SA’s power plan surges ahead

Eskom’s aggressive plan to produce more
electricity to meet demands in South
Africa includes the building of coal-fired
power plants and upgrading existing
infrastructure.
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MEDIA CONTACTS
•Fani Zulu
Eskom spokesperson
+27 82 451 0457
+27 11 800 2265
fani.zulu@eskom.co.za
•Wanda Langenhoven
Media Liaison – Nersa
+27 12 401 4600
wanda.langenhoven@nersa.org.za

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Khanyi Magubane

With South Africa’s increasing demand for electricity, Eskom, the country’s electricity utility, has revealed that the company would have to generate 20GW of electricity by 2020 in order to meet the population’s needs. By 2030 the country would need at least double in order to keep up with growing demands.

Currently, 43.5GW of electricity, including imported power, is used in South Africa.

Speaking on Eskom’s expansion programme on 7 September, Kannan Lakmeeharan, managing director of systems operations and planning, said although the company had managed to keep a tight leash on electricity usage across the country, more power needed to be produced as a matter of urgency.

“We have a very tight supply-demand balance and it will continue like that in the next five to 10 years … the situation has improved, but there are still risks,” said Lakmeeharan.

Eskom established a rationing or “load shedding” programme at the beginning of 2008 when the national grid almost collapsed. The lack of electricity followed Eskom’s failure to take heed of a warning published in the White Paper on Energy Policy in 1998 (PDF). Large parts of the country were left in the dark in a bid to conserve electricity.

The paper indicated that South Africa’s ability to supply sufficient power would decrease in 2007.

Recommendations in the White Paper included an investment in infrastructure, such as the building of new power stations, which would enable Eskom to extend and increase its supply.

At that stage however, government had plans to privatise the electricity sector, a move that never took off, leaving the utility with insufficient electricity and in need of an immediate damage control plan.

Load shedding was then devised as a short-term solution to the problem.

Sporadic power outages were scheduled and these implemented in residential areas and businesses for a period of two hours at a time.

At the time, in January 2008, mines, smelters and manufacturing plants, which use the bulk of the country’s electricity, were forced to shut down, some for at least a week, to temporarily preserve the national grid.

Most mines shut down completely for a week, after which, up to 90% of power was restored.

Another solution that Eskom devised to counter the problem, was what it described as an “unavoidable” tariff increase, which would hit consumer pockets. To this effect, in March 2008, Eskom applied for a price increase of 60% to the National Energy Regulator of South Africa (Nersa).

Eskom’s application indicated that it needed R63-billion (US$8.3-billion) for the 2008/09 financial year to cover its costs.

This figure was R14-billion ($1.8-billion) above an April 2007 application by the utility, of revenue requirement of R49-billion ($6.5-billion), where it asked for an increase of 18.7% to recover the amount.

In December 2007, Nersa only approved a 14.2% increase.

Following public hearings and submissions made to the Nersa, the 60% hike was rejected and Nersa stuck to its December ruling, where it indicated that the 14.2% would apply to poor households, and only a slight provision for an increase of 32.6% was made for those living in better circumstances.

In 2009, Eskom once again applied for an increase of 34%, Nersa approved a 31.3% hike in June.

More power for South Africans

Eskom has since embarked on an aggressive R385-billion ($51-billion) new power generation expansion programme, which is set to span over the next five years. The plan will include the building of new power stations and the revival of older existing ones.

Two new power stations are currently under construction, one in the Limpopo province, north of South Africa, and another in Mpumalanga, east of the country.

The Medupi power plant, currently under construction in Lephalele, in the Limpopo province, will be a coal fired 4 800MW power plant, made up of six 800MW units.

The power plant will be commissioned in phases with the first unit expected to start producing power in towards the end of 2011, or early 2012.

Once completed, the Medupi plant will be the fourth largest coal plant in the world, as well as the biggest dry-cooled power station.

The second power station is the Kusile coal-fired power plant, which will be commissioned for construction in 2013, and is expected to be operational in 2017.

According Eskom, Kusile will be the first power station in South Africa to have the sophisticated flue gas desulphurisation technology.

Flue gas desulphurisation is an advanced method used to remove oxides of sulphur, including sulphur dioxide, from the fuel gases expelled in coal-fired power plants.

This will enable the utility to produce cleaner gases, which will decrease environmental damage.

Eskom has also announced that it plans to make proposals to its board in December 2009 for a third coal-fired power plant, the utility has been mum about the finer details of the third plant.

In addition to building power plants, R150-billion ($20-billion) will be invested over the next five years to upgrading existing power stations.

This will include renovating and re-opening three power stations that have since closed down.

The three coal-fired power plants – Camden, situated near Ermelo in Mpumalanga, has an output ability of 1 600MW, while the Grootvlei power station in Pretoria, produces 1 200MW, and the Komati power station in Komatipoort, Mpumalanga, produces 1 000MW, will operate again after almost 20 years since they last actively produced electricity.

As part of its electricity generation expansion programme, the African Development Bank (AfDB) in November 2008 approved a $500-million (R3.7-billion) loan to Eskom.

This was highly regarded as a positive development within the continent, as AfDB, is a mostly African development bank which funds African ventures.

The bank consists of shareholders from 53 African countries, and 25 countries in the Americas, Asia and Europe collectively.

The 20-year Eskom loan is the largest amount lent out by the bank’s private sector division.