Consolidated Report on the Findings of the Electricity Generation Industry Compliance Audits Conducted in 2016/17 Financial Year
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Consolidated Report on the Findings of the Electricity Generation Industry Compliance Audits Conducted in 2016/17 Financial Year Consolidated Report on the Findings of the Electricity Generation Industry Compliance audits Conducted in 2016/17 FY I All enquiries and correspondence to be directed to the Head of Department unless indicated otherwise by means of a formal letter signed by the Head of Department: Electricity Licensing, Compliance and Dispute Resolution. Tel : +27 (0)12 401 4794 National Energy Regulator Kulawula House 526 Madiba Street Arcadia, Pretoria 0083 PO Box 40343 Arcadia 0007 Tel : +27 (0)12 401 4600 Fax : +27 (0)12 401 4700 Website : www.nersa.org.za Consolidated Report on the Findings of the Electricity Generation Industry Compliance audits Conducted in 2016/17 FY I TABLE OF CONTENTS ABBREVIATIONS ............................................................................................................ III DEFINITIONS .................................................................................................................. IV EXECUTIVE SUMMARY .................................................................................................. VI 1. INTRODUCTION .................................................................................................... 1 2. AUDIT OBJECTIVES ............................................................................................. 3 3. AUDIT PROCESS .................................................................................................. 3 4. AUDIT METHODOLOGY ....................................................................................... 4 5. SCOPE OF WORK ................................................................................................. 4 6. CHALLENGES FOR THE SOLAR FARMS ............................................................ 5 7. FACTS AND FIGURES .......................................................................................... 5 8. SUMMARY OF OBSERVATIONS AND AUDIT FINDINGS .................................... 6 8.1 ELECTRICITY GENERATION LICENCE...................................................................... 7 8.2 DISTRIBUTION INFORMATION EXCHANGE CODE ..................................................... 8 8.3 DISTRIBUTION NETWORK CODE ........................................................................... 9 8.4 THE GRID CONNECTION CODE FOR RENEWABLE POWER PLANTS ........................ 10 8.5 DISTRIBUTION SYSTEM OPERATING CODE .......................................................... 11 8.6 GENERATION MAINTENANCE STRATEGY ............................................................. 11 8.7 PLANT PERFORMANCE AND KEY PERFORMANCE INDICATORS (KPIS) ................... 12 8.8 OUTAGE MANAGEMENT ..................................................................................... 12 8.9 ASSET MANAGEMENT ........................................................................................ 13 8.10 REFURBISHMENT AND EXPANSION PLANS ........................................................... 13 9. PLANT INSPECTION ........................................................................................... 13 9.1 SCOPE OF PLANT INSPECTION ........................................................................... 13 9.2 ON-SITE OBSERVATIONS .................................................................................... 13 10. CONCLUSION...................................................................................................... 19 11. RECOMMENDATION ........................................................................................... 20 Consolidated Report on the Findings of the Electricity Generation Industry Compliance audits Conducted in 2016/17 FY II ABBREVIATIONS DoE Department of Energy DCUOSA Distribution Connection Use of System Agreement GCR Grid Code Requirement HV High Voltage MW Megawatt MV Medium Voltage NERSA National Energy Regulator OEM Original Equipment Manufacturer PPA Power Purchase Agreement SAGC South African Grid Code SAP System Application and Production Consolidated Report on the Findings of the Electricity Generation Industry Compliance audits Conducted in 2016/17 FY III DEFINITIONS Buyer The legal entity designated by the Minister in the Determination as the buyer of Energy from Sellers in terms of Power Purchase Agreements entered into pursuant to the Independent Power Producer Procurement Programme. Distributor A legal entity that owns or operates/distributes electricity through a Distribution System. Distribution System An electricity network consisting of assets operated at a nominal voltage of 132 kV or less. Generator A legal entity licensed to