Short-term options

Demand Management

Demand management entails the reduction in demand for energy. Three initiatives are underway to reduce demand in the short term. Demand side management entails swapping energy intensive equipment with more energy efficient equipment. A full analysis of the options available in the industrial, commercial and residential sectors has been completed and the roll-out of compact fluorescent lighting (CFL’\s) in the residential sector has started. Funding for such initiatives continues to remain a challenge. The adoption of energy efficient equipment by energy intensive customers will allow them to maintain existing production levels at reduced energy consumption levels.

The power conservation programme is based on the model that Brazil adopted during its energy crisis in 2001, but it has been customised for the South African situation. In its most basic form, the scheme penalises users that exceed their allocated quota and incentivises users that save on the quota allocated. Additional components can include cut-offs for repeated offenders and trading of power between users. The technical aspects of the scheme have been developed and regulatory and legislative requirements are being investigated. The effect of PCP implementation at 5% and 10% on reserve margin is shown in figure 4.

Figure 4: Effect of PCP on reserve margin
Source: Eskom System Operations and Planning

Figure 5: Cogen, DSM and IPP potential savings

South Africa is currently amongst the cheapest providers of electricity in the world. The cheap supply has resulted in a highly energy-intensive customer base investing in the country. Increasing pricing levels to more realistic levels will drive the reduction in consumption and make the viability of independent power producers and cogeneration options more realistic. Whilst there is consensus that prices need to be more realistic, opinion is divided with regard to the rate or incremental hikes in prices. Eskom recently applied for a proposed tariff increase of 53%.  The national energy regulator allowed an additional 13,3% for 2008/2009, bringing the total increase for the year to 27,5%, slightly above half of what we had requested.

Supply Side

• DSM Initiatives – based on current assumptions which are being refined and will be updated by mid June
• IPP OCGT – capacity of 1 040MW assumed to be added by 2012 – this is achievable if the contract is in place by the end of 2008  
• Non-Eskom generation – additional municipal generation of about 300MW
• Co-generation – based on current official assumptions, which includes initial co-generation amounts, and does not include up to 2 000MW from the Medium Term Power Production Plan (MTPPP). 

The medium-term considerations apply to options that will materialise in the medium term, but are currently being implemented. Eskom is committed to procuring 45 million tons of additional coal to alleviate the coal stockpile problem. To date, in excess of 39 million tons have been procured. In addition to this, an in-depth investigation into the limitations in terms of wet coal handling has been completed. Plans are in place to rectify shortcomings in the system design. Road conditions remain a problem, but discussions with Government have begun to remove the existing obstacles. The issues discussed however remain a concern. Figure 6 shows the medium-term coal procurement intervention that has been devised to ensure that coal stockpiles reach the required sustainable levels.

Plant maintenance has been elevated to ensure that solutions address the symptomatic causes of unplanned plant failures (UCLF). Original equipment manufacturers have been commissioned to identify and address root causes. The extent of the problem has been documented and plans have been put in place to ensure that UCLF losses are reduced to acceptable levels in the medium term. The programme goes beyond addressing the symptomatic needs of the plant, with more focus on the maintenance methodology and skills levels. The scarcity of skills has dictated innovative solutions to the problem, including the sharing of scarce resources between Eskom and contractors to ensure that the desired outcome is achieved.

Fundamental to a sustained solution is the introduction of an end-to-end value chain view of the operating system, across Generation, Transmission and Distribution. The increased visibility of operating systems across the value chain has enabled Eskom to make decisions taking into account potential knock-down effects. This, in essence, adds integrity to decision-making and ensures a holistic approach to ensuring security of supply.

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