Tag: power

By Carol Paton for Fin24

Eskom defended its proposed 20.5% tariff increase for 2022/23 on Monday, arguing that most of the cost increase was driven by two factors outside of its control: the requirement to increase purchases of energy from independent power producers and the increase in carbon taxes.

Together, these two factors accounted for 13.8% of the proposed price increase, while increases in operating expenditure accounted for only 7.5% and cost escalations in primary energy for 6.5%. SA introduced a carbon tax in 2019, which is to be increased gradually. IPP costs for Eskom are set to rise as more producers come on stream.

Due to large increases in these and other areas, in its application Eskom requested a negative return on assets of 6.38%, to prevent the overall increase rising too high.

CFO Calib Cassim presented Eskom’s revenue application to the National Energy Regulator of SA (Nersa) on which the utility’s annual tariff increase is based. Nersa decides the tariff on a legislated methodology, which determines how much Eskom can justifiably earn from consumers, assuming Eskom operates efficiently.

The regulator has seldom granted Eskom its full request, as its scrutiny of Eskom costs has almost always found that a large a portion of costs be ruled out due to inefficiency. Eskom, has in turn, regularly succeeded in clawing back some of the costs retrospectively through a mechanism called the regulatory clearing account. Retrospectively allowed costs are then added to future tariffs, making for a complicated and constantly changing price determination mechanism.

While the determination of Eskom tariffs is extraordinarily complicated at the best of times, this year’s application – which will put in place new tariffs on 1 April for non-municipal customers and 1 July for municipal customers – is even more complicated. This is because the application was drawn up a year ago but had not been deliberated on by Nersa.

In September, well after the application had been completed, Nersa informed Eskom that it intended to change the methodology for determining allowable revenue, requiring a new application. In December, Eskom approached a court and secured an order that Nersa consider the 2022/23 application immediately to put new tariffs in place by 1 April.

On Monday, Cassim presented Eskom’s tariff application which was compiled a year ago. However, much has changed in both Eskom and wider energy supply industry over the past year and Cassim will be given another opportunity on Tuesday to revisit the assumptions in the application.

While the balance between the various factors contributing to the price application will change, the global amount of 20.5% is expected to remain the same.

‘Not affordable’

But while Eskom tried to justify its application, stakeholders and interested parties at the Nersa public hearings appealed to Nersa to ignore its methodology and refuse to award the increase on the basis that consumers could not afford them.

Among them was mayor of the City of Cape Town Geordin Hill-Lewis who said the proposal was “unaffordable, unfair and unjust”.

“The point of departure should not be what Eskom’s maximum return on assets should be, but what people can afford. It would in line with inflation at around 5.5%,” he said.

The Nersa methodology should be set aside on the grounds that it is not rational to award high tariff increases in the prevailing economic environment, he said.

Other groups, including community, faith-based organisations and business organisations made similar appeals arguing that it was immoral to force consumers to pay for Eskom’s and government’s mistakes and excesses of the past.

Members of the Nersa electricity panel told presenters that while they sympathised with their plight, their hands were tied by legislation methodology.

 

By Siphelele Dludla for IOL

Eskom has warned the public to brace for more power cuts for the next 10 months as the capacity outlook for the period ending August 2022 showed that the power system would remain constrained.

The struggling power utility yesterday warned the public to expect an increased risk of load shedding while the reliability maintenance programme of its ageing coal fleet was being implemented.

Eskom has so far implemented 32 days of loadshedding since April 1 due to increasing breakdowns and low plant availability, and currently there is a nightly Stage 2 loadshedding.

Eskom’s energy available factor (EAF) has declined to 65.3 percent this financial year against a target of 70 percent, and down from the average of 67.9 percent achieved last year.

As a result, Eskom needs an additional 4 000MW to 6 000MW generation capacity to eliminate the risk of loadshedding and to ensure the necessary electrical energy that is needed to stimulate the economy.

It is not clear how soon the 2 000MW of emergency additional power commissioned by the Department of Mineral Resources and Energy will come into the grid.

Eskom group executive for generation Phillip Dukashe said a key contributor to the low EAF was high levels of planned maintenance over the summer months.

Since September, Eskom has increased its planned maintenance programme to an average 5 500MW of capacity, almost double the average maintenance carried out in the same period in September 2019 to April 2020.

