Major business disruptions as SA has first load-shedding relapse since 2008

6th March 2014

By: Terence Creamer

Creamer Media Editor

  

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State-owned electricity producer Eskom, which declared its fourth power emergency of the 2013/14 summer maintenance season on Thursday morning, began implementing load shedding from 9:00, causing shops to shut, disrupting cellular networks and raising fresh concerns about the constraint being placed on South Africa’s already poor growth outlook by the country’s electricity shortages.

It was the first time that the utility had resorted to rotational load shedding since the country’s power crisis of 2008, during which mines were shut, factories reduced output and offices and households across the country were left without power for extended periods.

Eskom declared an emergency as from 6:00 in the morning of March 6, compelling its large customers to reduce their consumption by 10%. But this was insufficient to stabilise the system and residential and commercial customers began being cut three hours later.

The utility said that the situation was more critical than had been the case during three recent emergencies in November and February, attributing the generation losses to relentless rain in parts of South Africa.

Public Enterprises Minister Malusi Gigaba later provided a more detailed explanation of the causes, including:
• The depletion of dry coal stockpiles at some plants, which resulted in lower power output as a result of wet and poor quality coal;
• The loss of three units at the Kendal power station, in Mpumalanga, as well as reduced output from Duvha, where conveyor belts were being reconstructed following a fire in December;
• Low dam levels at the Drakensberg and Palmiet pumped storage power stations;
• And, a loss of imports through the Zimbabwe Electricity Supply Authority.

During the previous emergencies the bulk of the savings were derived from the 32 members of the Energy Intensive Group (EIUG), which collectively account for about 45% of national consumption, or 112 704 GWh in 2013.

But Gigaba said that, after all reserves were used and after a reduction by key industrial customers, “an additional reduction in demand of about 3000 MW was needed to balance the electricity system”. To make provision for the shortfall Eskom’s emergency protocol required all customers to reduce their demand by 20% through rotational load shedding.

SHARING THE BURDEN?

The EUIG’s Shaun Nel told Engineering News Online that its members had responded to Eskom’s call for a 10% reduction, as they had done in both November and February.

The cuts were additional to the reductions made in line with contractual arrangements Eskom had with some larger customers under its Demand Market Participation scheme. The utility also had an interruptible-load contract with BHP Billiton’s aluminium smelters.

Nel said that the frequency of the cuts had become a serious problem for its members, which had hitherto used the periods of reduction to redirect resources, or to pursue short-term maintenance activities. “These opportunities are being exhausted as the frequency of the cuts increases.”

In other words, output would ultimately be affected across companies that had collective revenues of R794-billion in 2013, the equivalent of 27% of gross domestic product.

Nel said EIUG members were concerned that they were having to bear the brunt of the tight system and felt that, while load shedding was unpalatable, the “marginal impact of a couple of hours of shedding at a household level is relatively small, because it is diluted across a large number of people”.

“Whereas when you target 32 big companies, the impact is felt very significantly on the economy.”

Business Unity South Africa (Busa) echoed these sentiments, arguing that, if further load shedding is inevitable, it would be “better that energy saving should be spread over the whole nation than repeatedly placing an unfair burden on a small number of intensive energy-users”.

However, the cuts were deeply felt on March 6, with restaurants hauling out candles, retailers shutting their doors and mobile networks reporting disruptions. In fact, cellular group MTN put out a formal statement in which it stated that load shedding had resulted in its services being affected in certain areas.

Busa said it was “deeply concerned” about the frequency with which emergencies were being declared, “as these are now cumulatively beginning to have serious economic and business consequences”.

The organisation would be seeking urgent meetings with government to discuss the challenges on the energy front, including the economic negative impact of Eskom's inability to maintain stable power supplies, which was “inhibiting investment, growth and job creation.

SHORT-TERM SUPPLY?

The pressure on Eskom to restore supply contracts with independent power producers (IPPs) and municipalities would also grow in the coming weeks. These contracts were terminated in December, owing to Eskom’s financial constraints.

Gigaba said recently that discussions were under way between the Department of Public Enterprises, the Department of Energy (DoE), the National Treasury and Eskom to secure the resources to resume purchases and to pursue yet additional supply-side opportunities.

Eskom told Engineering News Online that it was currently signing up short-term capacity from IPP’s and municipal generators, which would endure until the end of May. “We are in discussion with government about the continued use of the IPPs beyond May.”

Energy Minister Dikobe Ben Martins said in early February that the DoE planned to initiate the long-awaited procurement processes for new baseload and cogeneration IPP projects by the end of March.

The bidding processes would be pursued in line with the determinations issued on December 19, 2012. Under the baseload determination, 2 500 MW had been allocated for coal-fired IPP projects, 2 652 MW for baseload or mid-merit natural gas capacity and 2 609 MW for domestic and imported hydro-electricity prospects.

In addition, the DoE planned to procure 474 MW from near-term natural gas projects as outlined under the Medium-Term Risk Mitigation Plan, which also included a further 800 MW allocation for cogeneration capacity arising from biomass, industrial waste and combined heat and power sources.

Nel said the EIUG was monitoring developments closely, but remained concerned that some of the problems raised by potential participants about the nature of the contracts had not yet been ironed out. Unless they were, it could dampen appetite for the procurement programmes.

“It’s a short-sighted argument to say we don’t have the money now, because the cost of unserved energy is significantly more than that. In addition, those short-term power contracts are cheaper than the diesel plants anyway.”

Busa was also unhappy with the further delay in Parliament to the progression of the Independent Services and Marketing Operations Bill, “to which business was looking to create a more competitive environment for energy supply and to provide greater energy security in future”.

“In the meantime, every effort must be made to get all sources of ancillary power mobilised and load shedding must be planned to cause the minimum disruption to economic activity, transport and welfare.”

Eskom said it would use the published load-shedding schedule available on its website at http://loadshedding.eskom.co.za/ for its customers, but pointed out that municipalities also had their own schedules.

It called on consumers to urgently switch off geysers, pool pumps and all nonessential appliances throughout the day to further reduce the impact of rotational load shedding and cautioned customers to treat all electrical connections as live during the period.

Eskom would provide regular updates on the status of the power system, while forecasting that load shedding would continue until 22:00 tonight.

The three Kendal units were expected to return during the course of the day, as well as another unit by evening peak from Majuba power station. But the wet weather conditions were expected to continue until next week making a prognosis for the lifting of the emergency difficult.

Edited by Creamer Media Reporter

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