Maximizing energy system, Cooperation between
city policy and the private sector
SE4All Global Energy Efficiency Forum on Cities
28-29 October 2015

Presented by : Sicelo Xulu
Managing Director, City Power
28-29 October 2015, Japan

Contents
1

City of Johannesburg, City Power at a glance

2

Power Industry Liberalization

3

Power System Topology

4City Power Policy Overview

5

Distributed Generation Catering for…

6

Cooperation between City Policy and Private Sector

7

Business Model

8

Load Profile Challenge

9Compliment Self-dispatch Gen with Flexible Loads

10

Disruptions resulting from Load Shedding• Johannesburg is a city ofsome 5 million people• Produces 17% of SA
economic value andemploys 11% of its
labour force• It is at the core of an
extended, virtuallycontinuous urban regionof 12.3 million people(23% of SA’s totalpopulation)

Johannesburg is situated within the Gauteng City-region – apolycentric city-region with a population estimated at 12.3
million people in 2011

JOHANNESBURG IN CONTEXT• Remains South Africa’s economic powerhouse – concentration oflarge industries and businesses• Joburg is the main driver of national growth – historically
performing at 50% higher than national growth rates• Covers 1 600 square kilometers of surface area
• Average density of 3039.5 people per square kilometers• Average households growth rate for the City in the last 10 years
was 36.3%.
• The current households growth rate is expected to be around
2.1%• Between 2015 and 2021, the number of households are expected
to increase by 14.5%

Our strategic intention…
Collectively, the principles of the GDS reaffirm the City of Johannesburg’scommitment to the objects and duties of local government outlined in theConstitution. Our 6 principles help us think through the complex challenges
facing us, and state our approach to solving them
ERADICATING POVERTY
BUILDING AND GROWINGAN INCLUSIVE ECONOMYSOCIAL INCLUSION
THROUGH SUPPORT AND
ENABLEMENTSUSTAINABLE HUMANSETTLEMENTS

GOOD GOVERNANCE

ENSURING RESOURCESECURITY ANDENVIRONMENTALSUSTAINABILITY

City Power at a Glance
Vision: World Class Electricity Utility

MOE: City of Johannesburg is the single shareholderof City Power
Number of customers: Over 460,000 - LPU: 1%,Prepaid:62%, Conventional Business/Domestic: 37%
Revenue: R13.2bn

Employees: Over 1,700
Only utility in Africa with three ISO accreditations(9000, 14001 and 18001)

7

City Power at a Glance
We are in the business of buying electricity and selling it to customers

National Energy
Regulator of South
IPP: Kelvin
Africa (NERSA)
Generation

Eskom and/or
Independent Power
Producers (IPP)

City PowerDistribution

City Power at a Glance(41) with 6 major intake points from Eskom

Current capacity demand of 3.5 GW
Predicted future demand to reach 6 GW in 2030

R8.5b invested in infrastructure in the past 10 years
R40b required in the next 20 years

Power Industry Liberalization
Regulatory environment within South Africa has been lagging
behind developments in the distribution industry
Eskom is the dominant player and still a verticallyintegrated utility; municipal distributors are dependent on
Eskom; regulatory environment mirrors this model
Concept of distributed generation explored by municipal
distributors as a partial solution to country’s energy crisisand part of the future energy mix is still evolving

Key Changes being advocated:- Decentralized future energy mix- Evolution of grid standards and guidelines- Enabling municipal distributors to adopt own andprivate generation into the energy mix- Simplifying the private generation licensing process

City Power Policy Overview
Aimed at facilitating, permitting and regulating Own and Private Distributed Generation
within the licensed area of supply
Different off-take possibilities – whole plant generation, excess generation only or a
combination of both; Different dispatch modes - self-dispatched or dispatched
City Power’s Distributed Generation Categories

Customer
Generation< 1MWCustomer
Generation> 1MW

DedicatedMunicipal
Independent
Owned
PowerEntity (MOE)
Producer
Generation(IPP)

City PowerOwn
GenerationDistributed Generation
Catering for…
Category

Description

Customer
Generation < 1 MW
(Self-dispatch)

Residential and commercial
customer installations of small scale
embedded generation•Customer
Generation > 1 MW
(Dispatch /Self-dispatch)

Existing CP large power users
installing own generators; searchingfor off- taker of excess power••

IPP (> 1 MW)(Dispatch /Self-dispatch)

Any independent producer interested
in selling power to City Power•

Co/tri/quad gen plants, fuel cells, PVfarms etc.

