South
Africa’s Electricity Crisis - How did we get here?
Researched,
compiled and written by:-
Sandile Tshazibana
Date: -
10 March 2014
The electricity crisis in the country has become a serious problem. In
recent weeks Eskom has battled to keep the lights on in Africa’s largest
economy. Rolling blackouts are a last-resort measure used by Eskom to avoid a
total blackout of the power system. Rolling blackouts are a type of demand-response
for a situation where the demand for electricity exceeds the power supply
capability of the network. From 2007 the country has experienced load
shedding as a result of an alleged shortage of capacity to meet the country’s
demand for electrical power. How did we get to this point of decline?
Eskom, through its Integrated Strategic Electricity Planning (ISEP) process,
had already warned government in 1998, sixteen years ago, that South Africa
would face a severe shortage of electricity a decade ahead. The ISEP advocated
the significance of upgrading existing power generation plants and constructing
additional power generation plants if a crisis that could cripple the country’s
economy was to be averted. Eskom’s ISEP process provides the strategic
framework for projection of supply-and-demand for the country’s progressive energy
needs, which also involves anticipating future energy requirements and the
development of strategic procedures to meet these expectations.
Eskom’s ISEP process is guided by the
Integrated Energy Planning framework, supported by the White Paper on
the Energy Policy of the Republic of South Africa. Based on the Eskom
report, released in 2000, towards sustainability, Eskom had already undertaken
high-level studies regarding the construction of conventional coal fired power plants.
The report also encompassed a variety of new options that Eskom had on the
table, including Energy Efficiency, Fluidised Bed Combustion, Renewables and
Pebble Bed Modular Reactors (PBMRs). According to Eskom’s Integrated Strategic
Electricity Planning process, on the basis of a moderate growth in demand for
electricity and a moderate reserve margin being envisaged, projected that new revised
demand-and-supply options were required to meet the expectations of commercial
services from about 2005/2007. This re-assessment became necessary due to a 5
percent increase in the country’s economic growth and the access to electricity
was projected to increase from about 30% in 1994 to 73% in 2005.
Despite early warnings about a foreseeable
shortage of electricity in South Africa due to a strongly grossing consumer demand
the national electricity utility was told to put development plans to construct
more power stations on hold. Government said no to Eskom. As a result adequate
advance preparations to build more power generation plants were abandoned. In
2006/7 and more severely in 2008 this decision to abandon development caused a severe
shortfall of electricity supply to households and industry alike, creating massive
economic problems for South Africans and businesses. Eskom’s interconnection
with the Southern African Power Pool power grid was inadequate to bridge the
supply-and-demand gap.
There were a number of reasons behind the refusal to pursue plans to
construct additional power stations. In 1998 Eskom warned the government
already of a looming power crisis. A White Paper published in the same year supported
the prediction that the country would run out of electricity by 2007. The
report was signed by the then Minister of Energy and Minerals, Penual Maduna. Yet,
despite the dire prediction, it was never acted upon. Eskom’s application for a
budget to build new power stations was also denied in 1998; instead, the
government instructed Eskom to abandon the concept of building new power
stations altogether. This decision was validated on the basis of the
governments failed attempt to privatise Eskom in the late 1990’s. Minister Maduna,
the serving Minister of Energy and Minerals in 1998, proposed that the state
sell 30 percent of Eskom's energy generation assets to private contractors.
This attempt at deregulation was meant to introduce competition into the
market, but it never took root. Government subsequently banned Eskom from
building any further power stations, despite Eskom's clamouring that South Africa
was fast running out of electricity. Phumzile Mlambo-Ngcuka, who served as Minister
of Minerals and Energy from June 1999 to June 2005, stated, "Maybe we were
pessimists who did not believe in our economic growth." Mlambo-Ngcuka
admitted that government had got it wrong and apologised to South Africa for the
numerous blackouts. Jeff Radebe, in his post as Public Enterprises Minister,
failed to approve Eskom's proposals to build new power plants. Radebe justified
his decision stating that it was believed that new international role-players
would emerge to fund developments, which the government had hoped would be a
competitor for Eskom.
