http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 18.15Change: -0.10
R/$ = 16.02Change: 0.13
Au 1196.44 $/ozChange: 2.44
Pt 936.00 $/ozChange: 11.00
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Letters About Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
May 16, 2008

Generation investments to feed South Africa’s power hunger

Back
Africa|CoAL|Cogeneration|Efficiency|Eskom|Gas|Generators|Hydropower|Nuclear|Power|PROJECT|Projects|Storage|Africa|Cogeneration|Energy|Maintenance|Power Generation|Power-generation|Rubber|Solutions|Cogeneration
Africa|CoAL|Cogeneration|Efficiency|Eskom|Gas|Generators|Hydropower|Nuclear|Power|PROJECT|Projects|Storage|Africa|Cogeneration|Energy|Maintenance|Power Generation|Power-generation|Rubber|Solutions|Cogeneration
africa-company|coal|cogeneration|efficiency|eskom|gas|generators|hydropower|nuclear|power|project|projects|storage|africa|cogeneration-industry-term|energy|maintenance|power-generation|power-generation-industry-term|rubber|solutions|cogeneration-person
© Reuse this



In a milieu of increasing demand for electricity and large-scale power shortages, power utility Eskom is pursuing a number of projects to boost its capacity, and plans to spend R343-billion over the next five years, and R1,3-trillion between now and 2025, mostly on generation-related investments.

The company’s project pipeline includes new coal-fired baseload facilities, gas-fired and pumped-storage peaking facilities, nuclear and renewable possibilities, as well as the refurbishment and recommissioning of existing plants.

For years South Africa’s electricity production capacity was in excess of the country’s requirements, owing to a period of overinvestment by Eskom, which eliminated the need to build new power plants, and also saw the company achieving the position of the world’s lowest-cost electricity producer.

However, the time of possessing excess generating capacity has passed, and South Africa is in urgent need of additional power generating capacity. Already, the country has faced large-scale power outages and load-shedding events, and forecasts indicate that South Africa’s power situation will remain tight for the next five to eight years if immediate interventions are not made.

Nevertheless, owing to long lead times for new baseload capacity, many of Eskom’s investments will only start contributing to the national grid in the longer term and, as a result, a number of alternative solutions to the energy crisis are also being pursued.

One such alternative is the involvement of independent power producers (IPPs). In an effort to facilitate such involvement, the Department of Minerals and Energy (DME) is spearheading an IPP project, and Eskom has invited tenders for small-scale IPP projects and is expected to issue a tender for large-scale IPP capacity in the coming months. Cross-border IPP oppor- tunities are also under investigation, and Eskom is pursuing the development of independent cogeneration facilities. Additionally, power group Independent Power South Africa (Ipsa) is investi- gating the development of additional power generation projects.

While Eskom is the source of about 95% of the electricity used in the country, and about 60% of the electricity consumed on the African continent, the private sector is set to play an increasingly important role in the generation of electricity in South Africa in coming years. IPPs are expected to generate 30% of the additional power capacity required by the country going forward.

South Africa already has several licensed IPPs, the most substantial of which is Gauteng’s Kelvin power station, which has a 600-MW capacity, although currently less than 150 MW of this capacity is available. Other licensed IPPs include the Darling Independent Power Producer (Darlipp), which is in the process of establishing a commercial wind farm, which will ultimately have a capacity of 13 MW, to be developed over two phases, with first production starting in 2008; and Bethlehem Hydro, which is installing 7 MW of hydropower capacity, in the Free State. Power produced by Darlipp will be sold to the City of Cape Town, in terms of a power purchase agreement (PPA), while the power produced by Bethlehem Hydro will be sold to the town of Bethlehem, also under a PPA.

There are also several IPPs operating in South Africa in the production of power for particular private companies. For example, the first IPP licensed in South Africa was intended to develop a small power station in KwaZulu-Natal to supply power to paper company Mondi’s Durban paper mill, and Ipsa supplies power to rubber manufacturer Karbochem.

Other companies that make use of privately generated power are Sasol, Tongaat Hulett, Friedenheim and TSB Sugar.

In addition, South Africa has about 16 municipal power generators, with a combined capacity of 1 841 MW.

The availability of significant IPP capacity, however, is a number of years away, and it seems that, in the short term, one of the best options for alleviating the electricity crisis lies not in the supply of additional generation capacity but in limiting the demand for existing capacity.

As a result, Eskom has rolled out a demand-side management and energy efficiency programme, including the pursuit of significant demand- reduction targets through strategies such as power rationing and the development of regulations to prohibit wasteful practices. In addition, Eskom has indicated that it will delay the signing of new electricity supply contracts for projects over a certain size for a period of four to six months from March this year.

The South African government has long been cognisant of the fact that the country would face an electricity supply shortage. Policy uncertainty and planning confusion contributed to the fact that the situation was not avoided.

Despite the fact that government was aware of the impending situation, the extent and timing of the problem that unfolded in early 2008 was unexpected, and was largely a consequence of the fact that a large percentage of Eskom’s existing capacity was unavailable for supply, owing to planned maintenance, unplanned breakdowns and reduced output linked to coal- supply problems.

