SA in deeper electricity crises than you think

2014-12-09 13:44

Have a look at the chart below that shows total Gigawatt-hours generated in SA since 1999. Since the peak generation capability achieved in August 2008, just before the Great Recession hit SA, total electricity output has DECLINED over 6.5% This is despite a massive R385Bn build program that commenced in earnest in 2006. In fact the total nationwide output now is the same as it was in 2006.

Apart from the obvious collapse in electricity demand brought on by the Great Recession of 2008 and introduction of the 2008 rolling blackouts, output ramped back up to peak around the 2010 world cup and then it was all downhill from there. Against the backdrop of an ongoing build-programme one can only assume that we are producing less and less electricity due to efficiency losses and ageing or poorly maintained infrastructure.  Power stations become old and less effective, they require more maintenance and cleaning as they age. If you have no reserves (spare generation capacity) to allow for a rigid maintenance regime, and if your skills base to deploy this more complex maintenance environment erodes, this will compound your problems.

Right now, the chart is hinting that even the introduction of the two new power plants in 12-18 months time (you can probably bank on the 18-month version since these plants' deadlines have slipped more than the Zimbabwean Dollar) is only likely to get us back to 2010 levels.

ESKOM said the other day they are not in a crises. Looking at the above chart, that is very hard to believe. Despite R385Bn and some 4,453MW additions to the grid since 2006, generation capacity has SHRUNK consistently. The disparity between output growth from 1999 to August 2008 and the 6 years thereafter is astounding. More than likely, the first part of the chart was merely electricity output (of which there was adequate reserve capacity) responding to economic growth and then suddenly in August 2007 we had no more spare capacity. Well, right now it appears we have EVEN LESS spare capacity on the grid, putting us in an even more tenuous situation. No reserve capacity does not allow proper maintenance and I suspect things are going to get a lot worse before they get any better, since there are no immediate new projects coming on line to save us, and those that were supposed to be coming on line are clearly delayed again. When industry starts cranking up again in the new year, expect a whole lot of Stage-3 load shedding coming to your area.

The coupling between the fortunes of the SA economy and electricity generation are very clear. Below we have a correlation chart between electricity output (horizontal x-axis) and the South African Reserve Bank co-incident economic indicator level (vertical y-axis) since 1999. It shows just under a 79% correlation. Electricity generation and economic growth go hand in hand.

We are clearly very far behind the curve with our build programme. Medupi is 5 years late due to labor strikes and faulty welding and we heard the other day from the new Eskom CEO of further delays. These delays are being accompanied by a decaying infrastructure that does not seem to be getting the required maintenance attention. This recent bout of load-shedding was triggered by "unforeseen" events related to maintenance/breakages and human error. More nuclear and/or coal power stations are unavoidable if we wish to continue rolling out infrastructure to the previously and currently disadvantaged AND grow our economy to address chronic unemployment. More money beyond the initial build program will be required. Lots of it. Electricity is going to cost a lot more in the future.

Enjoy the prices you are paying now, in 5-10 years you will wish for these prices again. E-tolls will be tame by comparison.

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