SAs power supply still stretched

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Lucky Biyane - Business Times

A view of the setting sun through the pylons of the Koeberg nuclear power station near Cape Town. Most of Eskoms power stations are under a maintenance programme to improve their performances.

Insufficient planning and savings by government that delayed South Africa's electricity infrastructure building programme still haunt Eskom. Most of Eskom's power stations are in their mid-life and the utility is caught up in a maintenance programme intended to improve performance.

Since the rolling blackouts of 2008 the national grid has remained stretched. In its attempts to keep up with demand, Eskom has also resorted to importing power from neighbouring countries.

The Department of Energy recently signed a memorandum of understanding with the Democratic Republic of Congo for the development of the Grand Inga project, which could generate about 4000MW.

"We are looking at a range of options," said Eskom spokeswoman Hilary Joffe. "Equity stakes could be one option, for example in regional transmission projects. Eskom last year established a Southern Africa unit, led by Segomoco Scheepers, to strengthen our trading relationships with the region as well as look at strategies to expand this," she said.

Joffe said Eskom is a member of the Southern African Power Pool, which includes all the electricity utilities in the region. "We have contractual arrangements to supply and we also import power from some of them. For example, Cahora Bassas 1500MW of capacity is very important to help us keep the lights on in South Africa itself," Joffe said.

She said Eskom saw great potential for more investment in energy in the region. Much of this was "clean energy" as some neighbouring countries had significant resources of water - like Zambia and Mozambique - while the likes of Namibia had plenty of natural gas. "We would like to see the development of a stronger regional electricity grid, which could contribute to SAs security of supply and add cleaner renewable power to the grid, as well as contribute to the prosperity of the region," Joffe said.

Shaun Nel, a director at accountancy firm BDO, said equity positions in other suppliers was a financial decision and not a supply solution. "Eskom should be focusing on getting its generation failure rates to acceptable levels and look at ways to minimise the electricity price path. Where will the funding for these equity stakes come from?" Nel asked.

Ross Burton, research analyst at Frost & Sullivan, said investments into inter-regional supply would do little to narrow the supply gap SA would experience over the year ahead.

Burton said regional development projects, such as the Grand Inga Project, held significant potential for Africa as a whole. However, key risks, such as the coordination and commitment of partner governments to their contractual obligations, persist in the development of such projects.

Nel said the political risks associated with, and the lack of progress on, the Grand Inga project meant it remained a speculative solution. "Eskom needs to address its unplanned losses. Our neighbours will only have surplus generation capacity if their own economies are not growing, so depending on the import option is risky," Nel said.

Burton said SA had in the past imported electricity from the Cahora Bassa hydro-electric plant in Mozambique.

"Outside of this source of power, surplus electricity supply within southern Africa is fairly limited, and the availability of this supply would depend on negotiations with national governments and private electricity producers, such as mining concessions with associated electricity generation," he said.

Burton said: "During the tight supply of electricity since 2008, the national grid power supply has been stretched, resulting in a backlog of maintenance that is expected to be ongoing throughout 2012.

"Furthermore, demand-side management initiatives such as the solar water heater programme and smart metering have been delayed, and are slow as regards implementation.

This is further aggravating the risk to supply security of the country," Burton said.