Solving Eskom's electricity headache

Solving Eskom's electricity headache

2014-03-16 12:24

Johannesburg - The government needs to look into the supply of coal for Eskom, diversify its energy sources and allow private players into the industry, according to experts.

Eskom is be battling to keep the lights on, nursing its fleet of ageing generating units and hoping breakdowns do not reduce reserve margins to critical levels.

The utility has declared four power emergencies since November and earlier this month imposed rolling blackout for the first time in six years.

Eskom also faces challenges relating to the quality of coal fed into its power stations. The recent blackouts were imposed after torrential rain soaked coal stockpiles and the coal could not be fed properly into the system.

"I don't think there is nearly enough attention being given to the supply of coal for Eskom. That's an area government needs to do more work on," said Mike Rossouw, former chairperson of the Energy Intensive Users Group, which represents heavy power users such as mines and factories.

Eskom's coal stockpiles are mostly kept in the open, in part because of the high cost of storage, and so are prone to damage from heavy rain.

Storage bunkers are available but not enough to protect all the coal and the problem is compounded by most of Eskom's supply coming from exposed open-pit mines.

Eskom generates most of its electricity from coal-fired plants but also has one nuclear plant, gas turbines, hydro-electric and wind facilities.

The utility is scrambling to finish new power plants, including Medupi and Kusile, with a combined capacity of about 9 500 megawatts MW, but they are not close to completion.
The first power from Medupi, about 800 MW, is expected in the second half of this year.

Coal is likely to remain the main feed stock for base-load power, given that South Africa is a major producer and exporter of coal.

To diversify its energy sources and reduce its reliance on coal plants, South Africa started three years ago to procure renewable power from independent producers.

To date, the government has signed off on 64 renewable energy projects with a combined capacity of 3 850 MW. Eskom said 19 projects had been connected to the grid to date.

At least one analyst say more needs to be done to allow private players in - and not just for renewable energy, which is struggling to produce power at rates Eskom deems competitive with coal.

"The industry is by far not deregulated enough. We need to have more participants in base-load generation in South Africa," said Cornelis van der Waal, an energy analyst at consultancy Frost & Sullivan.

"Whether that base load is coal, nuclear, gas or hydro, let's leave that to the industry to decide who can supply the most reliable electricity at the best rate."

Eskom provides 95% of South Africa's electricity and has a total generation capacity of 42 000 MW.

Outgoing Eskom chief executive Brian Dames said the country was still feeling the repercussions of the ANC's decision not to build new plants when asked by the utility to do so in 1998.

"It will take 10 years to fix the 1998 problem," said Dames, who steps down at the end of this month.

In its 20-year Integrated Resource Plan (IRP), running up to 2030, the government says coal, nuclear, hydro, shale gas and renewable energy are all options to beef up power supply.

And after the 2008 debacle, the government realises it could pay a heavy price if it does not decide in time on the next phase of power construction when Medupi and Kusile are complete.

"We are working around the clock to arrive at decisions quickly," Public Enterprises Minister Malusi Gigaba said.

  • Chris Yelland - 2014-03-16 12:41

    Disappointing that Reuters and Fin 24 get facts wrong: Mike Rossouw is NOT chairman of the Energy Intensive User Group (EIUG). The chairman of the EIUG is Kevin Morgan of BHP Billiton.

      MyFin Ed - 2014-03-16 13:00

      Hi Chris, thank you for your sharp eyes. We have contacted the EIUG to confirm this and corrected this in the Reuters article.

  • Howard Gambold - 2014-03-16 13:16

    why not use tidal power we have a very large coastline, alternatively cant we use our rivers to generate the required power.

      Ian Flack - 2014-03-16 16:05

      There is enough hot air coming from government ministers, why not use that?

  • Mike Heyns - 2014-03-16 13:49

    There is NO NEED to bather around again for a party! I will solve it for you!! USE THE REVENUE FOR THE SUPPLY OF ELECTRICITY and not FOR BONUSES and POCKET LINING!!!!

  • cornu.perold - 2014-03-16 16:11

    Poor decision making by the ruling party costing the tax payer consistently.

  • Cattle Class - 2014-03-16 21:10

    There's only one solution to Eskom's cash flow problems and their supply chain negotiations: Propell Supply chain Finance.

  • King Jack - 2014-03-17 07:26

    From the little knowledge that i have, coal gets washed/rinsed, then turned into powder before being fed into the furnace. This wet coal story is just a cover up

  • Andrew M - 2014-03-17 08:12

    Seemingly Eskom is also using lower grade coal which does not burn at the best rate thus causing lower output to generate power. This sounds about right to me but easier to blame wet coal. A case of pay least charge highest, no wonder the R12bn profit to pay bonuses.

  • Leonard Rom - 2014-03-17 11:39

    why we pay more when eskom cant maintain drop the price you use less grade coal !!!!!!!

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