[miningmx.com] — SOUTH Africa’s power supply situation will be “critical’ for the next two years and tight for the following three years, according to Eskom CEO Brian Dames.
Despite this, Dames played down the impact on the situation of the six month delay in bringing the first generating set at the Medupi power station on line.
Presenting Eskom’s interim results for the six months to end-September, Dames said contractor Hitachi had made commitments to bring the first unit at Medupi on line by May 2013.
That represents a six month delay on when Eskom had originally planned to have the first unit on-line.
Despite this, Dames said the revised May schedule was still in line with the timeframe in the 2010 Integrated Resource Plan (IRP) accepted by Government as the country’s power supply blueprint through to 2030.
Dames pointed out the power situation had been mitigated by a drop in demand for electricity to levels below what Eskom had factored into its planning. Reason for this was the slow-down in the South African economy.
He said electricity sales for the six months to end-September had risen just 0.9%, compared with the same period of 2010 against a predicted rise of 1.4%.
Two of the main reasons were that “winter demand from large power users was significantly below expectation” while “demand patterns also reflected weaker than expected economic activity”.
Asked whether he was implying the six month delay at Medupi would have no negative impact on the country’s power supply situation Dames replied, “I can’t say there will be no impact.
“It would have been nice to have the power on line sooner given our maintenance requirements.’
Asked about possible knock-on effects that could be caused to the other five generating sets being built at Medupi, Eskom CFO Paul O’Flaherty replied, “we cannot afford any knock-on delays and are working very closely with the contractors on this issue”.
Major electricity consumers are not so sanguine about the situation. According to one executive “the delay at Medupi is serious. It will have an impact in terms of supply and the cost of power”.
Dames indicated that Eskom now faced a major problem in terms of a backlog on essential maintenance caused by the need to keep plant running through winter given the problems at Duvha and Koeberg.
Eskom aimed at a yearly planned unavailability level of 10% for its maintenance schedules but only 6.1% had been achieved in the year-to-date.
Dames said, “there is a growing maintenance backlog that will require plant shutdowns and this must be addressed over the coming months.’
Maintenance is traditionally carried out during the summer months but this summer is proving particularly difficult because of the widespread heat wave conditions being experienced.
AIR CONDITIONERS
Dames singled out the increasingly widespread use of air conditioners as a major contributor to higher power demand this summer.
He added the heat wave conditions also affected the operating efficiencies of Eskom’s air-cooled power stations with up to 1,000MW of generating capacity being lost on some days.
Dames stressed the need for further power savings by electricity users across the board saying Eskom believed up to another 10% could be saved on the country’s total power consumption.
O’Flaherty sounded a warning about the significant risk to the kind of mega-projects being undertaken in terms of the IRP and Eskom’s business plan from factors such as “investment decision delays”.
“This could have various consequences ranging from the need for higher tariffs, use of more expensive generation options and insufficient reserve margin,” he said.
The very real danger this poses was highlighted at a presentation held by the South African National Energy Association in Johannesburg on October 20.
The IRP plan to build six nuclear stations by 2030 was already running a year late according to Energy Minister Dipuo Peters but that was more likely two years behind schedule said Ian Hall, chairman of the South African Coal Road Map Steering Committee.
O’Flaherty also stressed the seriousness of the recent downgrade of South
Africa’s credit rating from stable to negative by rating agency Moody’s which has a direct impact on Eskom which is wholly-owned by the state.
He pointed out that Eskom was not investment grade “as a stand-alone’ and any further downgrading of South Africa’s sovereign credit rating could result in Eskom being given a sub-investment rating.
“That would make debt very hard to find and extremely expensive.’
