Context of the Organisation – 1.1

The ISO 55000 standards are very explicit on the requirement to consider internal and external contexts when reviewing its AMS, as discussed in sec-

tion 2.1.4.1. External context could include considerations such as financial,

regulatory, economic, social and political while internal context could include considerations such as culture within an organisation, vision and mission, val- ues, and social and political factors.

Stakeholder consideration also plays a significant role in determining organ- isational objectives and decision making. Stakeholders also have a interest in the reliable and optimal performance of assets while maintaining a balance between other factors such as costs and safety. These considerations are as described in sections 2.1.3 and 2.1.4.

The context of this study is placed within the RE industry in SA that is currently dominated by the utility scale REIPPPP projects. The complex ownership structures and stakeholder interest creates an environment where there might not be a common view on the management system of these RE

assets. The context of the organisation, and the internal and external factors that influence decisions within the organisation are important aspects to be considered as part of a AM framework.

4.4.1.1 Scope of the Asset Management System – 1.1.1

The scope of the AMS needs to be defined in order to understand where the boundaries of the AMSare, as well as the asset portfolio covered by theAMS. The process of defining the scope of the AMS can be seen in figure4.6.

The example in figure 4.6 assumes that a management organisation (owner or contracted) is responsible for managing a fleet of RE plants that consist of different technologies such as wind and solar PV technologies. The scope of the AMS could include the entire REPPs as an asset and all the underlying asset types found within the REPPs such as transformers, control systems, wind turbines and inverters.

Start Phase 1:

AM Framework Establishment

Business Process Element:

Context of the organisation - 1.1

Define the scope of the AMS

Scope of the AMS Wind/Solar Power Plant  Wind Turbines  Solar Inverter  PV Panels  Balance of Plant  Transformers  Roads  Substation  Control Systems

Intangible assets/Human assets  Reputation

 Brand

 Intellectual Property  Knowledge  Information

Scope of the Asset Management System - 1.1.1 Organisational Context and Stakeholders Requirements - 1.1.2 Legend Process managed centrally at head office

level Step in process

Start/ Continuation/

End of phase

Figure 4.6: Scope of the asset management system – 1.1.1

Defining the scope of the AMS is important to align the AM policy and the SAMP with the internal and external stakeholder requirements (refer to sections 2.1.3 and 2.1.4).

4.4.1.2 Organisational Context and Stakeholders Requirements –

1.1.2

Once the scope of the AMS has been defined the needs, expectations and re- quirements of external and internal stakeholders with regard to AM have to be identified and documented. For example any expectations that the stake- holders may have regarding the recording and reporting of financial and non- financial information that relates to AM need to be considered. The process

of achieving the described requirements can be seen in figure 4.7. Firstly the stakeholders that are relevant to the AMS need to be defined.

Government  DOE  SA Treasury  NERSA  Governmental departments Typical Requirements:  Grid code compliance  Economic development obligations  Socio economic development obligations  Other contractual obligations  Reporting

Single Buyers Office/ Contractors  Customer  EPC/O&M  Asset manager  Service providers  Typical Requirements  Reliable energy  Adhere to contracts  Operational notifications  Maintenance adherence  Due payment  plant performance guarantees  Warrantees  Risk Investors/Lenders  Banks  BEE Partners  Owners  Other shareholders Typical Requirements  Return on investment  Business survival  Debt service coverage ratio  Reporting  Power plant reliability  Plant performance  Prudent AM  Risk management

Special Purpose Vehicle (SPV)  Projects company Typical Requirements  HSE  Reporting  Power plant reliability  Power plant performance  Prudent management  Contractor performance External  Land owners  Communities  Black owned businesses  Eskom  Local businesses  General public Typical Requirements  Good environmental management  Sustainable business  Due payment  Prudent management  Reporting

Are the stakeholders considered that are relevant to the AMS?

Are the stakeholders requirements considered in terms

of the AMS? Are the stakeholders

aware of the scope of the AMS?

YES

YES

No

No No

Define the internal and external stakeholders relevant to the AMS

and their requirements

Continue Phase 1:

AM Framework Establishment

End Business Process Element:

Context of the organisation - 1.1

Organisational Context Organisational Context and Stakeholders Requirements - 1.1.2 Legend Process managed centrally at head office

level Step in process Start/ Continuation/ End of phase YES

Figure 4.7: Organisational context and stakeholders requirements – 1.1.2

These stakeholders, in the SA context, can be numerous governmental de- partments, customers, lenders, investors, the public and the project company boards (Special Purpose Vehicleboard). All of these stakeholders have numer- ous requirements of AMS depending the scope of the AMS as seen in figure

In theSAcontext government has created a contractual environment where if an IPP does not adhere to the obligations such as grid code, economic development commitments, the IPP could face penalties or lose its operating licences.

The customer is essentially a single entity, Eskom, and referred to as the

SBO and would expect reliable energy delivery and adherence to any other requirements of the Power Purchase Agreement (refer to section 2.3.1).

Investors and lenders expect REPPs to perform at their required level in order to generate profits and pay back debts.

Contractors andAsset Managersexpect that the revenue generated can pay their fees while they balance their costs, risk and the REPPs in accordance with contractual obligations.

The REPPs are operated within a Special Purpose Vehicle (SPV) that can have key contractual agreements such as anO&M contract with a single party or multiple parties. Other key agreements can include SPVmanagement that could include the overall management of the REPPs, including all financial and reporting requirements.

Other key external stakeholders can include land owners who have 20-year leases with an SPV, local businesses that are dependent on providing services and the public who are concerned with general environment and their imme- diate surroundings.

All these various and often conflicting requirements need to be considered and balanced in order to achieve a sustainable project.

The complexity and alignment of ownership and management structures as seen in section 2.3.1 create an environment where it is important to create a common base from which to manage these projects. Fundamental busi- ness values that drive the long-term sustainability and performance of REPPs need to be established during the process. The process of establishing all the stakeholder requirements can also create an environment where all the related parties can negotiate and rationalise any trade-offs between priorities.

4.4.2

Organisational Strategic Plan and

AM

Maturity –