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NTLs and the Supply ChallengeProving the Yelland Thesis
William C. Erasmus CEM (FSAIEE)
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Introduction
• In South Africa we have adequate energy (kWhs) but we do not have the power capacity (MW or GW) to meet the demand for energy
• This status unequivocally creates an opportunity to unlock power capacity by reducing energy demand through DR and reducing NTLs thereby deferring new investment into generation, transmission and distribution
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What are Non-Technical Losses – NTL’s ?
Commercial AdministrativeReceivables
• Fraud may be:– Energy theft (illegal connections to the network)
– Meter fraud or by-passes
• Meter errors
• Fraud may be implemented by the customer or by professionals
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NTL’s :
Commercial
• High cost of managing aging accounts– Default Customers – Delayed Payments and
no payment• Defaulter consumer (*) some will delay, some will not
pay
• Volume and aging of receivable accounts has HIGH CO$T IMPACT consumer used energy but did not pay on time, which increase company’s financial expenses
* Usually not accounted as NTL.
AdministrativeReceivables
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NTL’s :Commercial
• Internal process flaws and database inconsistencies (Average 20% of all problems identified by C&I Audits in SA)– Human and system errors (*)
– Incorrect tariff (*)
– Internal fraud (*)* Usually not accounted.
AdministrativeReceivables
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Non-Technical Loss
NTLs and the Supply Challenge
NTLdetection
Revenue Increase
Energy Consumption Reduction
Time
Energy
Energy paid
Energy consumption
32%*
68%*
* Figures from recent studies in Brazil
Cost-free DSM
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Advantages of NTL Reduction
• NTLs decrease double benefit– Significant energy consumption reduction - unlocked significant additional power capacity
– Revenue increase• Energy consumption reduction
– Diminishes total supply – Reduces the demand-peak
• Therefore, reducing NTLs has a huge benefit in demand management without additional investments– Cost-free DSM benefits
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Brazilian Case StudiesNortheast BrasilNortheast Brasil
Southeast BrasilSoutheast Brasil
BrazilBrazil
SAELPASAELPA Area: 54.595 Km2
Consumers : 837 thousand NTLs : 9%
Area: 1.789 Km2
Consumers : 131 thousand NTLs: 4%
Area: 17.419 Km2
Consumers : 436 thousandNTLs: 4%
Area: 17.331 Km2
Consumers : 378 thousand NTLs: 2% Date: April / 04
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Energisa (SAELPA)• Energisa implemented solutions to reduce NTLs
from Feb-03 to Nov-04 at their following distribution companies: ENERGIPE – Feb/04 SAELPA/CELB – May/04
CFLCL/ CENF – Nov/04
• RESULTS AFTER 1-Year– SAELPA has 850 thousand customers in one of
poorest states of Brazil– Productivity increase = 90.25%– Energy consumption reduction = 40 GWh– Additional net revenue in 1 year = US$ 2,9 million
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• CEMAR implemented a solution in 2006 and results for 2007 are:– Cemar has 1,35 million customers– Productivity increase = 118.89%– Energy consumption reduction = 227 GWh– Additional net revenue in 1 year = US$ 16,9 million
Cemar
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Measurement of Productivity
Non-Technical Loss
NTLDetection
Revenue Increase
Energy Consumption Reduction
Time
Energy
Energy Paid
Energy Consumption
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Opportunity Cost/Benefit Differentiator
• Cost to implement a solution to identify sources of NTLs for, say, Jhb Metro (1.4 million consumers) = 20 million USD and deliver result in 1-year with a ROI in excess of 400%
• New thermal plant of equivalent unlocked capacity would cost in the region of between 10 to 20 billion USD and take nearly 9-years to complete
• The opportunity for the economy is a no-brainer
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The Important ?• Business/Economy needs to ask
Government/Eskom why the economy is been held to ransom a situation which is critically effecting employment, job creation and the countries ability to remain globally competitive
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Thank You
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Optimization Problem• There are several activities to reduce NTLs such as
inspections, anti-theft cable-box-seal, AMR, “SMART” meters etc.
• Activities can’t be applied to all customers because of economic restrictions hence, distribution companies only have budget for a portion of consumer base
• The consequential questions are:– What is the most-effective (ROI) activity for each
customer ?– Who are the top customers to apply each activity ?
• As a result we are confronted with an optimization problem