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 SA 166 (Pty) Ltd Kalkbult 75 25 October 2016

Sevenstones 159 (Pty) Ltd Aries Solar PV 10 29 September Facility 2016 SlimSun (Pty) Ltd Slimsun Swartland 5 21 June 2016 Solar Park Solar Capital De Aar (Pty) Ltd Solar Capital De 75 30 August 2016 Aar

The two-fold audit included a compliance assessment and plant inspection. The audited licensees are in compliance with the licence conditions. Table 2a and 2b below represent a snap-shot of the compliance status of the licensees.

Table 2a: A snap-shot of compliances Compliance requirement Licensees’ compliance status

All Licensees have valid electricity generation licences and comply with licence conditions, such as to submit 8.1 Compliance with Electricity Generation Licence production figures for the solar farms in a manner prescribed by NERSA, and submitted audited financial statements for the 2014/15 financial year.

All Licensees have a maintenance agreement in place which details the 8.2 Compliance with the Distribution Network Code responsibility of the Licensee and the Distributor for equipment at point of connection.

Consolidated Report on the Findings of the Electricity Generation Industry Compliance audits Conducted in 2016/17 FY

VII

Table 2b: A snap-shot of non-compliances Compliance requirement Licensees’ compliance status

8.5 Compliance with the Distribution System Operating Approximately 30% of the Licensees do Code not have a procedure for fault reporting and incident investigations and 15% do not have a procedure for outage scheduling.

Consolidated Report on the Findings of the Electricity Generation Industry Compliance audits Conducted in 2016/17 FY

VIII 1. INTRODUCTION

The National Energy Regulator (NERSA) derives its mandate to conduct compliance audits for licensed electricity Generators from the Electricity Regulation Act, 2006 (Act No. 4 of 2006) ('the Act'). The Act empowers the National Energy Regulator as the custodian and enforcer of the regulatory requirements.

The Regulator is empowered to execute functions such as to enforce performance and compliance, and take appropriate steps in the case of non-performance.

There are approximately 150 electricity generation licensees, including the state- owned entity, Eskom, 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 power station on the national grid; . research or data collected through desktop monitoring or media; and . a mixture of age, type of technology and location.

In the 2016/17 financial year, NERSA conducted audits for the electricity generation industry, specifically the renewable power plants operated by Independent Power Producers (IPPs). All of the licensees that were audited 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 3 provides a list of licensees that were audited in the 2016/17 financial year.

Consolidated Report on the Findings of the Electricity Generation Industry Compliance audits Conducted in 2016/17 FY

1 Table 3: The licensees audited in the 2016/17 financial year Licensee Solar Farm Capacity in MW Status of the Audit Date Name Solar Farm

Licensed Contracted AE-AMD Greefspan PV 10 9.9 Operational 27 September Independent Power Plant 2016 Power Producer 1(Pty) Ltd

Core Energy Witkop Solar 30 30 Operational 19 July 2016 (Pty) Ltd Park CPV Power 36 36 Operational 27 October Plant no.1 (Pty) 2016 Ltd De Aar Solar De Aar Solar 50 45.6 Operational 24 August Power (RF) Power 2016 (Pty) Ltd Droogfontein Droogfontein 50 48.5 Operational 23 August Solar Power Solar Power 2016 (RF) (Pty) Ltd Firefly 253 Letsatsi Solar PV 64 64 Operational 14 July 2016 Investments Power Station (Pty) Ltd

Oakleaf Lesedi PV 64 64 Operational 07 September Investments 2016 Holdings 79 (Pty) Ltd

RustMo 1 Solar RustMo1 Solar 7 6.93 Operational 07 September Farm (Pty) Ltd Farm 2016 Scatec Solar SA Kalkbult 75 75 Operational 25 October 166 (Pty) Ltd 2016 Sevenstones Aries Solar PV 10.75 10 Operational 29 September 159 (Pty) Ltd Facility 2016 SlimSun (Pty) Slimsun 5 5 Operational 21 June 2016 Ltd Swartland Solar Park Solar Capital De Solar Capital De 75 75 Operational 30 August Aar (Pty) Ltd Aar 2016