engage in the production of electricity through an electricity generation facility. Grid Code The ‘South African Grid Code’, which consists of the following documents, as approved by NERSA and updated from time to time by the Secretariat: . Preamble; . Governance Code; . Network Code; . System Operation Code; . Metering Code; . Tariff Code; and . Information Exchange Code. It also includes the Distribution Code, which consists of the following: . Distribution Code Definitions; . Distribution Information Exchange; . Distribution Network Code; . Distribution System Operation Code; . Distribution Metering Code; and . Distribution Tariff Code. Licensees . AE-AMD Independent Power Producer 1 (Pty) Ltd; . Core Energy (Pty) Ltd; . CPV Power Plant no.1 (Pty) Ltd; . Droogfontein Solar Power (RF) (Pty) Ltd; Consolidated Report on the Findings of the Electricity Generation Industry Compliance audits Conducted in 2016/17 FY IV . De Aar Solar Power (RF) (Pty) Ltd; . Firefly 253 Investments (Pty) Ltd; . Oakleaf Investments Holdings 79 (Pty) Ltd; . RustMo1 Solar Farm (Pty) Ltd; . Slimsun (Pty) Ltd; . Solar Capital De Aar (Pty) Ltd; . Sevenstones 159 (Pty) Ltd; and . Scatec Solar SA 166 (Pty) Ltd. Solar Farm The licensed Photovoltaic (PV) power generation facility. System Operator A legal entity licensed to be responsible for short-term reliability of the interconnected power system, which is in charge of controlling and operating the transmission system and dispatching generation (or balancing the supply and demand) in real time. Transmission System The transmission system consists of all lines and substation equipment where the nominal voltage is above 132 kV. All other equipment operating at lower voltages are either part of the distribution system or classified as transmission transformation equipment. Consolidated Report on the Findings of the Electricity Generation Industry Compliance audits Conducted in 2016/17 FY V EXECUTIVE SUMMARY The Electricity Regulation Act, 2006 (Act No. 4 of 2006) (‘the Act’), stipulates that the Regulator must enforce performance, compliance and take appropriate steps in the case of non-performance. Pursuant to Section 4(a)(vii) of the Act, all licensed entities are subject to an audit for compliance with licence conditions imposed by the Energy Regulator. The audit objectives are to assess compliance with applicable regulatory requirements, validate evidence of self-reported non-compliances, document the licensees’ compliance level and plans, and monitor the implementation of corrective action plans. There are approximately 150 electricity generation licensees; the state-owned entity, municipal generation, and independent power producers. The total number of licensed generation facilities consists of about 305 operational, 7 non-operational or decommissioned and 27 new-build facilities. The total capacity is apportioned as follows: operational capacity is about 52 133MW, decommissioned capacity is 1 058MW and capacity under construction equates to 10 979MW. The selection criteria for the representative sample of generation facilities audited is based on: . the type of licensee, for example municipal generators may be audited together so as to establish common practices and challenges; . information submitted to NERSA through G-forms, production figures or any other forms; . the audit cycle in terms of the compliance framework; . the power contribution or impact of the generation facility on the national grid; . research or data collected through desktop monitoring or media; and . a mixture of age, type of technology and location. The twelve licensees that were audited in the 2016/17 financial year operate Photovoltaic (PV) solar farms and supply power to the grid. All licensees are part of the Department of Energy (DoE) Renewable Energy Independent Power Producer procurement programme, which was initiated by the Ministerial Determination issued by the Minister of Energy on 02 July 2011. Table 1 shows a list of licensees that were audited. Consolidated Report on the Findings of the Electricity Generation Industry Compliance audits Conducted in 2016/17 FY VI Table 1: List of licensees audited for 2016/17 financial year Licensee Solar Farm Name Contracted Audit Date Capacity in MWh AE-AMD Independent Power Greefspan PV 9.9 27 September Producer 1(Pty) Ltd Power Plant 2016 Core Energy (Pty) Ltd Witkop Solar Park 30 19 July 2016 CPV Power Plant no.1 (Pty) Ltd CPV Power Plant 36 27 October 2016 No 1 De Aar Solar Power (RF) (Pty) De Aar Solar Power 45.6 24 August 2016 Ltd Droogfontein Solar Power (RF) Droogfontein Solar 48.5 23 August 2016 (Pty) Ltd Power Firefly 253 Investments (Pty) Ltd Letsatsi Solar PV 64 14 July 2016 Power Station Oakleaf Investments Holdings Lesedi PV 64 07 September 79 (Pty) Ltd 2016 RustMo 1 Solar Farm (Pty) Ltd RustMo1 Solar 6.93 07 September Farm 2016 Scatec Solar