fitting) lamps and inefficient ballasts to the efficient luminaries and efficient ballast's. The project developer shall ensure that the approved technology complies with all laws and regulations relating to the installation, working environment and lux levels. This does not replace the existing EEDSM process. The ESCo can therefore elect to propose a project using the normal EEDSM process or the Std Offer Process Applicable for Industrial & Commercial end users

9 Performance Payment Example: MAD - M&V592000kWh per annum Rebate34c/kWh Payment Term3years Initial Purchase Price R 603, Initial Payment of 40% R 241, Performance Payment 1 - Year 1 R 120, Performance Payment 2 - Year 2 R 120, Performance Payment 3 - Year 3 R 120,768.00

10 Standard Product Package  Eskom pays customer a rebate based on standard technologies, pre-determined savings per load factor, post implementation and after disposal of old technologies  Savings and Eskom rebate per technology change will be pre-determined  Only DSM/IDM pre-approved technologies will be given consideration for participation  No formal contract – only signed customer commitment for sustainability  Limited Eskom Procurement involvement  Standard Product projects will ultimately be managed & monitored at regional level.  Energy Advisors and Energy Service Managers will promote & launch the Standard Product process

11 Key Principles  Energy saving projects will be undertaken by Energy Services Companies (ESCO’s) or Eskom Customers  M&V methodology will be determined and published by the Assurance & Forensic department  Standard Product is aimed at giving the Advisors more options to tackle the market.  Applicable to savings of 1kW to 100kW:  Min Project size:  Demand Savings > 1kW and  Energy Savings > 2MWh.  Load factor > 15%  Max Standard Product rebate: R750,000 per project site (single metered entity)  No splitting of projects  Lighting now, near future heat pumps, showers, insulation.  Capped at LF of 85

12 Finance: Rebate Calculation Mechanism 2015/05/0512 Input current technology Maximum value that could be paid Technology payment factor(TPF) System generated savings Input number of units System gives approved DSM options Technology benchmark Final value after invoice & actual costs assessed System generated Energy Advisor input Note: Rebate limited to the least of = Benchmark x TPF x savings or Actual Project Costs.

13 Rebate limitations Maximum rebate to be paid to customer limited to: Least of: 1. Actual costs (Customer to provide proof of costs) 2. 85% X Technology Benchmark 3. TPF X Technology Benchmark TPF = Technology Payment Factor Rebate could be R/Mw or c/kwh based

14 IDM domestic heat pump rebate structure 100 L 200L Category 1 Rebate = R 3,668 Purchase Price = R 12, L 500L 400L Category 2 Rebate = R 4,320 Purchase Price = R 16, L500L Heat Pump tank Ranges The rebate and purchase prices to remain unchanged until year 2013

15 Thank you!! 15


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