Eskom Plans "Mega Power Projects" for South Africa's Growing Economy

Strategic Planning Needed to End Load Shedding

South Africa's economy is projected to grow at 6%, but, as a result of poor planning decisions, there is only marginal spare capacity for power generation and the country has experienced rolling blackouts in recent months (see South Africa: 31 March 2006: Electricity Generation a Worry, but Not a Crisis for South African President). The South African government aims to generate another 40,000MW over the next two decades and state-owned firm Eskom has announced plans to add three new "mega power projects" to its planned capacity expansion programme.

Eskom CEO Thulani Gcabashe has stated the company will build a new coal-fired power station near Lephalale in Limpopo at a cost of 26 billion rand. According to Business Day, the base load plant will be the first one built in South Africa for more than 20 years and is to have an output of 2,250MW. South Africa currently relies on its huge coal reserves for 90% of its energy. Another of the projects planned is the construction of a 1,332MW pumped storage station in Drakensberg at a cost of 9 billion rand. South Africa's most significant problem has been distributing the electricity effectively, especially the transmission lines from Mpumalanga to the Western Cape, and Eskom has been attempting to minimise the power lost by transmission lines by improving insulation (see South Africa: 23 May 2006: Energy Crisis Worsens as Cape Town Faces Blackout). Eskom will invest another 6 billion rand in a new transmission line connecting the east and west of the country. Two new gas turbines with a capacity of 1,022MW are set to be built, which should also boost electricity generation in the Western Cape. Meanwhile, Eskom has long had plans to bring back to service the Camden, Komati and Grootvlei power stations; the rejuvenation of these old coal-fired power stations is set to cost 12 billion rand.

To avert the energy crisis, Eskom has issued television alerts through the past few months warning consumers when it is necessary to conserve energy. The warnings have been praised for their effective communication (see South Africa: 17 May 2006: TV Warnings Issued as Power Crisis Looms in South Africa and South Africa 31 May 2006:Eskom's Energy Conservation TV Advertisements Proving Effective). In addition, Eskom has been distributing to the public compact fluorescent lights (CFLs), which are more efficient light bulbs (see South Africa: 24 May 2006: Energy Efficiency Is Key to Avoid Load Shedding in South Africa).

New Technology Will Lead the Way

South Africa, which is one of the largest producers of uranium, has been making some progress on the proposed next phase of nuclear energy: the Pebble Bed Reactor (see South Africa: 11 April 2006: South Africa's Nuclear Future Starts with Pebble Bed Reactor). South Africa will build the world's first pebble bed modular reactor (PBMR), which could usher in a new era for nuclear power. The construction of the plant at Koeberg in the Western Cape is set to cost US$400 million and could be the first of a series of nuclear power plants, possibly as many as 30, to be built to solve South Africa's long-term energy problems

Wen Jiabao the Chinese Prime Minister visited South Africa last month and signed a nuclear energy co-operation pact with President Thabo Mbeki, which included cooperation on the PBMR, on which both countries are currently working separately (see South Africa: 22 June 2006: Chinese Premier Signs Nuclear Energy Deal during Visit to South Africa and South Africa: 23 June 2006: South Africa and China to Work Together to Solve Their Energy Needs). The agreement allows for the sharing of information and personnel, and South Africa should benefit from Chinese knowledge of similar nuclear reactors (see South Africa: 11 April 2006: South Africa's Nuclear Future Starts with Pebble Bed Reactor). Tseliso Maqubela Chief Director for nuclear energy in the Minerals and Energy Department praised the agreement for setting up a framework with a strategic partner.

Another way in which Eskom is managing the country's power-generation problems is through demand side management (DSM), which allows Eskom to enter into agreements with large industrial users to schedule their demand to fit supply rather than trying to meet their demand with existing resources. The process follows strict guidelines whereby the client is never off for more than the agreed time preventing any damage to business. The client is then reimbursed by Eskom for allowing it to reduce its load.

Outlook and Implications

It has been a very tough year for South Africa and especially for the Western Cape, which has been worst affected by the power-generation problems. It has been embarrassing for Eskom to have to rely on television alerts to ask consumers to use electricity more efficiently. However, these hardships have taught South Africa, the largest economy in the continent, the need to plan strategically for the future in order to increase supply throughout the country. While the country's power generation will remain problematic in the short term, the incoming investment should see that South Africa is not as badly affected again.

South Africa is taking advantage of its energy needs by diversifying the sources through which its energy is generated; leading the way with the PBMR. Additionally, Sipho Mkhize chief executive of PetroSA is confident the country will be able to find large enough gas reserves in southern Africa to feed its facilities at Mossel Bay.

The country's electricity-generation problems are a result of poor planning decisions and a lack of investment in previous years. The 97 billion rand investment programme is a massive undertaking, but it is vital for South Africa in order to maintain its position as Africa's superpower.