Recommendations to address the generation capacity “crisis” in SA - CNBC Africa

Recommendations to address the generation capacity “crisis” in SA

Special Report

by Chris Yelland 0

Chris Yelland writes how South Africa is not experiencing an energy ‘crisis’ but rather a serious management failure.

The 2014 electricity blackouts in have brought into stark relief the failure by government, the Department of Energy, the Department of Public Enterprises, Eskom and municipalities to provide an adequate and sustainable electricity supply to meet the growing needs of the country, the economy and its people.

The 1998 Government White Paper on Energy Policy was indeed a far-sighted document in respect of its recommendations for the liberalisation of the electricity sector.

But perhaps it was too far-sighted in view of the prevailing political and ideological realities of the times, because these official government policies have never been implemented.

However, the hard experiences learned by following government and Eskom’s central command and control approach, and the resulting blackouts of 2008 and 2014, requires that the recommendations of the 1998 Government White Paper on Energy Policy be revisited.

The detailed planning done in the national integrated resource plan for electricity, IRP 2010-2030, should also be revisited in light of the significantly changed underlying economic growth, energy intensity and electricity demand assumptions during the first four years of the plan.

Proper attention should be given to the 2013 IRP Update, which takes into account the realities of the first years of the 20-year plan, and the associated impact these realities have on demand projections and generation capacity requirement to 2030.

These recommendations by energy professionals should not simply be ignored by government as it presses ahead with the outdated IRP 2010-2030 plan, regardless of these realities. Otherwise we will face expensive and damaging consequences in the years ahead, as we did by ignoring critical recommendations in the 1998 Government White Paper on Energy Policy.

The recommendations given below focus on unlocking the significant unfulfilled potential of the electricity generation sector. Issues relating to the sub-optimal electricity distribution sector are not considered.

Some of the recommendations are targeted at Eskom itself, while others involve industry-level actions. Some are short-term in nature, while others are medium and even longer term actions, and the recommendations are given in no specific order of merit, as follows:

  1. Stop further increases in unplanned generator outages in their tracks by increased, better planned and better resourced maintenance outages, even if this means more load-shedding at domestic level in the short term.
  2. Increase the efficiency and reduce the time taken for planned generation outages, by closer involvement of the original equipment manufacturers, even if this increases the cost of the maintenance.
  3. Systematically work towards reducing the generation maintenance backlog so as to begin to reduce the current unacceptable level of unplanned breakdowns, even if this means more load-shedding at domestic level in the short term.
  4. Press on aggressively with the Medupi and Kusile new-build projects to bring these on-stream without any further delays.
  5. Promulgate the Independent System and Market Operator Bill without any further delay, and remove all unnecessary barriers to entry for independent power producers of all technologies, including coal, gas, hydro, wind, solar photo-voltaic, concentrating solar power, biomass, biogas, etc.
  6. Remove all unnecessary barriers to entry for industrial, commercial and domestic co-generation, including rooftop solar photo-voltaic, biomass, biogas, waste gas, waste energy recovery, waste heat recovery, generation from discard coal, etc.
  7. Remove all unnecessary barriers to access to the transmission grid, including barriers to wheeling of power across the grid by independent power producers and large electricity users.
  8. Proceed with the renewable energy independent power producer procurement programme on an expedited basis.
  9. Require Eskom to purchase imported liquefied natural gas for its open-cycle gas turbines in the Western Cape, as well as the Department of Energy open-cycle gas turbines in KwaZulu-Natal and Eastern Cape, and convert these facilities to combined-cycle gas turbines as soon as possible.
  10. Facilitate the private sector in building offshore liquefied natural gas terminals, gasification plants, transmission and distribution pipelines in KwaZulu-Natal, Eastern Cape and Western Cape, to enable a new gas-power industry.
  11. Facilitate further independent power producers and/or Eskom combined-cycle gas turbines in the Gauteng area, and facilitate the private sector in building further gas transmission and distribution pipelines and compressor stations for imported compressed natural gas from Mozambique to Gauteng.
  12. Proceed with private sector exploration of South Africa’s shale gas reserves, with a view to exploiting commercially viable shale gas reserves in the future.
  13. Initiate and drive a national campaign by politicians, officials, Eskom, municipalities, police, justice and correctional services to reduce electricity theft and non-payment. If non-technical losses can be halved, this will save 1000 to 1500 MW demand at peak periods.
  14. Introduce domestic time-of-use tariffs to incentivise and penalise users to encourage them to change consumption patterns to reduce morning and evening peaks.
  15. Introduce ripple control receivers nationally as mature, low-cost, proven technology to control electric geysers and swimming pool pumps.
  16. Introduce a national campaign of power factor correction by Eskom, municipalities, industrial and commercial uses, and through electricity tariffs, to improve the national power factor, and so reduce the national MVA maximum demand, and reduce generator, transformer, cable and line loading and losses.
  17. Proceed with aggressive industrial, commercial and domestic energy efficiency and integrated demand management programmes, including the mass roll-out of solar hot water geysers.
  18. Aggressively continue with the diversification of primary energy sources away from the current over-dependence on coal, towards a balanced primary energy mix including coal, gas, nuclear, hydro, pumped water storage, wind, solar photo-voltaic, concentrating solar power, nuclear, etc.
  19. Facilitate and expand regional energy integration through energy and power projects and transmission grid infrastructure in DRC, Angola, Namibia, Botswana, Zimbabwe, Zambia, Mozambique, Swaziland, Lesotho and South Africa.
  20. Raise capital and improve Eskom’s balance sheet by selling identified power station assets and listing Eskom as a public company on the stock exchange.
  21. Increase diversity in the generation sector away from Eskom as a vertically integrated monopoly supplier, through unbundling of Eskom generation and the introduction of independent power producers, municipal generators, foreign energy investors and imported hydro power.

What gives hope in this mess of unfulfilled expectations is that there is still so much to be done that has been neglected by the myopic and closed-minded attitudes within government, the Department of Energy, the Department of Public Enterprises, Eskom and municipalities.

South Africa is rich in energy resources, both natural energy and human energy. We do not have an energy crisis in South Africa. What we have experienced instead is a serious management failure.

* Chris Yelland is the investigative editor at EE Publishers

First published on EE Publishers