Understanding South Africa’s electricity challenges
Historically, South Africa has enjoyed an excess of electricity capacity that has driven a country strategy to make electricity accessible to its citizens in an affordable manner, and stimulate growth by accommodating an array of users, including energy intensive industries.
As a country, South Africa ranks as one of the highest energy intensive users in the world. Driven by this strategy, the country has experienced visible erosion in its security of supply over a period of ten years – driven by above-average demand growth whilst there was no capital investment in generating capacity since the 1980s.
The 1998 Energy White Paper noted Eskom’s concern about its ability to meet demand beyond 2007 and that a decision on investing in additional supply capacity would have to be made in 1999 due to the long lead times required for infrastructure of this magnitude. In an attempt to reduce Eskom’s monopoly within the electricity supply industry, Government established that 30% of power generation was to be provided by independent power producers (IPPs) and that Eskom would provide the remaining 70%. Based on the fact that South Africa ranks amongst the cheapest electricity providers in the world, the subsequent cost-benefit analysis and rate of return estimates in the calculation of the real cost of electricity meant that IPPs were unable to competitively provide power and thus, no IPP projects materialised.
In 2004, after experiencing accelerated economic growth, this decision was reversed and Eskom was mandated to start building new capacity to meet demand. At this time, Eskom predicted the year-on-year energy growth to be 4,95%. By 2005, there were concerns that the current capacity relative to growth in demand would result in a diminishing reserve margin by 2005/6. On 6 January 2006, the first incident of mandatory load shedding since the 1980s occurred. Proposals to overcome this included the return to service of previously mothballed power stations. Risks around the transmission network reliability were also noted.
Figure 2: South Africa's net reserve margin since 1999 during the winter peak.
The reserve margin gives you an indication of the medium to long-term adequacy and short-term security of the power system. Adequacy enables utilities to deal with medium to long-term issues, i.e. growth spurts and supply chain problems. It is the ability of the power system to supply the aggregate electrical demand and energy requirements of the customers at all times, taking into account scheduled and reasonably expected unscheduled outages of system elements. Short-term security enables the power system to withstand sudden disturbances such as short circuits or unanticipated loss of system elements.
The electricity reserve margin is one of the key criteria to determine the adequacy of the power system. Internationally, it is acceptable for a country to have a reserve margin of to 15% to 25%. In the case of a 15% reserve margin, a country could have a loss of supply of up to 24 hours in a year during the peak demand periods, which will reduce as the figure gets closer to 25%.
South Africa’s reserve margin has been steadily declining since 1999. Increasing demand and lack of additional capacity being commissioned has resulted in a situation where the 2008 levels of reserve margin diminished to alarmingly low levels, resulting in extensive load shedding to prevent partial or complete black-outs.
Indications that the country’s power system had been deteriorating in terms of security and adequacy include the fact that extensive amounts of emergency resources have been used since 2005. In addition, the levels of generation unplanned outages increased substantially, as well as transmission and distribution plant failures and network congestion.
South Africa’s fleet of power stations is pre-dominantly coal-fired. They are fed from collieries that are linked directly into the power stations, or the coal is transported to power stations, either by road or rail. As the demand for electricity grew over the years, the supply constraints moved up the supply chain into the supply of coal. Constraints include increased demand on coal mines for production at increased levels, as well as use of roads and rail beyond normal levels. In addition, generation plant is being operated at levels higher than planned for.
Amidst a growing export market, coal supply to the power stations started to become constrained in terms of quality and quantity. Poor quality of coal causes increased wear on certain plant and equipment and thus increases the probability of failure.
Overview of the recent events leading to the electricity crisis
South Africa’s electricity deficits between October 2007 and January 2008, apart from the diminished reserve margin, have been worsened by increased unplanned generation plant outages, as well as coal supply and quality constraints. This led to Eskom being unable to supply the required amount of electricity to the country. Consequently, Eskom needed to reduce the load through emergency load shedding. In order to protect the power system from a potential overall nationwide blackout in January 2008, a national electricity crisis was declared to protect the system from potential failure.
Generating plant performance for the period between October 2008 and January 2008 deteriorated as a result of boiler tube failures, and the quality of coal. Plant performance became an increasingly significant challenge over the years as the requirement for increased supply resulted in the plant being used at higher than normal levels. The correlation between load factor (how hard a plant is being run on a percentage basis) and plant failures (UCLF – unplanned capability loss factor) is depicted in
Figure 3.
