South African consumers have experienced interruptions in the supply of electricity over the past few years and the situation, in terms of the availability of generation capacity, is expected to remain serious until the end of 2013, says Association of Municipal Electricity Undertakings strategic adviser Peter Fowles.
State utility Eskom has warned consumers that the supply of electricity will be tight until construction of its Medupi and Kusile coal-fired power stations are completed. However, the possibility of implementing load-shedding in the country again could be reduced by several mitigating strategies.
Consumers are beginning to realise the importance of saving electricity, resulting in many decreasing their power consumption.
“Although the demand for electricity is still growing, it is doing so at a slower rate than originally expected owing to poor economic performance globally and locally. The frequent warnings of possible blackouts and appeals to consumers to save power are starting to influence a wide range of consumers,” says Fowles.
He states that investment in energy saving measures could be increased with the introduction of impending energy efficiency tax incentives.
Many industrial electricity consumers have indicated their willingness to reduce their demand and implement energy saving measures.
There is also the possibility that private individuals will become involved in the development of small-scale renewable-energy projects, such as heat pumps, solar geysers and photovoltaic systems, which, over time, will help to decrease the level of the energy crisis.
Municipalities and Electrification
The completion of connection targets by municipalities has been hindered as a result of the cost of each electrification connection.
“The Department of Energy’s (DoE’s) funding policy provides Eskom with the full cost of each electrification connection while munici- palities only receive a subsidy for each connection and are required to use ‘top-up’ funds from their own budgets if the need arises,” states Fowles.
The DoE’s Integrated National Electrifica- tion Programme (INEP) initiative, which is funded through a National Electrification Fund, provided municipalities with R1.096-billion for 99 505 new electricity connections during the 2011/12 financial year.
“The corresponding allocation for Eskom for this year was R1.737-billion for 99 377 connections. This indicates that Eskom is more involved in rural electrification connections, as these are becoming more costly than their urban equivalent and more difficult for municipalities to fund,” notes Fowles.
He also believes it is unlikely that funding levels for both municipalities and Eskom will improve in the near future.
“With the average cost of connection increasing in most areas, it is likely that the total number of connections will reduce. Added to this constraint is the shortage of available infrastructure to serve both the rural areas and expanding urban developments. The DoE is receiving more funding applications for infrastructure projects comprising the installation of medium- and high-voltage lines, substations and an increase in transformer capacity,” explains Fowles.
He predicts the focus will shift to placating residents in informal areas within urban areas that are demanding electricity and other services, at the expense of rural electrification.
“The issue of electrification backlogs is inextricably related to the INEP and political pressure will ensure that the electrification priorities will more likely focus on the urban situation. Therefore, it is highly unlikely that the goal of universal access to electricity by 2014 will be achieved,” notes Fowles.
“The National Energy Regulator of South Africa has not yet released its decision on either the Eskom tariff increase for 2012/13 or the municipal tariff guideline for this period. Though it is expected that, from April 1, Eskom’s tariffs will increase by 25.9%. This increase translates into a 27.06% increase in the bulk tariffs charged to municipalities from July 1. Although the bulk purchases of energy from Eskom do not constitute 100% of municipal expenditure, it is still the largest item of expenditure and has a considerable influence on its municipal tariff increase,” says Fowles.
He believes that large tariff increases imple- mented by Eskom are necessary, as the ser- vice provider has frequently advised that it will need similarly large increases for a number of years to afford the large capital investment required to increase the country’s generation capacity.
Cable Theft and New Technology
Municipal distributors and the economy have felt the negative impact of cable theft, which involves more than just the replacement cost of the stolen cable and damaged or stolen equipment. Consequential damage, as well as transport and labour costs, also have to be taken into account.
The quality of electricity supply to customers is reduced and scarce skills are deployed for supply restoration rather than other major work.
“This crime also affects manufacturing processes, which can impact on the costs of goods and services, making South African products more expensive,” adds Fowles.
Various products have been introduced to the energy industry to help combat the challenge of cable and equipment theft but, unfortunately, these innovations cannot be applied to much of the existing infrastructure, especially underground cables.
The challenge of training to ensure skilled employees is one that needs to be tackled before allocating funding to alleviate the backlogs in network infrastructure, asset maintenance and refurbishment.
“It is well known that the skills shortage faced by municipalities is often in the order of 50% of established posts, owing to vacancies for skilled workers and managers. Funding for training has become increasingly limited over the years and the salaries and conditions of service that could be offered to potential new recruits in many municipalities cannot compete with other opportunities offered by corporate South Africa,” explains Fowles.