The public enterprises department has taken the extraordinary step of releasing a confidential report on the state of SA’s electricity market which paints a bleak picture of the prospects for power supply in the next few years.
The department’s move comes as Eskom warns that it is running into trouble due to spiralling demand for power and rapidly dwindling excess capacity. As a result, the electricity utility is speeding up the construction of new power stations, at a cost of more than R100bn over five years, and has called on consumers to cut back dramatically on power use.
The report contradicts recent statements by government ministers, including Public Enterprises Minister Alec Erwin, that concerns about the electricity supply situation in the country are exaggerated.
Finance Minister Trevor Manuel recently berated business organisations for “overcooking” estimates of how power cuts would affect the economy, while Erwin said he was confident SA would not be “plunged into darkness”. The report indicates frantic behind-the-scenes activity, involving a number of government departments. It suggests attempts to roll out other plans to improve security of supply and ward off looming short-term shortages.
The department said it released the report because there was “nothing to hide”. However, spokesman for the department Gaynor Kast admitted that the report had been leaked to the media. This prompted the department to release the document to avoid the issue being “hyped up”. The study was one of many commissioned to guide the implementation of Eskom’s programme, she said.
Since the report was commissioned, serious discussions had been held between Eskom, the public enterprises and minerals and energy departments and the National Energy Regulator of SA (Nersa), the public enterprises department said in a statement. It said the talks also explored “the best approach to improving the security of supply situation”. The report found that the balance between electricity supply and demand was extremely tight, particularly during the winter season when demand peaks. “The national supply/demand balance is likely to remain tenuous during the next few years,” it said. The report acknowledged that Eskom was responding to a critical shortfall in generation capacity which was partly due to problems at the Koeberg nuclear power station. It also attributed the shortfall to the fact that over the past few years, the reserve margin had fallen to record low levels. The reserve margin, which is the spare power that Eskom keeps for emergencies, was at a low 8%, against an average international norm of 15%.
It said Eskom’s construction plans were largely long term. They did not focus on tackling the shortfall of supply in the short term, and steps needed to be taken to deal with this. These could include building additional open-cycle gas turbines and reviewing the export of electricity to countries such as Mozambique, Botswana and Namibia as well as the import of power. Eskom imports electricity only from Mozambique’s Cahora Bassa.
Eskom CE Thulani Gcabashe said recently that the organisation was looking to import more power, particularly from Namibia when Kudu Gas comes on stream, and possibly from other sub-Saharan countries.
The public enterprises department has not yet had any feedback from the private sector on the contents of the document , Kast said.
