Power woes won't be over for a while
5 March 2006, 12:47
By Melanie Peters and Caroline Hooper-Box
South Africa and the Western Cape in particular face at least six more years of electricity shortages - because Eskom misread the country's economic future.
A government blunder is also to blame. It assumed it could attract private partners to build new power stations and therefore it prevented Eskom from expanding. No private partners came forward.
Damage by a loose bolt to a rotor at the Koeberg nuclear power generator has exposed the serious supply shortfall, resulting in continuing blackouts in the Western Cape.
The cost to the South African economy has been at least R500-million, according to the South African Chamber of Business (Sacob).
In the late 1990s, Eskom believed that South Africa's economy was heading for the "low road". Its planners were horribly wrong. Instead, the country's growth rate has been a healthy 5 percent and the electricity supply has fallen behind.
Christo Viljoen, a former Eskom council member, confirmed it would take at least six years for Eskom to recover from the current crisis. In order to do so it would have to act urgently.
Viljoen blamed the power shortage on Eskom's poor planning and the government's botched plans to privatise part of the electricity utility.
For the better part of the past decade, both Eskom and the government were well aware that there would be a shortage, but did little to prevent it, he said.
Viljoen said that in 1998 the department of minerals and energy, under the then-minister Penuell Maduna, suggested in a white paper on energy that 30 percent of Eskom's generation capacity should be sold to independent power suppliers to increase competition in the electricity sector as part of the "liberalisation" of the industry. But this did not happen as expected.
He said that in 1998, the government instructed Eskom to stop building new power stations. In June 1999 Maduna was succeeded by Phumzile Mlambo-Ngcuka, who is now the deputy president. It was only towards the end of her term as minister that it was realised that the deregulation policy was not working.
The ban on Eskom building new power stations was lifted in 2004.
Viljoen said that throughout this period voices, especially from the engineering sector, indicating that South Africa was running out of electricity-generating capacity, were ignored.
"During the past 10 years no additional power stations were erected. Eskom itself calculated that it would run out of peak-demand capacity by 2007, and base-load capacity by 2010. "This has happened much sooner and they have already run out of peak-demand capacity."
He said by Eskom's own calculations, the demand for electricity increases by 1 200 megawatts a year.
This meant that one nuclear power station equal to Koeberg (1 800MW) had to be built every 18 months, or alternatively one coal-fired power station the size of Tutuka (3 600MW) would have to be erected every three years.
"This is not happening. It takes 10 years from the decision to build a new power station until it is completed and capable of being connected to the national grid.
Eskom has simply run out of time." What exacerbated the problem, Viljoen said, was that several of Eskom's existing 24 power stations were 30 or more years old and coming to the end of their useful economic life. They also would have to be replaced in the next decade or, at most, two.
He said that this situation was aggravated by growth in the economy and the government's social responsibility of providing much-needed electricity to all people. At its last congress, the ANC announced its intention to provide all households with electricity by 2012.
"This can only be attained if the provision of electricity to the whole population can be reconciled with Eskom's ability to provide the increasing demand."
It has also emerged that the mess in which Eskom now finds itself is partly the result of a strategic error made seven years ago. At the end of 1998, Eskom devised three scenarios for future electricity-generation needs.
Under a scenario of high economic growth and corresponding electricity demand, fresh power capacity would have had to be in place by 2005.
The medium-term outlook planned for more power in 2007. The low-road scenario anticipated a need for fresh capacity in 2012. The high-growth scenario would have required taking a decision in 1999. That decision was delayed.
At the time, with Eskom's profits hard-hit by an economic slump, even a medium-growth outlook was judged too optimistic, according to Eskom's then-spokesperson, Peter Adams.
Strong economic growth subsequently forced the embattled utility to revise its strategic electricity planning timetable, but even in 2003 Eskom was saying it did not expect to need new capacity until at least 2012.
Matters were not helped by the no-show of a new type of nuclear power plant, the pebble-bed nuclear reactor, which Eskom had anticipated would be in operation by 2001.
South Africa has experienced a steady increase in electricity demand since the botched 1998 strategic assessment, and Eskom's plans are now based on an anticipated yearly economic growth of 4 percent.
In 2004, the cabinet approved a five-year investment plan in South Africa's electricity infrastructure amounting to R93 billion. To implement this plan, Eskom has to spend about R100 000 every minute, according to Thulani Gcabashe, the Eskom chief executive.