Figure 3: Correlation between UCLF and Load Factor
The current fleet of power stations is not equipped to run continuously at high load factors due to a limitation on the support or auxiliary systems that only permit a certain load factor. The higher load factor significantly increases the need for plant maintenance and reduces the opportunity for planned maintenance, thereby increasing unplanned outages. South Africa’s fleet of power stations have been operating for an average of 30 years and can be classified as being in mid-life, therefore requiring above average levels of maintenance.
Coal supply constraints in January 2008 reached a critical point as the average system days for coal stock piles was reduced to unacceptable levels. The problem was made worse by unusually high rainfall in Mpumalanga over this period. This rendered the already low stockpile levels unusable as the coal handling systems were severely hampered due to the increased levels of moisture in the coal. The increased moisture content and quality of coal results in the formation of sludge which is not optimum for the combustion process in the boilers. This further reduced the ability of the available generators, and ultimately Eskom’s ability to meet the required demand. The quality of coal delivered by the mines has also steadily decreased over time. This impacts negatively on the utilization rate, requiring larger volumes of coal to be burnt for the same energy output.
Eskom does not have its entire coal requirement locked into long-term contracts. As a result, it needs to procure approximately 20% of its requirement on the spot market at much higher prices, increasing the cost of primary energy substantially. Progress has been made in procuring coal and improving stock day levels, but this is still relatively slow. Some of the reasons for the slow progress include the lucrative export market which has seen coal supplies being diverted to the export market, and the delays in the awarding of mining rights to permit the necessary processes to extract coal. Delivery has also been slower than planned because of transport logistics, mining skills levels of new BEE suppliers, longer than expected lead time on various mines, road conditions and over-commitment from suppliers.
South Africa’s Seasonal Demand Profile
Seasonal and daily patterns of electricity consumer use determine how electric utilities plan and operate their energy supply. Some electricity customers, such as large industries, need a steady amount of electricity delivered throughout each day. Others need a large amount delivered at once. Residential customers, for example, need the most electricity in the early evening when they are home from work and preparing dinner or watching television. They need very small amounts of electricity late at night and moderate amounts throughout the day.
Figure 4: South Africa's Demand Profile
Energy (or consumption) refers to the total amount of electricity that a utility supplies throughout the year. In the home, the amount of energy used is measured in kilowatt-hours (kWh), and typically averages about 10 000 kWh per year per household. The energy supplied to all Eskom customers is measured in gigawatt-hours (GWh).
Capacity (or peak) refers to the highest level of electricity that a utility can supply at any one time. For residential customers, capacity is measured in kilowatts (kW). Peak demand on the electrical system is measured in megawatts (MW), or millions of watts.
Similarly, the demand for electricity varies through the year. In South Africa, demand is highest in winter (June – August), when people use more electricity for heating and lighting than in other months.
In the winter of 2007, the reserve margin dropped to 5,1%. Such a low reserve margin does not give Eskom the necessary space to deal with system disturbances and conduct essential maintenance on plant. In the winter of 2008, we expect to reach a reserve margin of 4,9%, assuming that no unplanned reductions occur.
South Africa’s electricity challenges are likely to continue for at least five to seven years, until sufficient new plant capacity is commissioned. The first of eight units at Medupi power station, the new base-load coal-fired power station, is scheduled to be commissioned in 2012, thereafter the balance of the seven units will be commissioned in intervals of nine months subject to skills, equipment and logistical constraints.
The challenge for South Africa is to meet the electricity demand growth during this period leading up to 2012, and to ensure that there is sufficient energy. In determining the supply challenges, the following assumptions were made:
- Electricity demand growth at 4% per annum.
- Generation availability of 86%.
- Supply options (co-generation,) and demand side management were included before determining the shortage currently experienced.
From the latest available planning information, the capacity gap has been quantified as a total requirement of 3 000MW leading up to 2012. Furthermore, the challenge includes an additional amount for maintenance and building of coal stockpiles from 2008 to 2011.
Key solutions that are being investigated include the implementation of demand side management initiatives to reduce the overall demand by 10%, and to ensure that new capacity is commissioned in the interim to cater for electricity demand growth. Decisions on new generating plant must be made during this period to ensure sufficient capacity to meet the demand beyond 2012.
Ultimately, the challenge remains to achieve and maintain a reserve margin of 15%. |
