The root causes of these failures are sometimes misunderstood. Many have argued that electricity consumption and demand growth have been higher than expected because of higher economic growth rates. Let’s look at the facts.
Annual peak demand has grown on average by just more than 3,6% a year since 2000. Current peak electricity demand is actually lower than that predicted in Eskom’s Integrated Strategic Electricity Plans, which were prepared in 2001, 2003 and 2005.
Furthermore, as far back as 1998, the Energy Policy White Paper warned of supply shortages in about 2007. The claim that electricity demand has grown faster than predicted is not supported by the data.
So what are the ultimate causes of recent supply failures? There are at least four main causes. First, policy uncertainty between 1998 and 2004 inhibited and slowed investment. During this time, consideration was given to breaking up Eskom and introducing competition and private investment. In 2001, Eskom was prohibited by government from building new generation capacity. Investment planning and decision-making fell 18 months behind schedule. Some consequences of the delays are that the commissioning of base-load generating plant (in the form of return-to-service coal stations that were previously mothballed) and new peaking plant (open-cycle gas-fired turbines) has been too late. In addition, policy uncertainty delayed the re-establishment of dedicated project teams and departments in Eskom to manage the new capacity expansion programmes.
Second, poor co-ordination has caused further setbacks. The lack of co-ordination and integration of the different electricity planning, investment decision-making, approval and procurement processes between Eskom, the National Energy Regulator of SA (Nersa), the minerals and energy department and the public enterprises department has created dangerous risks in terms of contradictory and badly timed decisions being made, and procurement processes that might lead to costly and late investments. An example is the delay in finalising the minerals and energy department bids for private, independent power plants. Emerging risks are also evident in the licensing delays by Nersa and the legal requirement for ministerial approval for any deviation from the official Nersa plan, which is already out of date.
Third, while there has been a great deal of planning, some of the earlier planning assumptions were wrong. The estimates for existing generation plant availability were too optimistic. It was assumed that municipalities would be able to contribute more generation capacity than is currently available. The assumed cost of unserved energy was unrealistically low. And planning was constrained by applying too low a reserve margin (10% compared with a more acceptable 15%). Together these faulty assumptions have resulted in planned capacity additions that are 18 months to two years too late.
Fourth, inadequate maintenance or negligence may have played a hand. An investigation by Nersa concluded that, in the case of the Western Cape outages, there was negligence on the part of responsible Eskom personnel, maintenance procedures and remedial actions were inadequate, and protection systems had been operated incorrectly.
These root causes help explain how we have arrived at where we are today.
He goes on in making suggestions to increase supply security and the reserve margin, primarily by increasing base load capacity. However, in the short term a more effective strategy will be to improve the efficient use of electricity in SA. This is particularly the cae in this era of climate change, where it becomes critical that we become more efficient in the use of out existing electricity resources.
Improving and properly maintaining the distribution network will certainly reduce the wastage of electricity on the network. A critical part he neglects to mention is to improve the efficiency of electricity usage in homes and factories. Yes, it will reduce demand for electricity by existing users, but the slack will most certainly be taken up by the growth in demand from new users and expanding businesses.
Some indicated that improving efficiency in electricty usage is not really in Eskom's best interest, as their business is basically to sell as much electricity as possible. IMO, in order to change this, more efficient electricity usage must be one of the key performance indicators of Eskom. Futher, Eskom is a SOE, and ideally their KPI should be aligned to national government targets, i.e. reducing greenhouse gas emissions by increasing efficiency in electricity usage and more environment friendly generating capacity; increasing the electricity supply reserve margin to acceptable levels to avoid future supply crises but growing electricity supply so that it dont constrain future economic growth; spread generating capacity geographically to reduce security risks while maintaining economic efficiencies; etc.
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