It will also have to place five orders every day across a number of projects in coming years. In May last year Mlambo-Ngcuka stressed that there was "no power-generation capacity crisis" in South Africa. Measures were being taken to improve the country's power-generation capabilities before demand exceeded capacity, she said.
At this point, however, Eskom has its hands full just trying to keep up with consumer demand. To this end it has recommissioned three stations - Camden in Ermelo, Komati in Middelburg and Grootvlei in Balfour.
In doing this, Eskom is "on virgin territory and will be setting new global standards", said Gcabashe. "No country or utility has de-mothballed power plants after more than 10 to 15 years in mothball".
A plan to return Koeberg nuclear power station's two units to full power was announced by Eskom on Friday.
Gcabashe said the utility had acquired the 200-ton rotor it needed for the repair to the rotor damaged by a loose bolt. However there will be a refuelling and maintenance outage towards the end of May, just as winter starts to bite. Maintenance and refuelling of Koeberg's Unit 2 will take until mid-July or the end of July.
A shortfall of 300MW of power is estimated in peak periods during that time. Eskom will employ 500 management teams to implement energy conservation programmes - including an efficient-light programme and the adjustment of geyser temperatures - to help minimise power consumption.
Other short-term plans to improve the supply to the Western Cape include securing non-Eskom co-generators for an additional 80MW at a cost of R115 million, and procuring a number of mobile generation plants for an additional 100MW in the winter period.
Deidré Penfold, the executive president of Sacob, said that on Friday the Western Cape government had committed to regular meetings with the province's business community to ensure that "business is provided with pro-active plans to accommodate the current crisis".
Gcabashe had also agreed to meet Sacob this week. Viljoen warned that the economic growth prediction of Trevor Manuel, the finance minister, was also in jeopardy. It is closely tied with Eskom's ability to provide reliable and adequate electricity.
"Without it, industrial growth is not possible, and it threatens the government's ability to eradicate poverty and unemployment. Manuel's greatest enemy for growth is an inadequate and unreliable supply of electricity."
He said in the short term seven gas turbines (four for Atlantis and three for Mossel Bay) would provide 1 000MW of generating capacity.
However, due to the very high generating costs, because the gas had to be imported, those turbines could be used only during peak demand hours and could not be used to provide electricity on a continuous basis.
He said the three mothballed power stations (Camden, Grootvlei and Komati) could hopefully be brought back into operation to provide a further 3 556MW of generating capacity. Eskom itself had calculated that this would cost R12 billion.
However, with little locally available experience in reactivating those power stations, it was not expected that that could be done within a year. The power stations were old and outdated, and it was doubtful if their redeployment could be technologically and economically successful.
He said wind power was unfortunately not the holy grail of electricity supply for the future. Despite the fact that the energy source - wind - was free, the very high capital investment required and the high maintenance costs resulted in high generating costs.
"It will require 1 840 wind generators to provide the same electricity
output as Koeberg. How the Cape Peninsula will look with 184 square kilometres covered by wind generators is anyone's guess.
This is certainly not an economical option for the future."
He said the 1 500km of transmission lines - the electrical life-line of the Western Cape - would soon have to be upgraded.
According to Eskom, this would not happen before winter next year. This was necessary to be able to import electricity from Mpumalanga, especially when Koeberg was not operating.
Viljoen said Eskom had to take the major share of the blame for the present dilemma. It should have thought about building more power stations - whether nuclear or fossil-fuel fired - 10 years ago.
Another problem was the loss of senior engineers in Eskom's top management. The present hierarchy lacked technological insight and experience. The government certainly had to take part of the blame due to the moratorium placed on Eskom to build new power stations.
A further problem was Eskom's apparent lack of preventative maintenance. Both breakdowns of the only operating Koeberg reactor during the past three weeks were precipitated by a small incident. He said that unless Eskom could come up with some magic solutions, a cold and dark winter awaited the Western Cape.
He said that half the province's electricity had to be imported from Mpumalanga.
With Koeberg down, the transmission lines could only provide about about two thirds of the Western Cape's peak electricity demand. With Eskom's total generating capacity barely capable of providing power during peak demand, the whole country was at risk.
"Rationing of electricity and power outages is something we will have to get used to," Viljoen said.
Meanwhile, Alec Erwin, the public enterprises minister, who claimed on Tuesday that the shutdown of Koeberg's Unit 1 was the result of sabotage, backtracked on his original statement on Friday, blaming "media spin".