Eskom and the government investigated an alternative resource to
conventional coal-generated power, namely pebble bed technology. In September
1998, Jan de Beer, an executive director of Eskom, revealed specifications
about the potential of the pebble bed modular reactor and that the successful
implementation of this process would result in a historic turnaround time for
Eskom. While the benchmark timescale to develop and implement the pebble bed
technology in South Africa was estimated at least two decades, due to
regulatory compliance in accordance with the US, EU and Japan. According to de
Beer, such technology could be fast-tracked over five years instead of 20 years
as previously alleged. Also, each incremental step for proven technology of
about 150MW could be implemented within two years following implementation. However,
the South African government took a tough decision to cut its losses and
cancelled further investments in the Pebble Bed Modular Reactor project. The
reason for abandoning the project, although found to be technologically sound
and potentially ideal for developing countries was due to the failure to secure
sufficient investments to financially sustain operations.
By 2004 the South African economy was growing faster than expected and
the demand for electricity was rising at an equal rate. In the same year the
department of minerals and energy invited proposals from independent power
producers to meet the anticipated need for approximately 1000MW that would be required
annually as from 2007. But the private sector wasn't very interested, chiefly because
Eskom wanted to manage at least 70 percent of the power generated and thus dominate
the consumer-supply market.
In
hindsight, the decision to task Eskom with the responsibility to embark on a
large-scale development programme in 2004 was ill-timed. Alec Irvin, Minister
of Public Enterprise, said “We took the decision to charge Eskom with providing
70 percent of new capacity. As I have indicated, we accept in hindsight that
the decision was too late. It is the underlying reason for the conditions with
which we are now faced”.
Thabo
Mbeki, President of South Africa at this time, admitted that Eskom did inform
government about an impending electricity shortage years ago, but that the
utility was told not to build more power stations. Mbeki acknowledged that this
was a mistake. Mbeki, had also publicly apologised for the power cuts that
plagued the country and cost millions of Rands in lost revenue due to mines and
resulted in crucial industries shutting down. The former president added, "When
Eskom said to the government: 'We think we must invest more in terms of
electricity generation'... We said not now, later. We were wrong. Eskom was
right. We were wrong”.
Furthermore, other factors at play beyond South African borders compelled
the government at the time to refuse permission for Eskom to build more power
generating plants. One of the reasons why South Africa promoted the accession
of the Democratic Republic of Congo, the DRC to SADC in 1997 was probably the
expectation to tap into its huge energy potential. The DRC has a potential
hydroelectric capacity of 100,000 MW. It promises more than 44 000 MW electricity
generation capacity, which is about half of the African continent’s installed
power capacity through the Inga Hydropower Project set in the Democratic
Republic of Congo. The Hydropower Project is set on the Congo River, the
world’s second largest river in terms of its flow of 42,000m3/s after the
Amazon. It is also the second longest river in Africa after the Nile River. The
Congo River hydropower potential is drawn from the rivers waterfalls, the largest
in the world. At the Inga Falls, the Congo River drops 96 metres and has an
average flow of 42476 m³/s. The hydropower capacity of the Congo River has been
exploited since the 1970’s, Inga II and Inga II, but its yield is yet to be
maximised.
SADC supported the conceptualization of the so-called Westcor, the
Western Power Corridor Project, an organization that was supposed to develop
hydro-electrical plants at the Inga dam and build connecting power lines from
the DRC via Angola, Namibia and Botswana to South Africa. This SADC energy plan
might have resulted in the government deferring Eskom’s proposal to construct
additional coal fired power generating plants. The Inga III dam on the Congo
River alone has a potential power generation capacity of 39 000 MW, which could
supply nearly all of Southern Africa's electricity needs; to date only a small
portion of its capacity has yet been developed and it will take several more
years before this untapped potential can eventually be made available to the
industrial centres of the SADC region. The total installed generating capacity
in 2001 was estimated at close on 2,500 MW; of this no more than 630 to 750 MW
were actually produced because most of the turbines were not functioning.
