Jan 30, 2012
Eskom still pursuing mandatory savings 'safety net'Back
Construction|Johannesburg|SECURITY|Africa|CoAL|Diesel|Eskom|Industrial|Public Enterprises|Safety|Security|System|Turbines|Africa|South Africa|Eskom Plant|Security|Energy|Energy Conservation Scheme|Maintenance|Mining|Security|Brian Dames|Malusi Gigaba|Power|Security|Turbines|Diesel
© Reuse this
Providing a power system update in Johannesburg on Monday, CEO Brian Dames said the system would remain constrained for the coming five years, while the maintenance backlog had become unsustainable. Savings were, therefore, needed to create "space" for the utility to implement its proactive maintenance schedule across all of its 58 units.
Eskom was still forecasting a 9 TWh shortfall for 2012, equivalent to the operation of a 1 000 MW power station.
Public Enterprises Minister Malusi Gigaba encouraged corporate South Africa, as well as private citizens, to take voluntarily steps to reduce their demand to ensure system stability and to create room for continued economic growth.
He said catching up on maintenance was "no longer an option".
"Eskom has a highly developed maintenance policy, which is designed to ensure that areas at risk are addressed in order of priority through a consistent schedule of maintenance and inspection work across its fleet of power stations," Gigaba said, warning that any further deferral of maintenance would pose significant risks to the safety of assets and people, while placing security of supply in jeopardy.
Dames said Eskom required greater certainty on demand reductions and would, thus, continue to pursue a mandatory ECS in its negotiations with business and labour at the National Economic Development and Labour Council, or Nedlac.
These discussions had been under way for a number of years and business had continually raised objections to a mandatory scheme, saying it could result in the curtailment of growth and a reduction in jobs.
Dames stressed that such a compulsory scheme would only be deployed as a last resort “safety net”, while also welcoming the voluntary efforts that had already been made to reduce demand.
However, its top 250 customers had, thus far, only managed to reduce their demand by 1% against a 2007 baseline, even though Eskom's 95 leading industrial customers had achieved average savings of 6.9% against that baseline.
In fact, some mining companies had already breached the 10% savings level and would not be asked to make further mandatory cuts should it be agreed that the ECS be made compulsory.
Overall, Eskom's top customer grouping also included entities, such as the large municipalities, that had not made much progress in reducing demand.
Dames warned that 2012 would be “particularly tight”, owing to the fact that no new major supply would be introduced while demand was still increasing, albeit at a slower rate than initially anticipated.
Demand had returned to 2007 levels, with the summer daily peak of just over 30 000 MW and winter demand likely to peak at above 37 000 MW.
Further, the first unit of the coal-fired Medupi power station, which was under construction in Limpopo, would not be introduced during 2012 as initially envisaged. In fact, Dames indicated that the first unit was currently only scheduled to be introduced late in 2013, but that efforts were being made to align the schedule to the first quarter of 2013 schedule outlined in the Integrated Resource Plan, or IRP, for electricity.
In the meantime, much of Eskom's attention had turned to the reliability of the existing fleet, much of which was approaching 30 years.
There was a need to accelerate maintenance efforts at a rate of around 10% of installed capacity during the summer maintenance peak. But owing to the supply constraints, Eskom had been failing to introduce outages as planned and was shifting maintenance out in a bid to keep the lights on. This was increasing the vulnerability of the system to unplanned outages in the longer term and was thus “unsustainable”.
Besides the focus on the ECS and its maintenance programme, Eskom was also pursuing a range of other demand- and supply-side interventions to shore up supply ahead of the introduction of capacity from Medupi and Kusile.
It was interrogating various importation options from the region, including the prospect of importing natural gas from countries such as Mozambique, possibly for use in its gas turbines at Mossel Bay and Atlantis, in the Western Cape. Currently these open-cycle gas-turbines (OCGTs) were fuelled using diesel and were, thus, a significant cost contributor.
On average Eskom produced electricity at a cost of 38c/kWh. But the cost of production at the OCGT plants was between 150c/kWh and 250c/kWh, depending on the diesel price.
The utility was also procuring all available power from non-Eskom sources, having secured 1 000 MW of such capacity from independent power producers and municipalities.
It was also moving ahead with demand-side management schemes and had entered into agreements with large customers to enable it to buy back power in times of system distress.
It was also in the final stages of implementing an innovative demand aggregation model and hoped to have some 500 MW of such buy-backs available by winter 2012.
Edited by: Creamer Media Reporter© Reuse this Comment Guidelines (150 word limit)
Other Video News
Updated 3 minutes ago The strategic area frameworks for the City of Johannesburg’s three identified Corridors of Freedom had been approved by council, on Thursday, executive mayor Parks Tau has revealed. The proposed Corridors of Freedom were the Empire/Perth corridor, that would stretch...
Updated 13 minutes ago Affordability was the key issue facing South Africa in terms of human settlements and housing development, South African Affordable Residential Developers Association committee member and Basil Read Developments MD Yusuf Patel said on Friday. Speaking at the Banking...
Updated 17 minutes ago Some two years after the merger of the United Transport and Allied Trade Union and the South African Railway and Harbour Workers Union, the newly formed entity has been officially renamed the United National Transport Union (UNTU). “[The merger of the unions] was...
Recent Research Reports
Defence 2014: A review of South Africa's defence industry (PDF Report)
Creamer Media’s Defence 2014 report examines South Africa’s defence industry, with particular focus on the key participants in the sector, the innovations that have come out of the sector, local and export demand, South Africa’s controversial multibillion-rand...
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 road...
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.
This Week's Magazine
In the next 20 years, it was expected that, in Africa, more people would live in cities and towns than in rural areas, United Nations Habitat executive director Dr Aisa Kirabo Kacyira said at the Human Settlements Indaba that took place earlier this month in...
Tough-talking Human Settlements Minister Lindiwe Sisulu has committed government to building 1.5-million low-cost houses over the next five years, telling the Human Settlements Indaba in Johannesburg on Wednesday that the State would achieve this target through the...
Over the past 20 years there has been persistent concern about deindustrialisation in South Africa, as well as the fact that locally produced manufactured products have been increasingly displaced by imports.
Financial agreement for Ghanian independent power producer (IPP) Cenpower Generation Company’s $900-million, 350 MW combined-cycle gas-turbine power plant was finalised earlier this month, paving the way for the project’s construction to begin before 2015 in Tema,...
The revenue implications for South Africa of ‘base erosion and profit shifting’ by corporate taxpayers are firmly in the crosshairs of the Davis Tax Committee (DTC) and Judge Dennis Davis hinted last week that recommendations were being considered to “detect and...