However, Erwin did use the word "sabotage" in his original claim, born out by TV replays.
South Africa and the Western Cape in particular face at least six more years of electricity shortages - because Eskom misread the country's economic future.
A government blunder is also to blame. It assumed it could attract private partners to build new power stations and therefore it prevented Eskom from expanding. No private partners came forward.
Damage by a loose bolt to a rotor at the Koeberg nuclear power generator has exposed the serious supply shortfall, resulting in continuing blackouts in the Western Cape.
The cost to the South African economy has been at least R500-million, according to the South African Chamber of Business (Sacob).
In the late 1990s, Eskom believed that South Africa's economy was heading for the "low road". Its planners were horribly wrong. Instead, the country's growth rate has been a healthy 5 percent and the electricity supply has fallen behind.
Christo Viljoen, a former Eskom council member, confirmed it would take at least six years for Eskom to recover from the current crisis. In order to do so it would have to act urgently.
Viljoen blamed the power shortage on Eskom's poor planning and the government's botched plans to privatise part of the electricity utility.
For the better part of the past decade, both Eskom and the government were well aware that there would be a shortage, but did little to prevent it, he said.
Viljoen said that in 1998 the department of minerals and energy, under the then-minister Penuell Maduna, suggested in a white paper on energy that 30 percent of Eskom's generation capacity should be sold to independent power suppliers to increase competition in the electricity sector as part of the "liberalisation" of the industry. But this did not happen as expected.
He said that in 1998, the government instructed Eskom to stop building new power stations. In June 1999 Maduna was succeeded by Phumzile Mlambo-Ngcuka, who is now the deputy president. It was only towards the end of her term as minister that it was realised that the deregulation policy was not working.
The ban on Eskom building new power stations was lifted in 2004.
Viljoen said that throughout this period voices, especially from the engineering sector, indicating that South Africa was running out of electricity-generating capacity, were ignored.
"During the past 10 years no additional power stations were erected. Eskom itself calculated that it would run out of peak-demand capacity by 2007, and base-load capacity by 2010. "This has happened much sooner and they have already run out of peak-demand capacity."
He said by Eskom's own calculations, the demand for electricity increases by 1 200 megawatts a year.
This meant that one nuclear power station equal to Koeberg (1 800MW) had to be built every 18 months, or alternatively one coal-fired power station the size of Tutuka (3 600MW) would have to be erected every three years.
"This is not happening. It takes 10 years from the decision to build a new power station until it is completed and capable of being connected to the national grid.
Eskom has simply run out of time." What exacerbated the problem, Viljoen said, was that several of Eskom's existing 24 power stations were 30 or more years old and coming to the end of their useful economic life. They also would have to be replaced in the next decade or, at most, two.
He said that this situation was aggravated by growth in the economy and the government's social responsibility of providing much-needed electricity to all people. At its last congress, the ANC announced its intention to provide all households with electricity by 2012.
"This can only be attained if the provision of electricity to the whole population can be reconciled with Eskom's ability to provide the increasing demand."
It has also emerged that the mess in which Eskom now finds itself is partly the result of a strategic error made seven years ago. At the end of 1998, Eskom devised three scenarios for future electricity-generation needs.
Under a scenario of high economic growth and corresponding electricity demand, fresh power capacity would have had to be in place by 2005.
The medium-term outlook planned for more power in 2007. The low-road scenario anticipated a need for fresh capacity in 2012. The high-growth scenario would have required taking a decision in 1999. That decision was delayed.
At the time, with Eskom's profits hard-hit by an economic slump, even a medium-growth outlook was judged too optimistic, according to Eskom's then-spokesperson, Peter Adams.
Strong economic growth subsequently forced the embattled utility to revise its strategic electricity planning timetable, but even in 2003 Eskom was saying it did not expect to need new capacity until at least 2012.
Matters were not helped by the no-show of a new type of nuclear power plant, the pebble-bed nuclear reactor, which Eskom had anticipated would be in operation by 2001.
South Africa has experienced a steady increase in electricity demand since the botched 1998 strategic assessment, and Eskom's plans are now based on an anticipated yearly economic growth of 4 percent.
In 2004, the cabinet approved a five-year investment plan in South Africa's electricity infrastructure amounting to R93 billion. To implement this plan, Eskom has to spend about R100 000 every minute, according to Thulani Gcabashe, the Eskom chief executive.