The plan to develop Ingo III through a SADC-based consortium of utility
companies (Westcor) was more or less put aside as the DRC Government preferred
to undertake the investment itself in order to cater for the supplies of
principally, BHP Billiton’s energy demand for its proposed smelter. Construction
of a new phase on the Inga dam was supposed to have started in 2009 but the
project was on the verge of failure because the Government of the DRC decided
to develop Inga III as an independent venture. The impact of the Second Congo
War, the conflict in eastern Democratic Republic of Congo, beginning in 1998,
devastated the country and consequently delayed regional integration and
development; this impacted negatively on South Africa. The outbreak of this war
might have had a direct or indirect bearing on the fading of the SADC Energy
plan. Ultimately the project was aborted by the SADC shareholders when
unforeseen changes were proposed to the founding agreements.
The SADC Energy Sector Action Plan, which was to be used by the member
states as a guiding policy to the regional power needs, took too long to be
rectified. The SADC states were not permitted to produce individualised energy
plans; any plan put forward had to be an agreed and integrated effort. The
meeting of SADC Energy Ministers in Arusha, Tanzania in June 1997 approved the
SADC Energy Sector Action Plan as a framework for elaboration of a more detailed
and operational Activity Plan. This activity plan was the envisaged vehicle to implement
the SADC Energy Sector Cooperation Policy and strategy approved in 1996. The
aim was to develop the first Draft Activity Plan on the basis of the above
inputs and incorporate comments received from the Member States and prepare a
final version of the Activity plan to be used by TAU, SADC’s Technical and
Administrative Unit and the SADC Secretariat. The SADC Treaty, the Protocol on
Energy, the SADC Energy Cooperation Policy and Strategy and SADC Energy Sector
Action Plan had to provide the broad framework for the development of the SADC
Energy Sector Activity Plan. This meant the SADC states had to fully accept the
responsibility to share the costs associated with institutional mechanisms
created for the effective implementation of the energy Protocol.
Furthermore, the Protocol on Energy had to commit the Member States to
following main objectives, and the harmonization of national and regional
energy policies. The SADC Energy Commission and its Technical Unit was expected
to begin functioning towards the end of 2001 or the beginning of 2002. However,
the rectification of this policy took too long to be finalized. The Task Team
therefore reviewed this impending development, which had a critical bearing on
the implementation of the Activity Plan. These strategic plans, however, did
not bring much change and improvement to the SADC energy market as envisaged
because of poor commitment by member states to implement strategies.
Consequently, the regulation of the energy market and the region’s integration
on infrastructure development remained in limbo. Member states generally fail
to comply with the regional energy guidelines because they are more driven to achieving
domestic national interest than regional obligations. Member states were much
more comfortable in making long-term power purchase agreements bilaterally to
secure their energy interest outside the regional value chain. By failing to
act in accordance to achieving regional interest, including building the
infrastructure and implementing regional plans, the SADC states continued to show
poor commitment to regional integrated energy policy. The lack of commitment by
the SADC member states on focusing on the Regional Energy Plan as the regional
driving policy, the delay in finalisation of the SADC Energy Sector Action
Plan, the failure of the SADC/DRC Congo Energy Project, all these could have
had a direct bearing on the current South African energy crisis. It would
appear that the South African government might have determined all its developmental
energy strategies to the delayed SADC Energy plan and policies.
To remedy the South African electricity crisis the Inga Hydropower
Project in the Democratic Republic of Congo (DRC) is set to be revived coupled
with the on-going construction of two power stations in South Africa. The Inga Hydropower
Project is regarded as one of the most ambitious multinational infrastructure
development programme to bless the African continent. In
October 2013 South African President Jacob Zuma and his Democratic Republic of
Congo counterpart Joseph Kabila have signed a treaty for the construction of
the Grand Inga Project. The Grand Inga, is expected to be the world’s largest
hydropower scheme, it is expected to produce up to 40,000MW of electricity. Projections
suggest that construction of the Inga III will begin in 2016 and first power
will be produced around 2020. A multinational distribution network covering
about 3000km will be needed to push power to South Africa.
According to Eskom South Africa can
expect electricity this year from coal-fired power stations Medupi in Limpopo
and Kusile in Mpumalanga. The first of six 794MW units at Medupi would produce
electricity in the second half of 2014. Kusile’s first unit would produce electricity
by December 2014. Kusile has six 800MW units. The rest of the units in both
power stations would go online in eight-month intervals until completion in
2018.
