here Renewable Energy Independent Power Producer Programme Bidder’s Conference 16 August 2012 Andrew Etzinger Senior General Manager Eskom

2 Eskom is fully supportive of renewable energy generation in South Africa Developing renewable energy in South Africa is important Reduce CO 2 -emissions Mitigate climate change Diversify energy sources Government has taken several important steps to drive renewables deployment Large portion of IRP allocated to renewables Renewable Energy Purchase programme introduced South Africa has excessive resources (especially for solar) Average solar radiation of about 2,300 kWh/m 2 /year Large areas in the Cape with average wind speeds of more than 6 m/s Eskom facilitates the deployment of renewable energy and the ramp up of a renewable energy industry in South Africa

3 Policy and regulatory environment is defined and established Industry restructuring is in process (“ISMO”), but should not hinder the IRP roll out  20 year generation plan with MW of renewable generation by 2030 Eskom is committed to facilitating the entry of IPPs and acknowledges the role they play in the South African electricity market Eskom will continue to pursue IPP opportunities and to date have achieved the following:  Signed 373 MW of PPAs with IPPs, including Sasol, Sappi, Ipsa  Signed short-term PPAs for 470 MW with municipal generators with the aim to extend these agreements for three to five years  In the final approval stages for MW of peaking power  Internal governance approval to sign MW of renewable energy PPAs subject to PFMA and NERSA approvals Eskom’s commitment to IPPs

4 System Operator Renewables Unit Buyer Office Transmission / Distribution Designing grid enhancement to allow for renewables Ensuring equitable and fair connection to grid Enter into power purchasing agreements Manage contractual relationship Grid studies and providing information on current and future grid capacity to the market Connecting to the grid To assist in service delivery, Eskom set up a Grid Access Unit for Generators Deploying pilots to understand renewables technologies Playing a role in developing, operating and maintaining Eskom renewable energy assets Eskom is involved in renewable energy in various ways

5 High level process* for the renewable energy IPP programme and possibly other programmes Section 34 Ministerial Determination and inclusion in IRP Text RE IPP programme Grid application Accountability with Eskom or Municipality Procurement process Accountability with Department of Energy License application Accountability with NERSA Evaluation, selection of preferred bidders and negotiations Accountability with DoE NERSA and PFMA approvals PPA awarded to successful bidders signed by Buyer (Eskom currently) * Aligned to the New Generation Regulations, May 2011 Approval of PPAs Eskom Govern- ance Bidder enters into Implementation Agreement with DoE NERSA to concur Preparation of procurement documentation Accountability: DoE with support from NT & advisors Supported by various Government departments, including NT Bidder enters into connection agreements with network owner

6 Once preferred bidders are announced, Eskom will support the DoE to financial close Preferred bidders will enter into an Implementation Agreement (IA) with the DoE Eskom will enter into the following key agreements: Signing of all agreements is subject to PFMA and NERSA approvals Agreements entered into with IPPs Transmission Agreement (TA)Standard connection and use of system agreement TA/DA Direct AgreementStandard TA and DA Direct Agreement Power Purchase Agreement (PPA) Standard PPA per technology PPA Direct Agreement Standard PPA Direct Agreement Eskom and the Project Company: Eskom and the Lenders: Distribution Agreement (DA)Standard connection and use of system agreement for Eskom networks

Eskom applications for renewable energy grid connections Quotation, Contracting & Connection of generators Consultation with, and advising of IPPs Operation of IPPs and generators All current and future Eskom organisational requirements, are accommodated by the following processes Manage service relationships with IPPs Facilitate Grid Access for generators

Eskom process, related to the Eskom Grid Access Unit role Quotation, Contracting and Connection of generators Consultation with, and advising IPPs Operation of IPPs and generators Manage and facilitate the service relationship with IPPs Facilitate Grid Access for generators Eskom Grid Access Unit for Generators role Enabling and facilitating generators and IPP grid access, and making commercial options more viable requires service relationship, stakeholder and interface management, communication Management and integration of the development of relevant and appropriate standards, processes, frameworks Possibility of various connection, grid access and commercial options IPP pricing frameworks (costing of connection, network strengthening, and costs to “wheel”) Technical capability for integration of the IPP generators Process and system capability, and facilitation thereof, to enable grid access Quotation and Contracting capability and management Sufficient data and information, to effectively facilitate, enable, plan and support Requirement for long-term viability

Please partner with us Embrace energy saving as a national culture, joining the global journey towards a sustainable future 49M campaign aims to create a culture of energy efficiency in SA Remember the three Ps: save p ower, save your p ocket and save our p lanet. If you’re not using it, switch it off! 9

10 Thank you