Consolidated Report on the Findings of the Electricity Generation Industry Compliance audits Conducted in 2016/17 FY

2 2. AUDIT OBJECTIVES

All licensed entities are subject to an audit for compliance with licence conditions as imposed by the Regulator. The audit objectives are to: . assess compliance with the requirements of the Electricity Generation Licence conditions and the South African Grid Code; . validate evidence of self-reported non-compliances; . document the licensees’ compliance level and plans; and . monitor and enforce the implementation of corrective action plans.

3. AUDIT PROCESS

The compliance audit assessment and site visit serve as an information gathering process. The information that is collected together with evidence that is submitted by the licensee is analysed. Subsequently, an audit report detailing the record of observations, findings and recommendations is compiled for each licensee according to the number of its generation facilities. The reports are sent to the licensee for comments. On receipt of the comments, the audit report is finalised and a consolidated audit report detailing a summary of observations, findings and recommendations for all the power stations that were audited in the financial year is prepared for approval by the Energy Regulator. The approved reports are sent to the licensees, who must develop a corrective action plan to address the findings of the audit. NERSA then monitors and enforces the implementation of the corrective action plan to assist the licensees to comply with its licence conditions. The various stages of the audit process involve the following activities, as outlined in Table 4 below.

Table 4: The various stages of the audit process Stage 1: . Establish an audit team. Pre-site visit activities . Establish communication with the licensees to be audited. . Prepare audit questionnaire. . Compile audit programme, agenda, and presentation. . Prepare audit packages. . Travelling to site and logistics. Stage 2: . Presentations detailing the aim of the audit and the audit On-site visit activities process. . Conduct compliance audits assessment on the licensee and take notes. . Conduct plant inspection. Stage 3: . Consolidate licensee responses. Post-site visit activities . Compile licensee individual audit reports. . Send individual audit reports to the audited licensees for comments. . Incorporate the licensees’ comments and finalised audit reports. . Compile a consolidated audit report. . Prepare submissions to the Energy Regulator. . Request licensees to submit corrective action plans. . Monitor the implementation of the corrective action plans.

Consolidated Report on the Findings of the Electricity Generation Industry Compliance audits Conducted in 2016/17 FY

4. AUDIT METHODOLOGY

An audit questionnaire is the main document used to facilitate the audit and to determine the level of the licensees' compliance. It was sent to the licensees before the day of the audit for preparation. The following documents are the basis for the audit questionnaire: . the Electricity Regulation Act, 2006 (Act No. 4 of 2006); . the Generation Compliance Monitoring Framework; . the Electricity Generation Licence issued to the licensee; . the National Environmental Management Act, 1998 (Act No. 107 of 1998); . the Occupational Health and Safety Act, 1993 (Act No.85 of 1993); . the Grid Connection Code for Renewable Power Plants connected to the electricity Transmission System or the Distribution System in South Africa, version 2.8 of July 2014 and . the South African Grid Code (SAGC), version 9.0 of July 2014, including the Distribution Code, version 6.0 of July 2014.

The questionnaire is divided into 13 sections; the five compliance requirement sections relate to: . the Electricity Generation Licence conditions; . the South African Grid Code – Distribution Information Exchange Code; . the South African Grid Code – Distribution Network Code; . the Grid Connection Code for Renewable Power Producers; and . the South African Grid Code – Distribution System Operating Code.

The other eight sections of the questionnaire are aimed at establishing whether the licensees align themselves with the industry standards and best practices with regard to reliability, safe and sustainable operation of the licensed facilities. The sections are as follows: . Generation Maintenance Strategy; . Plant Performance; . Outage Management; . Asset Management; . Refurbishment and Expansion Plans; . Environmental Assessment; . Occupational Health and Safety Assessment and . Business Assessment.