Other City subsidiaries exploring
utilization of its resources to producepower•••

JW’s hydro conduit
PickitUp’s waste to energy
City Theatre’s gas generation

City Power’s own generating
resources under the direct control ofcity power••

CP’s gas turbine generating sites
PV in unused lands of CoJ and leased
rooftops
Battery Storage Plant

MOE generation(Dispatch)
City PowerOwn Generation(Dispatch /Self-dispatch)

Examples•••PV installations at residential andcommercial establishments
Application received for 1000kWp PV atClear water mall – plus many others
MTN quad generation facility @ 5.8MW
ABSA co-generation facility @ 18MW ofwhich 2MW grid connected
At least 45MW identified within City Limits

13

Power System Topology
City Power electricity grid is largely interconnected withpockets of settlements where the distribution infrastructure

is limitedThose areas where the distribution infrastructure has
capacity constraints, it may be augmented with PV with anelement of storage
Thembelihile and Lawley Informal Settlement- Grid tied micro system supply the dwelling loads
directly- Grid connected PV hybrid system with battery storage- Surplus energy if any to be exported to grid

Cooperation between City
Policy and Private Sector

Customer generation is

Utility service offering isviewed as future IPP

to still provide grid forpartners; micro-sized anddistributed within the City

Driving
Policy and Tariff
Evolutionenergy balancing andback-up services

The more the distributed

Net metering cannot begeneration penetration , thesupported without losing

more the revenue impact; CPrevenue; however City

revenue model and tariffs toPower offers avoided

be gradually (decoupled)

Eskom costs for thetransformed to increase fixedsurplus that generators

to variable charges

produce15Evolving Business Model
City Power working towards removing the restrictions ofMunicipal Finance Regulations (MFMA) – long term PPAs

with purchasing prices < Eskom price;
Eskom’s tariffs are increasing while alternate technology
costs are decreasing; the cross over is likely to happen
within the next decade
Eskom Vs Private generation- Private distributed generation can be built faster- Private generation pricing can be escalated by CPI only
- City Power has an abundance of load and can disperse
significant distributed generation;- Majority of private distributed generation is cleaner and cancount as greener energy to fulfill the City of Joburg’s
environmental committments

Load Profile Challenge

Dispatched vs Self dispatched- Self-dispatched power does not eliminate morning and evening peaks- Most PV installations are self dispatched unless an element of battery storage included- Hybrid Photovoltaic Electricity System is the preferred option and meets customer needs- Dispatched generation is mainly gas fired but is restricted by the limited availability of gas

City Power is still
liable for the morningand evening peakenergycosts
andexcessive
network
demand charges

Complimenting Self-dispatched
Generation with Flexible Loads
Load Management is enabled by smart metering technology

On demand flexible loads can be created through load
limiting and demand response programmes
Load profiles can be shaped by implementing dynamic
pricing or time of use tariffs
Flexible load can be sold as an ancillary service in future toenable the emerging electricity trading market

Disruptions resulting
from Load Shedding
Non-Eskom generating sources are

Change in muncipality perspective;

not included in the dispatchingmigration from Eskom dependent

order of merit of the country;

distributor role to driver

Perceptions are changing

in load shedding mitigation

Loadand new generation
within the country
Private sector

Iniatives to mitigate load

Shedding

viewed as future partner

shedding giving rise to a

to the solutions;de-facto market within theEskom and muncipalities

Utility space consisting of

responding to views of business

DSM & SSM initiatives

communities; partnering in solutionsConclusion• We have a legacy of regulation and out-dated policy and are at theforefront of driving change, as the energy landscape evolves• We have the advantages of new technologies as well as the challengesof their disruptive effects to include in our evolutionary process• We know that we are not alone – virtually all utilities across the globe
face similar issues• We look forward to exploring all viable solutions that are being
implemented around the globe
2021