SA electricity esources on a knife edge
Thématique :
sud afrique
2007/10/31 - Property 24
SA is facing a serious electricity supply problem due to the spiralling demand for power and rapidly dwindling excess capacity, and the prospects for the next few years do not look rosy. However, generators as backup for both private and sectional title residences could offer a temporary solution.
In a report by analysts Global Insight, South Africa's electricity sector's contribution to overall GDP in the country halved from 1990 to 2006. The country is thus facing a serious electricity supply problem due to the spiralling demand for power and rapidly dwindling excess capacity, and the prospects for the next few years do not look rosy.
Craig Silver, CEO of Generator Logic, believes that much information about South Africa's electricity capacity problems are being kept hidden from public scrutiny, and that the reality of the situation facing both the commercial and private sectors may be far worse than anticipated.
"We are already sitting with a very precarious balance between supply and demand, with very tight margins during peak times such as winter, and the situation is not going to improve in the next year or two," says Silver. "There is an urgency to expand electricity supply but at a cost of more than R150 billion over the next five years, much debate is still raging as to the 'when, how and who' of these upgrades. Top level discussions have been held between Eskom, the departments of Public Enterprises and Minerals and Energy departments of the government, and the National Energy Regulator, and plans have been put forward for possible solutions – none of them offering any short-term solution to the electricity crisis."
"And while South Africans are being fed information about plans to increase supply, the actual distribution of power paints a far worse scenario," adds Silver. In a recent report published by Nersa, an audit of 11 large distributors - including Ekurhuleni, Tshwane, Cape Town, eThekwini, Emfuleni, Mangaung, Msunduzi, Rustenburg, Nelson Mandela Metro and the Eskom Southern and North-West regions - painted a bleak picture of the state of electricity distribution in the country, especially in metro areas and small municipalities. Massive skills shortages and a lack of investment are the main threats to the continued supply of power.
The current proposal on the table would be to divide distribution into six regional electricity distributors (REDs) which would replace the current municipality structure. The REDs would offer greater advantages and efficiencies, but the legislation to put it all into effect is taking time as it involves the transfer of assets from the municipalities and Eskom to the REDs, leading to a loss in revenue for the municipalities. The legislation is thus subject to much debate and is expected to undergo several amendments before it is implemented.
And of course, there is the question of who will foot the bill for the funding of all the expansion programmes, which will inevitably lead to increased costs of electricity. "We could be in for anything up to an 18 per cent increase in tariffs and although rates have been set for this year, we could be in for much sharper increases from 2008 onwards," says Silver.
"From a business perspective we are seeing more and more commercial and industrial operations investing in multi-million Rand standby power generation projects as they simply cannot afford the downtime and product losses due to power outages and load shedding.
For companies with manufacturing processes that cannot be interrupted, it is essential to keep operating, even when utility power is unavailable. For every hospital, backup power is imperative to ensure that emergency and life support systems remain fully operational. A reliable backup system provides tremendous peace of mind to hospital administrators and facility managers," explains Silver. The implications extend so much further than just cost issues – in the instance of healthcare institutions, human life is at stake and for these organisations a power failure can put their reputation on the line and result in serious liability claims.
"The effect of this shortage of resources on the local construction and property markets is also substantial," says Silver. "We are now getting more and more enquiries from developers for equipment, either for building purposes or for installation in new developments."
In fact, Silver believes that it is now a major selling point for a new development to have generator power installed. "In the past, it was a given that electricity was available," he says, "but now a back up electrical supply is becoming essential."
The company doesn't receive too many queries for installations in private homes. Most homeowners prefer to purchase the basic petrol generators that are readily available at hardware shops, which can provide backup for one or two items in the home for a couple of hours at most. A diesel-operated generator that can provide full electrical supply for a three-bedroomed house for up to 50 hours will cost around R79,000 plus VAT, and installation outdoors in a weather-proof canopy will add to the price. However, in terms of complexes it can be very economical for a ten-unit complex to install a 15kva diesel generator for around R150,000 that will feed all ten units running at full capacity for several days.
"The beauty of these machines," says Silver, "is that they have sophisticated controllers that sense power outages and automatically start up and cut the Eskom supply, switching over again when the power returns. Some even have modems that can be configured to send an SMS when the fuel level drops below 30% or any other problems are diagnosed."
The cost of servicing these generators every 250 running hours or once a year adds up to around R3500 for the largest, and beyond that they are relatively maintenance free. This may well be the way of the future for the next five years.
"It is vital for industry as well as consumers to understand that we cannot expect Eskom to make a full recovery without support and awareness about how to conserve energy as well as derive energy from alternative sources. South Africa is relying heavily on an ageing power infrastructure that was never designed to handle the volumes now required. There are bound to be serious shortages in the interim exacerbated by the phenomenal growth spurt South Africa is experiencing, especially in the run-up to 2010 and beyond," warns Silver.