5. SCOPE OF WORK

The scope of work involved the activities detailed in Section 3 (‘Audit Process’) of this report. Table 5 indicates the solar farms that were audited in the 2016/17 financial year.

Consolidated Report on the Findings of the Electricity Generation Industry Compliance audits Conducted in 2016/17 FY

Table 5: The solar farms audited in 2016/17 financial year Licensee Solar Farm Name

AE-AMD Independent Power Producer 1(Pty) Ltd Greefspan PV Power Plant

Core Energy (Pty) Ltd Witkop Solar Park

CPV Power Plant no.1 (Pty) Ltd CPV Power Plant No 1

De Aar Solar Power (RF) (Pty) Ltd De Aar Solar Power

Droogfontein Solar Power (RF) (Pty) Ltd Droogfontein Solar Power

Firefly 253 Investments (Pty) Ltd Letsatsi Solar PV Power Station

Oakleaf Investments Holdings 79 (Pty) Ltd Lesedi PV

RustMo 1 Solar Farm (Pty) Ltd RustMo1 Solar Farm

Scatec Solar SA 166 (Pty) Ltd Kalkbult

Sevenstones 159 (Pty) Ltd Aries Solar PV Facility

SlimSun (Pty) Ltd Slimsun Swartland Solar Park

Solar Capital De Aar (Pty) Ltd Solar Capital De Aar

6. CHALLENGES FOR THE SOLAR FARMS

All licensees are experiencing challenges; some challenges are common to a number of licensees, whereas others are unique to a particular licensee or solar farm. For example, a few of the solar farms experienced lightning strikes on the PV modules and the reason for the incidents is currently unknown. One of the solar farms had a unique challenge as it was unable to reach its estimated P50 MWh forecast due to low irradiance.

7. FACTS AND FIGURES

The 12 solar farms supply power up to the contracted capacity that the licensee and Eskom (‘the Buyer’) agreed on in the Power Purchase Agreement (PPA). The energy contribution from the audited solar farms is as outlined in Table 6 below.

Table 6: Energy contributed by the audited solar farms in 2014, 2015 and 2016 Name of audited Energy generated Energy generated Energy generated licensee (MWh) in 2014 (MWh) in 2015 (MWh) in 2016 AE-AMD 19 012 26 869 27 471 Independent Power Producer 1(Pty) Ltd

Consolidated Report on the Findings of the Electricity Generation Industry Compliance audits Conducted in 2016/17 FY

5 Name of audited Energy generated Energy generated Energy generated licensee (MWh) in 2014 (MWh) in 2015 (MWh) in 2016 Core Energy (Pty) 18 431 66 493 64 346 Ltd

CPV Power Plant 6 434 69 050 74 364 no.1 (Pty) Ltd

De Aar Solar Power 83 917 94 368 96 728 (RF) (Pty) Ltd

Droogfontein Solar 81 931 94 178 92 889 Power (RF) (Pty) Ltd

Firefly 253 92 236 145 990 143 407 Investments (Pty) Ltd

Oakleaf Investments 93 324 148 706 150 878 Holdings 79 (Pty) Ltd

RustMo 1 Solar Farm 11 811 11 978 12 427 (Pty) Ltd

Scatec Solar SA 166 150 528 143 433 143 531 (Pty) Ltd

Sevenstones 159 21 050 20 256 20 900 (Pty) Ltd

SlimSun (Pty) Ltd 0 4 705 10 520

Solar Capital De Aar 64 777 151 309 111 219 (Pty) Ltd

643 451 977 335 948 680

The total power contribution for 2014, 2015 and 2016 was 643 451MWh, 977 335MWh and 948 680MWh respectively.

