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Aug 17, 2012

Eskom says decisions on new generation capacity urgent

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Government would have to start implementing the Integrated Resource Plan (IRP) for electricity soon, to avoid another power supply crisis, Eskom CEO Brian Dames said on Friday.

He expressed concern as plans of further generation capacity build programmes, beyond the completion of the coal-fired Kusile power station being built in Mpumalanga, were yet to be announced.

“As Eskom, we are waiting for guidance as to what is expected from us.

“Our concern is that unless a decision on new build is made soon, in terms of what happens after the Kusile power station is completed, we will have continued constrained electricity supply from 2019 to 2020,” Dames stated at a business breakfast in Pretoria.

The Eskom CEO said the utility had aspirations to be involved in a nuclear build programme under the IRP, which planned 9 600 MW of new nuclear capacity.

He pointed out that it would take Eskom about ten years to get a new nuclear project into commissioning phase, which meant that it was already behind schedule to keep to the 2023 commissioning date, as called for in the IRP.

Meanwhile, Dames affirmed that South Africa’s power system would remain constrained until the Medupi and Kusile power stations were commissioned.

He added that in the short to medium term it would be challenging for Eskom to ensure a secure and stable supply of electricity, owing to poor planning by the country as a whole.

Further, Dames pointed out that conventional and unconventional gas could serve as the ‘game changer’ in terms of power supply in South Africa over the next two decades.

Despite environmental concerns surrounding unconventional gas, he said gas would carry various benefits, such as lower capital costs and improved emissions.

Eskom was currently looking for gas sourcing options beyond South Africa, to the Southern African region. “From a natural gas perspective, Mozambique and Namibia hold great advantages for us and we intend to expand operations there,” Dames noted.

The company recently signed a contract with UK-based Aggreko for 92.5 MW from its new 107.5 MW interim gas-fired power plant in Ressano Garcia, in Mozambique, and was also exploring natural gas opportunities on the country’s coast.

OUTLOOK

Dames said prospects for the global economy influenced the outlook for commodities, which directly impacted on the demand for electricity in South Africa, as Eskom currently sold 40% of its power to large energy-intensive mining and industrial customers.

He indicated that the utility was experiencing lower-than-expected demand growth, which was in large part attributable to slower demand growth from large commodity producers in the country.

“We have seen a decline in electricity consumption, so the year-on-year growth is negative,” Dames added.

Based on feedback from clients, Eskom projected a slow growth in electricity demand over the next five years of less than 2%, linked to an anticipated economic growth rate of about 3%.

Dames said Eskom envisioned a massive, high-voltage network or “super grid” for the electricity sector in Southern Africa by 2030. He added that such a system would integrate solar, nuclear, coal, gas and hydropower.

“We think the Southern African electrical system should leverage the hydro on the north [of the continent] all the way to the Congo on to the Zambezi and leverage the gas fields of the east and the west,” he stated.
 

Edited by: Mariaan Webb
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