The crisis has also been attributed to demand growth, and, certainly, gross domestic product (GDP) growth has been higher than the 4% on which many of Eskom’s expansion plans were based. However, the fact that government was aware of the problem as far back as 1998 shows that demand growth alone has not caused the crisis.

The potential impact of the crisis on the South African economy is significant, with the situation having the ability to damage consumer, business and foreign investor confidence, with implications for GDP growth, employment, capital formation, capital inflows, the rand, inflation and interest rates.

Edited by: Laura Tyrer
© Reuse this

To subscribe email subscriptions@creamermedia.co.za or click here
To advertise email advertising@creamermedia.co.za or click here
 
Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
Other Eskom News
GAME PLAN Eskom's strategic focus points could include ensuring the viability of projects before commissioning and ensuring their completion on time and within budget
Power utilities need to master the act of balancing scheduled and unscheduled maintenance, says global growth consulting firm Frost & Sullivan. Programme manager for energy and environment, Johan Muller, adds that maintenance can be managed, provided a utility’s...
HOLISTIC OFFERING Structa’s subsidiaries provided significant quality, sufficient capacity and a quick production turnaround on the Kusile and Medupi flue ducting
Steel products and related services company Structa Group’s manufacturing, machining and refurbishment services subsidiaries Turnmill Proquip Engineering and One Steel Engineering are supplying flue-ducting material to State-owned power utility Eskom’s Kusile power...
CHRIS WHELAN There is a strong push in the Western Cape to pursue gas turbines to supplement national baseload power generation
The use of gas turbines should, ideally, be conceptualised and the related infrastructure constructed as soon as possible in the Western Cape to overcome current electricity undercapacity issues and grow future demand, says business leadership organisation Accelerate...
More
 
 
Latest News
Updated 2 hours 15 minutes ago While international companies are keen to invest in South Africa, they are unable to meet the conditions of employment that have been extended to non-parties, forming part of a myriad of reasons why the the Free Market Foundation (FMF) is challenging the current...
Updated 3 hours ago South Africa- and Botswana-based research institutions have teamed up to research dynamic spectrum access and the sharing of television (TV) band frequencies using a TV white space (TVWS) experimental network. South Africa’s Council for Scientific and Industrial...
Randgold CEO Mark Bristow
Updated 3 hours ago Mining companies owed it to their host countries and their shareholders to invest in the troughs so that they could reap the benefits in the peaks, Randgold Resources CEO Dr Mark Bristow said on Tuesday. Speaking during a panel discussion at the 2016 Investing in...
More
 
 
Recent Research Reports
Construction 2016: A review of South Africa's construction industry (PDF Report)
Creamer Media’s Construction 2016 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; key participants; local demand; geographic diversification; corporate activity; black economic...
Energy Roundup – February 2016 (PDF Report)
The February 2016 roundup covers activities across South Africa for December 2015 and January 2016 and includes details of a Government Gazette notice that confirms Cabinet’s decision to move ahead with the 9 600 MW nuclear procurement programme; State-owned power...
Energy Roundup - December 2015 (PDF Report)
The December 2015 roundup includes details of State-owned utility Eskom’s application to claw back R22.8-billion; South Africa’s ranking as an investment destination for renewable energy; and a nuclear expert’s thoughts on reactor designs for South Africa’s nuclear...
Water 2015: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2015 Report considers the aforementioned issues, not only in the South African context but also in the African and global context in terms of supply and demand, water stress and insecurity, and access to water and sanitation, besides others.
Input Sector Review: Pumps 2015 (PDF Report)
Creamer Media’s 2015 Input Sector Review on Pumps provides an overview of South Africa’s pumps industry with particular focus on pump manufacture and supply, aftermarket services, marketing strategies, local and export demand, imports, sector support, investment...
Liquid Fuels 2015: A review of South Africa's liquid fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2015 Report examines these issues in the context of South Africa’s business environment; oil and gas exploration; fuel pricing; the development of the country’s biofuels industry; the logistics of transporting liquid fuels; and...
 
 
 
 
 
This Week's Magazine
Power and automation company ABB is in the launch phase of its highest payload, multipurpose industrial robot, the IRB 8700. The robot has a reach of 3.5 m and can handle a payload of up to 800 kg. “When designing the IRB 8700, we emphasised reach and payload, as...
Identity and Access Management (IAM) is a critical facet of a connected security ecosystem, as controlling the confidentiality, integrity and authorisation of data access and use is key to securing new digital business channels. However, companies face several...
RORY YOUNG Managed security services provide companies with a means to actively monitor their environment and ward against threats
Data underpins digital business models, the digital economy, the Internet of Things and the fundamental changes in the ways people interact and protecting data is crucial to securing new ways of doing business, says T-Systems South Africa information and...
The City of Cape Town will issue a tender for the procurement of electric buses for its MyCiTi service, in line with the council’s commitment to lower its carbon footprint, says executive mayor Patricia de Lille. The tender, to be advertised early in February, will...
The iSimangaliso Wetland Park Authority signed a R10-million contract last month with local tailings storage facility specialists Cyclone Engineering Projects to remove about 100 000 m3 of dredge spoil obstructing the natural course of the uMfolozi river, in...
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks
Subscribe Now for $149 Close
Subscribe Now for $149