May 15, 2008
Eskom seeks regulator approval to double DSM budgetBack
Engineering|Africa|CoAL|Diesel|DSM|Eskom|Flow|PROJECT|Projects|System|Africa|South Africa|Energy|Energy Efficiency|Flow|International Bank For Reconstruction And Development|South African Association Of Energy Service Companies|Andrew Etzinger|Ken Gram|Monkwe Mpye|Power|Diesel
© Reuse this Capacity constrained power utility Eskom has asked the National Energy Regulator of South Africa (Nersa) to more-than-double the amount of money it can claim back from government for its demand-side management (DSM) programme for this financial year to R2,5-billion, an official said this week.
Eskom DSM GM Andrew Etzinger conceded that the firm was taking financial strain, but, in fact, planned on expanding its DSM programme.
"According to the regulator, we have a budget of R400-million, which we have extended internally to R1,2-billion for our current financial year," he said in an interview.
"We would want to extend that from about R1,2-billion to about R2,5-billion, so there's a substantial increase that we've asked for, which is part of our price increase application to the regulator."
Etzinger said that the reason that Eskom had suspended the signing on of new DSM projects earlier this year was because it had already allocated the full R1,2-billion.
This stood in contrast to what another DSM manager, Monkwe Mpye, told Engineering News Online on May 5.
He said that new DSM projects had been put on ice because of "cash-flow issues" stemming from soaring coal and diesel prices.
"It's certainly not the case that we have diverted costs from our DSM programme to buy coal," Etzinger asserted. "If anything, we have overextended ourselves on the DSM programme, which poses a risk if we don't get permission from the regulator to recover these costs - it will come off Eskom's bottom line."
"We're out on a limb because of our DSM acceleration," he added.
But South African Association of Energy Service Companies (Escos) president Ken Gram believed Eskom's current DSM programme "is the single biggest hindrances to saving energy in this country".
He said in a telephone interview that getting DSM projects approved through Eskom's system took up to two years.
He specifically mentioned an Esco that had finally reached agreements on three or four DSM projects this year, only to be told by Eskom that it would not sign on any new projects until June.
Gram said that the World Bank had recommended to Eskom that it change its approach to DSM to making a "standard offer".
He explained that this would greatly simplify processes, as the utility would then pay customers a set amount for each MW that they removed from the grid.
Etzinger said that this was what Eskom had applied to Nersa for.
He stated that the current environment was vastly different to what it was about five years ago, when the utility adopted its DSM policies.
"At the time, our priority was on load shifting and not energy efficiency, those have changed dramatically," Etzinger said. "We need 3 000 MW of DSM to be implemented immediately."
Secondly, he believed that Eskom's focus must shift to energy efficiency, rather than shifting power use from peak usage times.
"Both in terms of how projects are evaluated, the extent to which they are funded and are prioritised between energy efficiency and load management - all of that needs to change," Etzinger noted.
"We need to vastly accelerate the evaluation and approval stage for projects brought to us, and this is where the standard offer comes into its own."
He said that Eskom now wanted to get prior approval for standard types of projects.
"Where we can achieve economies of scale, we really must," stated Etzinger.
He said that the power parastatal hoped to hear from the regulator "shortly" on what the new DSM policy looked like.
Edited by: Mariaan Webb© Reuse this Comment Guidelines (150 word limit)
Updated 4 hours ago Despite various challenges related to the extraction of shale oil and gas, as countries grow accustomed to the idea, the use of shale as a form of energy will be more widely pursued, international oil and gas market analyst Michael Lynch said on Tuesday. Speaking at...
Updated 4 hours ago A consortium led by two Kenyan firms won a government tender to build a 1 000-MW, coal-fired power plant, company officials said on Tuesday, part of moves to satisfy rising demand for energy in East Africa's biggest economy. Kenya suffers from regular blackouts due...
Updated 4 hours ago The announcement of the successful bidder for the construction of Durban’s long-awaited passenger cruise terminal was imminent, Transnet National Ports Authority (TNPA) CEO Tau Morwe told delegates at the African Ports Evolution Conference in Durban on Tuesday. ...
Recent Research Reports
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
Real Economy Insight: Road and Rail 2014 (PDF Report)
This six-page brief covers key developments in the road and rail industries over the past 12 months, including details of South Africa’s road and rail network and prospects for both sectors.
This Week's Magazine
South African State-owned defence industrial group Denel has announced its fourth consecutive year of profits. The group's results for the financial year 2013/2014 were recently announced at its head office in Centurion, south of Pretoria. Revenues grew by 17%, net...
There is little opportunity for JSE-listed infrastructure company Group Five to grow shareholder value in the domestic market, says CEO Mike Upton. He says value can still be found in the private sector, in the renewable and industrial power sector, as well as in...
The National Association of Automobile Manufacturers of South Africa (Naamsa) has announced the event dates of the 2015 Johannesburg International Motor Show (JIMS). The event will take place from October 14 to October 25, 2015, at the Johannesburg Expo Centre, Nasrec.
UK engineering support services provider Babcock is set to deliver the largest order of global truck manufacturer DAF’s truck tractors in Southern Africa to bulk carrier road-based logistics company Ngululu Bulk Carriers (NBC), with 133 trucks to be delivered in...
Digital radio communications in the African local government space can open up the world, but have many challenges to overcome, notes integration and migration of legacy radio communications infrastructure with digital mobile radio company Emcom Wireless head of...