8. SUMMARY OF OBSERVATIONS AND AUDIT FINDINGS

Observations and findings related to compliance with the licence conditions, the South African Grid Code, and best engineering practices were identified and shared with the licensees. Where applicable, possible options for corrective actions were discussed with the licensees during the audit process. Furthermore, the individual audit reports present recommendations to address the audit findings and non- compliances. Each subheading below briefly discusses the findings and status of compliance of the licensees.

Consolidated Report on the Findings of the Electricity Generation Industry Compliance audits Conducted in 2016/17 FY

In each compliance requirement section, the total compliance rating equates to 100%, and the compliance rating is apportioned equally according to the number of compliance items within the section. The outcome compliance status of the licensees is then graphically represented in Graph 1.

8.1 ELECTRICITY GENERATION LICENCE

The licence conditions stipulate the conditions under which the generation facility must operate to ensure compliance with the regulatory requirements. It stipulates that the licensee must maintain separate accounts for the solar farm, submit annual financial information, production figures and any other information as prescribed by NERSA. It also states that the licensee must inform NERSA of any change of company details or the process of generation or the operational status of the solar farm.

Table 7 below contains a summary of electricity generation licence compliance requirements and the licensees’ compliance status.

Table 7: Licensees’ compliance status with electricity generation licence Licence condition Compliance Compliance Status requirement rating (%) Compliant Non- Compliant

Maintain separate accounts and 16.7 A, B, C, D, E, F, submit audited financials for the G, H, I, J, K, L generation facility.

Submit production figures in a 16.7 A, B, C, D, E, F, manner prescribed by NERSA. G, H, I, J, K, L

Validity of the electricity 16.7 A, B, C, D, E, F, generation licence. G, H, I, J, K, L

Changes of details of licensee. 16.7 A, B, C, D, E, F, G, H, I, J, K, L

Changes in operational status or 16.7 A, B, C, D, E, F, generation process of the Solar G, H, I, J, K, L Farm.

Validity of PPA and contracted 16.7 A, B, C, D, E, F, capacity. G, H, I, J, K, L

Total compliance rating 100%(16.7x 6)

Consolidated Report on the Findings of the Electricity Generation Industry Compliance audits Conducted in 2016/17 FY

7 Key to Table 7

A: AE-AMD Independent Power Producer 1(Pty) Ltd B: Core Energy (Pty) Ltd C: CPV Power Plant no.1 (Pty) Ltd D: De Aar Solar Power (RF) (Pty) Ltd E: Droogfontein Solar Power (RF) (Pty) Ltd F: Firefly 253 Investments (Pty) Ltd G: Oakleaf Investments Holdings 79 (Pty) Ltd H: RustMo 1 Solar Farm (Pty) Ltd I: Scatec Solar SA 166 (Pty) Ltd J: Sevenstones 159 (Pty) Ltd K: SlimSun (Pty) Ltd L: Solar Capital De Aar (Pty) Ltd

8.2 DISTRIBUTION INFORMATION EXCHANGE CODE

The code defines the reciprocal obligations of parties, the Generator and Distributor, with regard to the provision of information for the implementation of the Grid Code. The information requirements are divided into planning information, operational information, post-dispatch information and treatment of confidential information. The code requires both the Generator and the Distributor to designate personnel for information exchange. Table 8 contains a summary of the licensees’ compliance status with the Distribution Information Exchange Code.

Table 8: Licensees’ compliance status with the Distribution Information Exchange Code Distribution Information Compliance Compliance Status Exchange Code requirements rating (%) Compliant Non- Compliant

Procedures to address the 25 A, B, C, D, E, requirements of the Distribution F, G, H, I, J, K, Information Exchange Code e.g. L appointment of designated person to facilitate communication with the Distributor or Network operator, method of communication.

Operational data storage, the 25 A, B, C, D, E, provision of a storage facility, G, H, I, J, K, L access control and data retention period.

Submission of information to the 25 A, B, C, D, E, Distributor regarding new or altered G, H, I, J, K, L equipment at point of connection.

