Load-shedding, a controlled process that responds to unplanned events (such as demand exceeding available capacity) in order to protect the electricity power system from a total blackout, seems to be getting worse in South Africa. Eskom, South Africa’s national electricity utility company, has had to implement load-shedding increasingly over the past few years.
Eskom’s load-shedding program is structured in stages, where Eskom sheds a certain quantum of load from the grid to stabilize the grid. So, depending on the severity of the crisis, load-shedding is implemented in stages from Stage 1 to Stage 8, where Stage 1 sheds 1,000 MW of load from the grid and in a Stage 8 scenario, Eskom takes out 8,000 MW of load from the grid. Load-shedding is implemented over 2-hour or 4-hour blocks on a rotational basis depending on the severity of the crises. Stage 8, however means most consumers will experience a blackout for about 12 hours.
We are only halfway though the year but already, 2022 has been the worst year of load-shedding on record. Already, South Africans have experienced more load-shedding in the past 6 months than in the whole of 2021!
Eskom’s latest State of the System briefing: 11 May 2022 gives a good overview of the route causes of the current electricity generation crisis. In the status briefing, Eskom says the main “contributor to capacity shortage is the delay of adding new capacity to the system: A 1998 Energy White Paper stated that an investment decision to build new capacity was needed by, not later than, 1999 to ensure that demand does not exceed available supply capacity. The investment decision was only made in June 2007 and therefore, the needed capacity was not available in time.”
Also, “delays in commissioning of new power plants at Medupi and Kusile, resulted in Eskom having to create ‘virtual’ capacity from 2002 by running existing plants above normal design parameters to Keep The Lights On.” The briefing also says that from 2008, necessary maintenance was delayed to avoid load-shedding caused by lack of capacity as units would have to be taken offline for maintenance. The briefing sums it up by stating that “this high utilisation of deteriorated plants and deferred maintenance created a cycle of deteriorating availability.”
South Africa’s installed electricity generation capacity is around 50,000 MW. Eskom’s load-shedding notice from this past week gives us a look at the scale of the issues. Eskom has had to implement Stage 4 and Stage 3 load-shedding this weekend because it currently has 4,501 MW on planned maintenance and another 16,320 MW of capacity unavailable due to breakdowns. That’s a total of 20,821 MW, which makes up about 40% of South Africa’s installed capacity!
South Africa recently experienced Stage 6 load-shedding. Stage 6 load-shedding is said to cost South Africa up to R4.6 billion ($270 million) per day. Cape Town’s Mayor, Geordin Hill-Lewis, says that the power situation in South Africa is now a fully-fledged socio-economic crisis. South Africa needs an urgent plan to end load-shedding and achieve energy security. This past week, Geordin Hill-Lewis proposed a 10-point plan as follows:
- Abolish the 100 MW licensing threshold for embedded generation and ensure a registration period for IPPs not exceeding 14 days. Not only is this threshold arbitrary, but it makes little financial sense. Due to economies of scale, the optimal size for new energy projects is far larger than this, and larger projects offer cheaper electricity per unit.
- Implement an income tax write-off for capital investment into small-scale generation and battery-storage projects. This could also be used to subsidize and incentivize home installations of solar PV and battery storage, making home generation affordable to more South Africans.
- Exempt financially-healthy municipalities from all unnecessary legislation and regulations (including those governing municipal procurement) that will delay bringing new generation capacity online. A minimum-compliance approach must be allowed in respect of tenders for IPP procurement and the construction of municipal own-generation projects.
- Declare in clear and unequivocal terms that municipalities do not require approval from Minister Mantashe for electricity procurement. Uncertainty in this regard is having a chilling effect on municipalities’ ability to procure new generation and introducing delays; there is no good reason for this to continue.
- Offer National Treasury guarantees in respect of any borrowing — by municipalities and private entities — necessary for IPP generation projects and municipal own-generation projects.
- Waive the Department of Trade and Industry’s local content requirements on solar PV modules until energy security is achieved.
- Exempt electricity traders from onerous National Energy Regulator of South Africa (Nersa) licensing requirements, substituting a registration process in which traders are required to demonstrate compliance with a basic list of requirements only designed to protect public distribution networks.
- Remove the substantial red tape on the establishment of natural gas imports and transport in the Western Cape, unlocking the use of natural gas-powered turbines. These are cleaner and cheaper than the diesel and jet fuel turbines currently in use.
- Convert Eskom’s Ankerlig plant in Atlantis, Cape Town, to natural gas and run the plant on a mid-merit basis, with dynamic output adjusted according to fluctuations in demand.
- Immediately establish a Power Crisis Unit in National Treasury, with representation from municipalities and technical experts as well as the Finance Minister, with the mandate of expediting all interventions that could end the power crisis. The Unit must not just be another Government task team, and must in fact have power to make regulatory decisions. This includes decisions needed for interventions described above, as well as demand-side management, battery storage, new natural gas projects, and increasing Eskom’s operational efficiency.
What are your thoughts on this 10-point plan? What else should South Africa do to tackle this crisis? Let us know in the comments below.
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