From load shedding to over supply
Eskom battles decline in electricity consumption
THE TREND of rising electricity production amid decreasing demand continued in October, with electricity output up by 2 percent, while consumption declined by 0.5 percent, compared to the corresponding period last month, according to Statistics South Africa (StatsSA).
In the year to October, electricity consumption fell by 1.3 percent, compared to the same period last year following a decline of 1.5 percent last year. On the other hand, electricity production rose 0.8 percent year-on-year in the year to date after declining by 2 percent last year.
Eskom last month said it expected excess electricity capacity to grow steadily over the next three years. As a result, Eskom increased international sales volumes by 31.6 percent in the six months to September. In that period, it improved generation plant availability from 71.2 percent to 78.5 percent, adding an extra 3 700MW to the national grid.
Through a capacity expansion programme, Eskom intends to commission a total of 9 104MW between next year and 2022. The utility has delivered a total of 1 893MW since last year. Eskom has encouraged customers to increase consumption and take advantage of the excess capacity situation.
Commenting on the StatsSA figures, Kamilla Kaplan of Investec said that lower electricity consumption was associated with weak economic growth, which was forecast at 0.3 percent year-on-year this year, compared to growth of 1.3 percent last year.
“In addition to lower demand, the reduction in unplanned breakdowns, an increase in planned maintenance and increased capacity as units of the new build programmes are synchronised to the national grid has seen an absence of load shedding for over a year,” said Kaplan.
She also commented on the recent draft Integrated Energy Plan (IEP), which outlines South Africa’s energy requirement to 2050. The department’s base case scenario includes existing government energy policies remaining in place, a moderate increase in economic growth with “no perceived changes in the structure of the economy,” she said.
The base case scenario estimated growth in peak electricity demand to 2050 at 2.2 percent and assumed that approximately 150 gigawatts in additional generation capacity would be required, she said.
She said the draft IEP, also released for public comment last month alongside the draft IRP, said “the timing and pacing for additional generation capacity from nuclear can be revised, such that the first unit starts generating power from 2030, without causing a further negative impact on the adequacy of electricity supply before that period, because other options can be deployed faster”.
The base case assumed that capacity from the new nuclear build would only be commissioned in 2037 instead of from 2023. In its recent sovereign credit rating review, Moody’s noted that the announcement in the delay of the commissioning of the new nuclear power stations alleviated “concerns over any medium-term fiscal impact,” she said.
“Eskom has indicated that it would fund the nuclear build, but its non-investment grade rating would raise the cost of funding. Should Eskom’s financial viability come under pressure, this could have implications for government finances. The rating agencies have already flagged the increase in contingent liabilities linked to government guarantees to state owned enterprises as a risk to the sovereign credit rating,” said Kaplan.