It will also have to place five orders every day across a number of projects in coming years. In May last year Mlambo-Ngcuka stressed that there was "no power-generation capacity crisis" in South Africa. Measures were being taken to improve the country's power-generation capabilities before demand exceeded capacity, she said.
At this point, however, Eskom has its hands full just trying to keep up with consumer demand. To this end it has recommissioned three stations - Camden in Ermelo, Komati in Middelburg and Grootvlei in Balfour.
In doing this, Eskom is "on virgin territory and will be setting new global standards", said Gcabashe. "No country or utility has de-mothballed power plants after more than 10 to 15 years in mothball".
A plan to return Koeberg nuclear power station's two units to full power was announced by Eskom on Friday.
Gcabashe said the utility had acquired the 200-ton rotor it needed for the repair to the rotor damaged by a loose bolt. However there will be a refuelling and maintenance outage towards the end of May, just as winter starts to bite. Maintenance and refuelling of Koeberg's Unit 2 will take until mid-July or the end of July.
A shortfall of 300MW of power is estimated in peak periods during that time. Eskom will employ 500 management teams to implement energy conservation programmes - including an efficient-light programme and the adjustment of geyser temperatures - to help minimise power consumption.
Other short-term plans to improve the supply to the Western Cape include securing non-Eskom co-generators for an additional 80MW at a cost of R115 million, and procuring a number of mobile generation plants for an additional 100MW in the winter period.
Deidré Penfold, the executive president of Sacob, said that on Friday the Western Cape government had committed to regular meetings with the province's business community to ensure that "business is provided with pro-active plans to accommodate the current crisis".
Gcabashe had also agreed to meet Sacob this week. Viljoen warned that the economic growth prediction of Trevor Manuel, the finance minister, was also in jeopardy. It is closely tied with Eskom's ability to provide reliable and adequate electricity.
"Without it, industrial growth is not possible, and it threatens the government's ability to eradicate poverty and unemployment. Manuel's greatest enemy for growth is an inadequate and unreliable supply of electricity."
He said in the short term seven gas turbines (four for Atlantis and three for Mossel Bay) would provide 1 000MW of generating capacity.
However, due to the very high generating costs, because the gas had to be imported, those turbines could be used only during peak demand hours and could not be used to provide electricity on a continuous basis.
He said the three mothballed power stations (Camden, Grootvlei and Komati) could hopefully be brought back into operation to provide a further 3 556MW of generating capacity. Eskom itself had calculated that this would cost R12 billion.
However, with little locally available experience in reactivating those power stations, it was not expected that that could be done within a year. The power stations were old and outdated, and it was doubtful if their redeployment could be technologically and economically successful.
He said wind power was unfortunately not the holy grail of electricity supply for the future. Despite the fact that the energy source - wind - was free, the very high capital investment required and the high maintenance costs resulted in high generating costs.
"It will require 1 840 wind generators to provide the same electricity
output as Koeberg. How the Cape Peninsula will look with 184 square kilometres covered by wind generators is anyone's guess.
This is certainly not an economical option for the future."
He said the 1 500km of transmission lines - the electrical life-line of the Western Cape - would soon have to be upgraded.
According to Eskom, this would not happen before winter next year. This was necessary to be able to import electricity from Mpumalanga, especially when Koeberg was not operating.
Viljoen said Eskom had to take the major share of the blame for the present dilemma. It should have thought about building more power stations - whether nuclear or fossil-fuel fired - 10 years ago.
Another problem was the loss of senior engineers in Eskom's top management. The present hierarchy lacked technological insight and experience. The government certainly had to take part of the blame due to the moratorium placed on Eskom to build new power stations.
A further problem was Eskom's apparent lack of preventative maintenance. Both breakdowns of the only operating Koeberg reactor during the past three weeks were precipitated by a small incident. He said that unless Eskom could come up with some magic solutions, a cold and dark winter awaited the Western Cape.
He said that half the province's electricity had to be imported from Mpumalanga.
With Koeberg down, the transmission lines could only provide about about two thirds of the Western Cape's peak electricity demand. With Eskom's total generating capacity barely capable of providing power during peak demand, the whole country was at risk.
"Rationing of electricity and power outages is something we will have to get used to," Viljoen said.
However, Erwin did use the word "sabotage" in his original claim, born out by TV replays.
- This article was originally published on page 3 of The Sunday Independent on March 05, 2006
Cape Town
