SA's electricity sector has come a long way

Tuesday, March 11, 2014

Pretoria – President Jacob Zuma says the growing South African economy and rising standards of living have resulted in increased demand for electricity infrastructure.

“Since the mid-2000s, government has placed increasing emphasis on economic infrastructure such as ports, rail, dams and power stations … Over the past five years, investment in this infrastructure has dramatically increased further,” said the President.

He was speaking at the release of the 20 Year Review: South Africa 1994 to 2014 at the Sefako Makgatho Presidential Guest House in Pretoria, on Tuesday.

President Zuma said central coordination of infrastructure delivery, through the Presidential Infrastructure Coordination Commission has improved delivery and assists to remove bottlenecks faster. “Investments in infrastructure will increase further, including on much needed social infrastructure such as water, electricity, sanitation, schools, colleges and housing amongst others.”

According to the 20 Year Review document, South Africa’s electricity sector has come a long way since the advent of democracy whereby only 36% of the country’s households had access to electricity. In the early 1990’s an estimated 19000 black schools and 4000 clinics were without electricity.

“Electrification is one of the country’s success stories with over 5.68 million electricity connections having been made between 1995 and 2013 by Eskom and municipalities,” notes the Review.

Apartheid legacy

The new democratic dispensation inherited a modern generation system that was coal-based. Additionally, electricity had been provided for cheaply and between 1994 and 2002, little investment had been made in electricity generation.

However, this posed a problem for government as the economy was growing and demand was exceeding supply resulting in a supply crisis in 2008.

The post-apartheid government completed the Majuba power station and boasts that from 2000 to date, 6028MW additional power capacity has been added, including 2084MW from two gas projects and Independent Power Producers cogeneration.

Since 2009, 2925MW additional generation capacity has been added mainly made up of previously mothballed power stations [namely Grootvlei, Komati, Camden, Koeberg, Ankerlig and Arnot] being returned to service.

However, the 20 Year Review says electricity generation remains a binding constraint on the South African economy and a barrier to entry to large users that may want to invest in the country.

Future power-generation

The Medupi and Kusile coal fired power stations are currently being built to increase the generation of electricity and to open up the economy to large investors. Medupi is 56% and Kusile is 24% complete while storage pump scheme Ingula is 65% complete.

In November 2013, the Department of Energy signed agreements with 17 new preferred bidders in Window 3 of its Renewable Energy Independent Power Producers Procurement Programme (REIPPP) which is set to boost the country’s power supply. The programme is aimed at bringing additional megawatts into the country’s electricity system through private sector investment in wind, biomass and small hydro among others.

Through the programme about R47 billion in renewable energy IPP investment has been committed.

Meanwhile, the distribution of solar water heaters to low income households has reached 372000.

Government says that the mechanisms in place to finance infrastructure require urgent reform.

The challenge was that while the country has a relatively good core network of national economic infrastructure, expansion so as to address the demands of the growing economy remains the challenge. –

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