Presented by Vicky BassonCEO - KES Energy Services Company

KES SHAREHOLDINGKES SHAREHOLDING

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KES in South Africa

KES - KZN Company began operations in 2001 (tender in 1998).

The project in KZN is funded by the DOE.

Development of project was intermittent due to contractual issues. Areas of installation were Msinga, Maphumulo and Ndwedwe.

In Nov 2009, KES was awarded a new tender for 10000 SHS installations in Central KZN - will be completed within the next month. Installation areas include the existing areas and also Nquthu and Umvoti.

At the end of this project there still remains many non-electrified households in our concession areas.

KES submitted a proposal for the remainder of 2012/13 financial year and until 2015 – awaiting feedback.

KES – Eastern Cape KES was awarded a tender in 2007.

This project is funded by KfW (German development agency) for a total of +/- 30000 households. Concession area is in Eastern Cape specifically DC 13 and DC14.

Total of 7300 customers installed in Eastern Cape to date in the areas of Tsomo and Mount Fletcher

Currently we need to identify new areas as soon as possible. KES needs clarification from the role players for the grid roll-out and subsequently the identification of non-grid areas.

Looking at larger size systems or multiple offerings

Fee for service model Capital investment – 80% subsidy 20% KES investment

Customer “rents” system for a monthly fee 89 rands per month – 365 days pa

Depending on area monthly tarrif is subsidised by Free Basic Electricity from Local Municipality

FBE policy was 48 rands per month per customer in 2004. Funded through EBSST – has never increased and rarely followed (unconditional grant) results in disparities in customer tariffs.

KES has full operational/maintenance contract for systems for 20 yr period

A prepayment meter system is used

55 /65 wp solar panel

Solar Home System

3 CFL lights, 1 LED

Meter and battery enclosure

Challenges Institutional delays pose problems to sustainability of

project Financial costs of delay – fixed costs and commitments to SMMEs – increases overall operators investment.

Sustainability Current model implies customer tariff should cover payback of investment, life-time replacement costs (batteries), maintenance costs – all which are bourne by the operators. In reality, it cannot.

Payment issues

All operators experience low and continued decreasing collection rate which impacts upon the sustainability of the model.

Affordability of the monthly fee is a large contributor to non payment

Operational Challenges

Difficult Terrain, theft of systems and tampering all increase costs. There is a need for the system to evolve to balance demand and supply issues whilst always considering affordability.

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Benefits to the community KES is a services company - Msinga households

already have 10yrs of service

The SHS replaces more expensive and hazordous energy sources.

Exterior lights increase security.

Access to media and education – radio and tv.

JOB Creation – directly 91 permanent jobs created by KES and 6 BEE SMME Subcontractors appointed employing 100 people. This excludes all indirect jobs.

Energy stores used to introduce other modern, safe forms of energy for thermal needs such as LPG, efficient wood burning stoves

98 MWh per month of green energy In rural areas less expensive than grid connections

and quicker to roll-out In line with the government’s strategic plan

Electricity access is the cornerstone to social upliftment

Jobs – Create 5 million new jobs by 2020,

-KES, suppliers and households- 5% of newly connected households are able to do additional, income-generating work, adding on average of R175 per month to the household

Quality Basic Education 87% of newly connected households indicate a positive educational impact, with average learning times increasing by 1 hour 40 minutes per week

Health Reduction of smoke inhalation, fire risks

Housing – “Sustainable human settlements and improved quality of household life”

▪ Newly installed SHS save households on average between R81 and R188 per month2

▪ Benefits are primarily driven by savings in lighting costs (68%) and cellphone charging costs (18%)2

Crime - “All people in South Africa are and feel safe”

Exterior lights - About 62% of newly connected households are of the view that electrification has benefited their community; of these, 42% mentioned improved security and safety3

Electrification Rate 2010 – 75%

Between 1996 and 2010, 5 million households electrified

In 2012, 3.4 million still unelectrified

Currently electrification rate is 150k-200k pa.

Unless rate increased = 20 years

Universal Access

INEP and Roadmap DOE held Energy Indaba in 2012 Working Groups and steering committee set up with

all role-players to review all aspects of electrification including:Access FundingPlanning and Delivery

Roadmap to be presented to Minister and Cabinet for approval

Goal is for universal access, using best mix of solutions including a dignified level of service for all.

KES looks forward to a clear framework for business development

KES and KZN Municipalities KES has the concession for DC22, DC23, DC24 and DC29

Municipality identifies non-grid areas to DOE, DOE fund it

KES enters into Service Level Agreement

FBE crucial to ensure affordable by your communities.

ConclusionKES has been in operation for more than a decade supplying

electricity to the deep rural areas of South Africa.

However, there are challenges to the sustainability of the project that need to be addressed.

There is a role for non-grid electrification in South Africa to obtain universal access.

KES is a public private partnership, and looks forward to continuing its role of bringing energy to the rural communities.

Thank you for your attention