Commissioning and notification 25 A, C, D, E, G, B procedure in place. H, I, J, K, L Total compliance rating 100% (25 x 4)

Consolidated Report on the Findings of the Electricity Generation Industry Compliance audits Conducted in 2016/17 FY

8 Key to Table 8

The licensees cite the PPA and the Distribution Connection and Use of System Agreement (DCUOSA) as documents that contain the procedures relating to the requirements of the Distribution Information Exchange Code. All licensees do not have standalone formal procedures related to transfer of information, submission of information related to new or altered equipment at point of connection, data storage and archiving of operational information; and commissioning and notification. However, some have designated persons to facilitate communication with the Distributor, submit information of new or altered equipment at point of connection, established appropriate data storage facilities with access control features and capability to retain data for more than five years.

8.3 DISTRIBUTION NETWORK CODE

The code requires the licensee and the Distributor to conclude a connection and supply agreement, whereby the parties agree on connection conditions and responsibilities of each party in terms of maintenance and operation of equipment at the point of connection. The Distributor stipulates protection equipment requirements for generators prior to connection to the network. Table 9 below shows the compliance status of the licensees.

Table 9: Licensees’ compliance status with the Distribution Network Code Distribution Network Code Compliance Compliance Status requirements rating (%) Compliant Non-Compliant

Maintenance agreement for 25 A, B, C, D, E, F, equipment at point of G, H, I, J, K, L connection.

Connection and supply 25 A, B, C, D, E, F, agreement in place. G, H, I, J, K, L

Capability to remotely report 25 A, B, C, D, E, F, any status change of any G, H, I, J, K, L critical function that may

Consolidated Report on the Findings of the Electricity Generation Industry Compliance audits Conducted in 2016/17 FY

9 Distribution Network Code Compliance Compliance Status requirements rating (%) Compliant Non-Compliant negatively impact on the quality of supply on the Distribution system (telemetry).

Does the licensee dispatch or 25 A, B, C, D, E, F, synchronise its plant using G, H, I, J, K, L appropriate equipment and in line with the code requirements. Total compliance rating 100% (25x4)

Key to Table 9

All of the above listed requirements are implemented through the DCUOSA and PPA.

8.4 THE GRID CONNECTION CODE FOR RENEWABLE POWER PLANTS

The Grid Connection Code for Renewable Power Plants requires all Renewable Power Plants (RPPs) to demonstrate compliance with all applicable requirements specified in the code and any other applicable code or standard approved by NERSA before being allowed to connect to the Distribution System or the Transmission System and operate commercially.

Almost half of the plants do not comply with certain requirements under Abnormal Operation Conditions, Reactive Power Capabilities, Power Quality and the Provision of Data and Dynamic Simulation Models. All the licensees were granted temporary exemptions while investigating possible solutions to address the non-compliances. However, some of the exemptions have expired while the non-compliances have not been addressed. The licensees need to apply for the extension of the exemptions and ensure that the non-compliances are addressed.

Consolidated Report on the Findings of the Electricity Generation Industry Compliance audits Conducted in 2016/17 FY

10 8.5 DISTRIBUTION SYSTEM OPERATING CODE

The code sets out the responsibilities and roles of those connected to the network as far as the operation of the Distribution System is concerned and more specifically, issues such as economic operation, reliability and security of the Distribution System, operation under normal and abnormal conditions, maintenance coordination/outage planning and safety of personnel. Table 10 below contains the licensees’ compliance status with the Distribution System Operating Code.

Table 10: Licensees’ compliance status with the Distribution System Operating Code Distribution Network Code Compliance Compliance Status requirements score (%) Compliant Non-Compliant Cooperation with the Distributor 33.3 A, B, C, D, E, F in executing all the operational G, H, I, J, K, L activities during an emergency generation condition. Procedure for outage 33.3 A, C, D, E, F, G, B, L scheduling and safety co- H, I, J, K ordination.