SA is facing a serious electricity supply problem due to the spiralling demand for power and rapidly dwindling excess capacity, and the prospects for the next few years do not look rosy. However, generators as backup for both private and sectional title residences could offer a temporary solution.
In a report by analysts Global Insight, South Africa's electricity sector's contribution to overall GDP in the country halved from 1990 to 2006. The country is thus facing a serious electricity supply problem due to the spiralling demand for power and rapidly dwindling excess capacity, and the prospects for the next few years do not look rosy.
Craig Silver, CEO of Generator Logic, believes that much information about South Africa's electricity capacity problems are being kept hidden from public scrutiny, and that the reality of the situation facing both the commercial and private sectors may be far worse than anticipated.
"We are already sitting with a very precarious balance between supply and demand, with very tight margins during peak times such as winter, and the situation is not going to improve in the next year or two," says Silver. "There is an urgency to expand electricity supply but at a cost of more than R150 billion over the next five years, much debate is still raging as to the 'when, how and who' of these upgrades. Top level discussions have been held between Eskom, the departments of Public Enterprises and Minerals and Energy departments of the government, and the National Energy Regulator, and plans have been put forward for possible solutions – none of them offering any short-term solution to the electricity crisis.""And while South Africans are being fed information about plans to increase supply, the actual distribution of power paints a far worse scenario," adds Silver. In a recent report published by Nersa, an audit of 11 large distributors - including Ekurhuleni, Tshwane, Cape Town, eThekwini, Emfuleni, Mangaung, Msunduzi, Rustenburg, Nelson Mandela Metro and the Eskom Southern and North-West regions - painted a bleak picture of the state of electricity distribution in the country, especially in metro areas and small municipalities. Massive skills shortages and a lack of investment are the main threats to the continued supply of power.
The current proposal on the table would be to divide distribution into six regional electricity distributors (REDs) which would replace the current municipality structure. The REDs would offer greater advantages and efficiencies, but the legislation to put it all into effect is taking time as it involves the transfer of assets from the municipalities and Eskom to the REDs, leading to a loss in revenue for the municipalities. The legislation is thus subject to much debate and is expected to undergo several amendments before it is implemented.
And of course, there is the question of who will foot the bill for the funding of all the expansion programmes, which will inevitably lead to increased costs of electricity. "We could be in for anything up to an 18 per cent increase in tariffs and although rates have been set for this year, we could be in for much sharper increases from 2008 onwards," says Silver.
"From a business perspective we are seeing more and more commercial and industrial operations investing in multi-million Rand standby power generation projects as they simply cannot afford the downtime and product losses due to power outages and load shedding.
For companies with manufacturing processes that cannot be interrupted, it is essential to keep operating, even when utility power is unavailable. For every hospital, backup power is imperative to ensure that emergency and life support systems remain fully operational. A reliable backup system provides tremendous peace of mind to hospital administrators and facility managers," explains Silver. The implications extend so much further than just cost issues – in the instance of healthcare institutions, human life is at stake and for these organisations a power failure can put their reputation on the line and result in serious liability claims.
"The effect of this shortage of resources on the local construction and property markets is also substantial," says Silver. "We are now getting more and more enquiries from developers for equipment, either for building purposes or for installation in new developments."
In fact, Silver believes that it is now a major selling point for a new development to have generator power installed. "In the past, it was a given that electricity was available," he says, "but now a back up electrical supply is becoming essential."
The company doesn't receive too many queries for installations in private homes. Most homeowners prefer to purchase the basic petrol generators that are readily available at hardware shops, which can provide backup for one or two items in the home for a couple of hours at most. A diesel-operated generator that can provide full electrical supply for a three-bedroomed house for up to 50 hours will cost around R79,000 plus VAT, and installation outdoors in a weather-proof canopy will add to the price. However, in terms of complexes it can be very economical for a ten-unit complex to install a 15kva diesel generator for around R150,000 that will feed all ten units running at full capacity for several days.
"The beauty of these machines," says Silver, "is that they have sophisticated controllers that sense power outages and automatically start up and cut the Eskom supply, switching over again when the power returns. Some even have modems that can be configured to send an SMS when the fuel level drops below 30% or any other problems are diagnosed."
The cost of servicing these generators every 250 running hours or once a year adds up to around R3500 for the largest, and beyond that they are relatively maintenance free. This may well be the way of the future for the next five years.
"It is vital for industry as well as consumers to understand that we cannot expect Eskom to make a full recovery without support and awareness about how to conserve energy as well as derive energy from alternative sources. South Africa is relying heavily on an ageing power infrastructure that was never designed to handle the volumes now required. There are bound to be serious shortages in the interim exacerbated by the phenomenal growth spurt South Africa is experiencing, especially in the run-up to 2010 and beyond," warns Silver.
