Overview of the SAPP and the Energy Network in Southern Africa www.sapp.co.zw By Eng. Musara Beta Chief Market Analyst SAPP Coordination Centre Carbon Capture & Storage Workshop: Perspectives for the Southern Africa Region Holiday Inn, Sandton, Johannesburg, SOUTH AFRICA 31 May 2011

CONTENTS INTRODUCTION TO SAPP SAPP DEMAND & SUPPLY BALANCE SAPP GENERATION MIX TRANSMISSION NETWORK DEVELOPMENT DEMAND SIDE MANAGEMENT SAPP COMPETITIVE MARKET CONCLUSION

1. INTRODUCTION TO THE SAPP Geographic DR Congo Tanzania Zambia Angola Malawi Zimbabwe Mozambique Botswana Namibia South Africa Lesotho Swaziland 12 Countries 230 Million people Average Electricity growth rate 3% p.a. For South Africa demand growth was 4.9% in 2007 and for whole region 4.6%.

Motivation to SAPP Formation Hydro Northern Network DRC Tanzania Angola Zambia Malawi Mozambique Zimbabwe Botswana Namibia South Africa Swaziland Lesotho Thermal Southern Network

Membership CEC and LHPC private companies admitted following SAPP reforms

DEMAND AND SUPPLY SITUATION

SAPP Planned & Required Gen. Capacity 2014 Critical For Capacity 2016 Critical For Energy

SAPP GENERATION MIX - Current 74.3% Coal 20.1% Hydro 4.0% Nuclear 1.6% Gas/Diesel

Medium Term Outlook Of the 28,462MW to be commissioned, approximately 80% will be coal and 12% hydro.

Planned New Generation The SAPP PLAN shows that 56,686 MW of new additional power generation capacity would be required by 2025 as follows: The optimized plan includes no new nuclear.

SAPP Future Generation Mix In 2025, a total of 102,871 MW of generation would be required in the SAPP as follows:

TRANSMISSION PROJECTS DRC 2013: ZIZABONA -220/330 kV Tanzania 2013: Mozambique Malawi 2014: Zambia - Tanzania - 400 kV Angola Malawi Zambia 2015:DRC - Angola – 400 kV Zimbabwe Namibia 2016: MOZAMBIQUE BACKBONE -RSA Mozambique Botswana 2015: RSA Strengthening Swaziland 2017: Namibia – Angola South Africa Lesotho

DEMAND SIDE MANAGEMENT - 1,000.00 2,000.00 3,000.00 4,000.00 5,000.00 2009 2010 2011 2012 2013 2014 2015 Year Demand Reduction [MW] HWLC Commercial Lighting SWH CFLs Four technologies were planned: Compact florescent lamps (CFLs) Solar Water Heaters (SWH) Hot Water Load Control (HWLC), and Commercial Lighting In 2010, 750MW of savings were realised with CFL programme against a target of 1400 MW

SAPP COMPETITIVE MARKET OVERVIEW SAPP DAM Market opened for live trading on 15 December 2009 Market performance highlights as of 31st April 2011 437,000 MWh Sale and 338,000 MWh Buy bids received 42,000 MWh was matched on the DAM trading platform However only 29,000 MWh was traded or approximately 1% market share The remainder could not be traded due to transmission constraints

Average Monthly Market Clearing Prices as of 31st Apr 2011

CONCLUSION SAPP is making efforts to reduce carbon emissions In the long-term, high cost coal will be displaced by cleaner energy sources such as hydro, wind and solar Coal % to be reduced from 74% to 56%. Hydro % to be increased from 20% to 26% Wind and solar % to be increased from 0% to approx. 0.5% SAPP has reformed in line with world wide trends in the electricity sector To date SAPP has introduced a competitive power market in the form of a Day Ahead Market Intends to introduce other markets incl. Carbon markets