Procedure for fault reporting 33.3 A, C, F, G, H, I, A, B, D, E and analysis/Incident J, K, L Investigations.

Total compliance rating 100%(33.3x3)

Key to Table 10

Although there are no procedures in place for most solar farms, the activities that would have been documented in the procedures are implemented to a larger extent. The licensees need to formalise the activities in writing.

8.6 GENERATION MAINTENANCE STRATEGY

The basis for maintenance planning is Original Equipment Manufacturer (OEM) recommendations for all licensees. There is sufficient time to schedule planned

Consolidated Report on the Findings of the Electricity Generation Industry Compliance audits Conducted in 2016/17 FY

11 maintenance as the PV plants are only operational during daytime when there is sunshine.

Some of the licensees have a maintenance planning system to schedule and keep records of proactive, preventive and reactive maintenance, whereas others do not have a maintenance planning system, but use Microsoft Office software such as an Excel spreadsheet.

The licensees’ strategy to manage maintenance planning is in line with international best practice aimed at ensuring that maintenance of equipment is carried out timeously and in an orderly manner, deriving optimal performance and preserving the life of the equipment.

8.7 PLANT PERFORMANCE AND KEY PERFORMANCE INDICATORS (KPIS)

The licensees submitted estimated energy generation and capacity factors for the solar farms. Graph 1 below represents a comparison of the capacity factor estimated during the licence application and the actual capacity factor.

The actual capacity factor for Solar Capital De Aar (Pty) Ltd (SCD) is 38% less than the estimated, whereas that of CPV Power Plant No.1 (Pty) Ltd (CPV) and RustMo1 Solar Farm (Pty) Ltd (RustMo1) is 45% and 33% above the estimate. It would appear that the estimated capacity factor of 37% for SCD was unrealistic or an error. On the other hand, CPV estimated an energy generation of 46GWh for the first year of operation but the actual energy generation was 67GWh, hence, the 45% variance in capacity factor.

8.8 OUTAGE MANAGEMENT

The licensees undertake outage management in accordance with OEM instructions. They take advantage of the night when the plants are not generating to do planned and corrective maintenance to avoid outages during the day when the solar farms are generating. In the event of forced outages that

Consolidated Report on the Findings of the Electricity Generation Industry Compliance audits Conducted in 2016/17 FY

12 will constitute a 10% loss of achieved capacity, the licensees immediately notifies the System Operator or Distributor as per the agreement between the parties stipulated in the PPA.

8.9 ASSET MANAGEMENT

The plant equipment in most of the audited solar farms is partially labelled so as to identify the equipment on the asset register. Most of the solar farms use a functional location system to identify equipment and a coding system for identification of components. All assets, including plant equipment, are recorded in the asset register, which is updated continuously.

8.10 REFURBISHMENT AND EXPANSION PLANS

All the solar farms are new as they were first commissioned between 2013 and 2014. Approximately 58% of the solar farms that were audited have an expected lifespan of 20 years, while the remaining 42% are estimated at 25 and 30 years. The solar farms currently do not have any future expansion plans beyond 20 years of PPA period.

9. PLANT INSPECTION

9.1 SCOPE OF PLANT INSPECTION

The plant inspection was conducted as complementary to the audit questionnaire.

The inspection covered the following aspects: a) safety of equipment; b) display of safety signs and emergency evacuation routes; c) environmental issues; d) housekeeping, for example cleanliness, neatness and tidiness; and e) plant labelling.

The following areas were inspected: a) PV modules; b) Inverters; c) MV switchgear; d) transformers; e) substation, station control and batteries; f) critical spares storage; and g) fire protection equipment.

9.2 ON-SITE OBSERVATIONS

Consolidated Report on the Findings of the Electricity Generation Industry Compliance audits Conducted in 2016/17 FY

13 It is essential to ensure that plant equipment is adequately labelled for safety reasons. Equipment should be easily identifiable so that mistakes are avoided where an employee might inadvertently work on equipment that is in service. In addition, plant equipment labelling forms part of asset management.

