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Lights may dim, Eskom warns

Eskom CEO Brian Dames

Eskom CEO Brian Dames

Published Jan 7, 2011

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As many as 500 major users of electricity across the economy may have to face mandatory power cuts if Eskom is forced to ratchet up its bid to plug the gap between supply and demand over the next three years.

Users spanning such critical sectors as mining, transport and manufacturing might be discouraged from increasing employment should these cuts be effected, Tony Twine, a senior economist at Econometrix, said yesterday.

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Other businesses such as ferrochrome and aluminium smelters would not be able to expand their businesses should mandatory cuts come into play, he added.

“This could lead to constraints on plans put forward by (Economic Development Minister) Ebrahim Patel to use labour-intensive industries to produce jobs,” Twine said, referring to the government’s New Growth Path, which aims to create 5 million jobs over the next decade.

“Even a threat of mandatory cuts could see a deterrence in industries and job creation.”

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Eskom chief executive Brian Dames yesterday warned that South Africa could face critical shortfalls as early as March because almost a quarter of its generating capacity, including half of the Koeberg nuclear plant, was undergoing maintenance because of equipment failures.

In addition heavy rains had reduced the supply of coal to some power stations. This meant the safety margin between consumption and supply had narrowed.

Eskom would face similar problems until 2013 when the new Medupi baseload plant is expected to come on line.

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Dames outlined an energy conservation scheme (ECS), which is still a work in progress between the utility’s various stakeholders, such as the Department of Energy.

“The ECS would be mandatory and is aimed at the largest 500 electricity users,” Dames said. “The scheme would provide a certainty of demand for at least seven years for those customers that consume between 50 percent and 60 percent of the electricity.”

He added that the ECS would send strong signals to improve energy efficiency rather than face disruptive load shedding.

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He warned that the country faced a risk to electricity supply unless steps were taken to address a possible shortfall of 6 terawatt-hours in 2011/12 and 9 terawatt-hours in 2013.

Dames said Eskom needed 2 000 megawatts of operating reserves and highlighted that there was enough capacity between now and the end of February, conceding there were inadequate reserves to go around.

 

He outlined various risks associated with the constraints of the system. These included unexpected heavy rains and an unplanned shutdown of two units at the Koeberg nuclear power station.

Dames said the loss of half of Koeberg’s generating capacity had significantly reduced the utility’s flexibility to conduct maintenance at its coal-fired power station. This has resulted in a postponement of maintenance and an increased risk of unplanned power outages at some of its stations.

“Most of our power stations are in their mid-life and require more maintenance. Due to the low reserve margin there is insufficient available time to carry out essential maintenance,” Dames said.

Andrew Etzinger, Eskom’s senior general manager of integrated demand management, said there would be no moratorium on new connections and where new customers were connected, there would be sufficient electricity to meet energy demands. “We support growth and we will look at ways of ensuring efficient production.”

Eskom spokeswoman Hilary Joffe said she was confident the utility would complete its current R300 billion build programme in 2017 and that the utility had sufficient funding in place to complete the power stations and power lines.

She said the parastatal was using a mixture of its own cash and borrowed from a variety of sources and equities.

In contrast, Bloomberg said: “It sounds very similar to the last crisis with equipment failures, wet coal and the like, which begs the question: have they learnt the required lessons that time around?

“Investors need to be cautious that as the economy recovers the situation is only going to be worse next year before the next power station comes on line.” - Ayanda Mdluli

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