Safety and evacuation signs are essential for the safety of personnel under normal operations and in case of an emergency where personnel working in the plant need to evacuate quickly. Table 11 to 16 indicates the areas that were inspected as a sample representation of the solar farm.

Table 11: PV Modules inspection A B C D E F G H I J K L PV Modules Check for dust or debris on IO IO IO IO IO IO IO IO IO IO IO IO surface of PV Module Check for physical damage to IO IO IO IO IO IO IO IO IO IO IO IO the PV module PV module PI PI IM IM IM IM IM IM IM IM IM IM labelling Check for cable conditions e.g. wear & tear, burn IO IO IO IO IO IO IO IO IO IO IO IO marks, hot spots or loose connections Safety signs PI IM PI IM IM PI PI IM PI PI IM PI clearly displayed

Key to Table 11 to Table 16

Consolidated Report on the Findings of the Electricity Generation Industry Compliance audits Conducted in 2016/17 FY

14 I: Scatec Solar SA 166 (Pty) Ltd J: Sevenstones 159 (Pty) Ltd K: SlimSun (Pty) Ltd L: Solar Capital De Aar (Pty) Ltd IM: Implemented to a large extent IO: In order NA Needs attention PI: Partially implemented, there is room for improvement N: Not implemented or do not exist NI: Not inspected NO None observed

Table 12: PV Inverter inspection A B C D E F G H I J K L PV Inverter Inverter operational data or plant output e.g. nameplate info & display IM IM IM IM IM IM IM IM IM IM IM IM parameters such as output voltage, MW, operating temperature Check for cable conditions e.g. wear & tear, IO IO IO IO IO IO IO IO IO IO IO IO burn marks, hot spots or loose connections Ventilation IM IM IM IM IM IM IM IM IM IM IM IM Safety signs clearly IM IM IM IM IM IM IM IM IM IM IM IM displayed All plant equipment IM IM IM IM IM IM IM IM IM IM IM IM clearly labelled House- keeping in IO IO IO IO IO IO IO IO IO IO IO IO order

Consolidated Report on the Findings of the Electricity Generation Industry Compliance audits Conducted in 2016/17 FY

15 Table 13: Transformer inspection A B C D E F G H I J K L Transformer Controls are locked off and only IM IM IM IM IM IM IM IM IM IM IM IM accessible on authorisation Oil-filled transformers are installed IM IM IM IM IM IM IM IM IM IM IM IM inside bund- wall area with drainage Access to transformers IM IM IM IM IM IM IM IM IM IM IM IM is restricted to authorisation Safety signs clearly IM IM IM IM IM IM IM IM IM IM IM IM displayed The transformers and IM IM IM IM IM IM IM IM IM IM IM IM accessories are clearly labelled Evidence of oil and water NO NO NO NO NO NO NO NO NO NO NO NO leaks Silica gel and oil bowl, IM IM IM IM IM IM IM NA IM IM IM IM liquids at correct levels Check for cable conditions e.g. wear & tear, IO IO IO IO IO IO IO IO IO IO IO IO burn marks, hot spots or loose connections.

Consolidated Report on the Findings of the Electricity Generation Industry Compliance audits Conducted in 2016/17 FY

16 Table 14: MV Switchgear, Station Control and Substation inspection A B C D E F G H I J K L MV Switchgear, Station Control and Substation Switchgear room accessible by authorised IM IM IM IM IM IM IM IM IM IM IM IM personnel and access records in place Switchgear door panels are locked IM IM IM IM IM IM IM IM IM IM IM IM (circuit breaker compartment) All equipment IM IM IM IM IM IM IM IM IM IM IM IM clearly labelled Safety signs IM IM IM IM IM IM IM IM IM IM IM IM clearly displayed Emergency evacuation signs IM IM IM IM IM IM IM IM IM IM IM IM and route clearly displayed Firefighting equipment clearly marked with IM IM IM IM NA IM IM IM IM IM IM IM instructions and serviced Housekeeping in IO IO IO IO IO IO IO IO IO IO IO IO order Monitor display working, able to operate the plant IO IO IO IO IO IO IO IO IO IO IO IO from the control room and to view status of the plant Check for cable conditions e.g. wear & tear, burn IO IO IO IO IO IO IO IO IO IO IO IO marks, hot spots or loose connections.

Consolidated Report on the Findings of the Electricity Generation Industry Compliance audits Conducted in 2016/17 FY

17 Table 15: Battery inspection A B C D E F G H I J K L Battery Check conditions of the room e.g. IO IO IO IO IO IO IO IO IO IO IO IO ventilation, water ingress

Batteries - electrolyte level, filler caps IM IM IM IM PI IM IM IM IM IM IM IM and battery check sheet

Safety signs clearly IM IM IM IM IM IM IM IM IM IM IM IM displayed

Check for cable conditions e.g. wear & tear, burn marks, IO IO IO IO IO IO IO IO IO IO IO IO hot spots or loose connections.

Eyewash provided and fire extinguishers and firefighting IM IM PI PI IM PI PI IM PI PI IM PI equipment marked with instructions and serviced.

Housekeeping in order. IO IO IO IO IO IO IO IO IO IO IO IO

Most of the plants do not have a dedicated battery room as there is only a small quantity of batteries, which are only used as backup for communication and emergency systems. Therefore, in most cases, the batteries are in the same room as the metering panels and communication servers.

Consolidated Report on the Findings of the Electricity Generation Industry Compliance audits Conducted in 2016/17 FY

18 Table 16: Critical spares storage inspection A B C D E F G H I J K L Critical Spares Storage Spares stored IM IM IM PI IM IM IM IM IM IM IM IM neatly Spares clearly IM IM PI PI PI IM IM IM IM IM IM IM labelled Spares have IM IM IM IM IM IM IM IM IM IM IM IM manuals A list of spares and spares movement IM IM IM IM IM IM IM IM IM IM IM IM tracking registers are in place.

It is worth noting that no measuring standard was used for plant inspection, however, a comparison between the audited licensees was used as reference. For example, a solar farm that fared poorly in terms of plant equipment labelling and a solar farm that implemented plant equipment labelling to a larger extent are flagged and compared for the licensee who fared poorly to evaluate whether is in line with the requirements of the applicable regulations. A similar approach is adopted for the requirements for safety signs and evacuation signs.

10. CONCLUSION

Detailed findings and recommendations of the audit for each licensee are presented in the individual audit reports of the licensees. From the audit findings, it is evident that the licensees have systems in place to implement the requirements of the licence conditions, however, some do not have systems in place or programmes for compliance with the South African Grid Code.

Graph 2 represents the compliance status of the licensees with the four compliance requirement items, namely: a) The Electricity Generation Licence – Table 7; b) The Distribution Information Exchange Code – Table 8; c) The Distribution Network Code – Table 9; and d) The Distribution System Operating Code – Table 10.

In interpreting Graph 2, the following example is made:

In Table 10, Core Energy (Pty) Ltd (B) is compliant with two requirements of the Distribution System Operating Code, hence, on Graph 2 its compliance status is 66.6% (33.3 x 2), whereas Slimsun (Pty) Ltd (K) is compliant with the three requirements, therefore, its compliance status is 100% (33.3 x 3). This interpretation method is applicable to the rest of the licensees’ compliance statuses on the graph.

Consolidated Report on the Findings of the Electricity Generation Industry Compliance audits Conducted in 2016/17 FY

19 11. RECOMMENDATION

It is recommended that licensees address the non-compliances and other issues that are highlighted in this report, in particular those listed in the detailed individual audit reports.

Consolidated Report on the Findings of the Electricity Generation Industry Compliance audits Conducted in 2016/17 FY