Dukashe said the recent high levels of unplanned outages was a concern, but Eskom would continue to drive its reliability maintenance recovery programme.

“Generation plant performance is still unreliable and unpredictable, but improvement initiatives are being driven hard to get to acceptable levels,” Dukashe said.

“We need to ensure system stability and to meet demand a minimum 4 000MW of additional generating capacity is critical.

“This will ensure the space for generation to continue with the planned reliability maintenance and refurbishment programme, and that the operational recovery is timeously funded and resourced to enable maximum readiness to execute successfully.”

Due to the system constraints, Eskom said it had used more than the anticipated levels of diesel for its Open Cycle Gas Turbines (OCGTs), spending at least R2.5 billion so far to keep the lights on.

Eskom chief operations officer Jan Oberholzer said the utility would be required to extensively use the OCGTs to either avert loadshedding or to reduce the magnitude thereof.

Oberholzer conceded that load shedding carries a significant damaging effect to the economy.

“We are aware that the increased maintenance does elevate the probability of loadshedding in the short term, but this is necessary to improve the future performance of the generation fleet,” Oberholzer said.

“Our objective is to achieve a reliable and sustainable generation plant, thereby reducing the risk and frequency of the occurrence of loadshedding. As such, Eskom will not compromise on reliability maintenance and mid-life refurbishment.”

 

NERSA approves licences for Karpowership

Source: eNCA

The National Energy Regulator has approved three-generation licenses for Karpowership South Africa.

The floating power ship provider has been granted generation licenses for Saldanha Bay, Coega, and Richards Bay.

WATCH | Discussion: Karpowership application denied

But it’s not all systems go for Karpowership SA.

It will need to secure further authorisations before its ships at the three ports can be fully operational and connect to the grid.

Nersa’s decision comes after Karpowership’s applications for environmental approval were refused by the Department of Environment in June.

 

Like a seriously unwelcome – but all-too-familiar – guest, loadshedding has returned.

To help South Africans get through the powerless days and dark nights, Orlando Luis, CEO of Brights Hardware, shares a list of eight must-have items that will keep your home (and office spaces) functional during a power outage.

Battery-powered LED lighting

“Battery-powered LED lighting is essential during power outages,” says Luis. “There is a wide range of rechargeable LED light strips, lanterns, and torches available that make keeping the lights on during loadshedding easy. You can even get a rechargeable LED desk lamp so that the kids can continue doing their homework during evening power cuts.”

Another great item to have in the home are intelligent LED light bulbs. These bulbs come in either a screw or bayonet configuration and can be used like a standard light bulb in any light fixture but they stay on during load-shedding as they hold charge for up to four hours.

Solar lighting

In addition to rechargeable and battery operated solutions, there is a wide range of solar powered lighting on the market today. These range from spot lights/security lights to solar lanterns, garden lighting and even pool lights.

“Solar powered lighting is a great solution in a sun-rich country such as ours,” advises Luis “There is no cost to recharge them, and many are practically “set and forget” and will come on automatically after sun down.”

Gas stove/cooker

Boiling water and getting meals prepared during power outages is impossible without a gas stove or cooker. Thankfully there are many different options available to consumers today – whether it is a large six plate gas hob and oven or just a simple, portable table-top one or two-plate gas cooker – and many more options in between.

“Many people are choosing to change their ovens over from electrical to gas. Not only does this mean you can carry on your dinner preparations during a power outage, but your electricity bill will also be reduced through the introduction of gas appliances,” says Luis.

Portable power bank

We all want to stay connected, especially in the dark. No electricity coupled with no means of communication is not a great combination.

“Portable power banks are a fantastic solution to ensure that you don’t run out of cell phone battery life,” advises Luis. “These compact gadgets can also charge other devices such as tablets, portable modems and speakers.”

Surge protector

It is a good idea to purchase a surge protector for your home or office. A surge protector is an electrical device that is used to protect equipment against power surges and voltage spikes that can be caused by power cuts.

“Surge protection can range from plug and play devices to systems installed at the distribution board by a registered electrician.”

Luis goes on to caution that some household insurance policies stipulate that they will not cover damage caused through power surges if the proper surge protection is not in place – “it is worth checking with your insurance provider.”

Uninterruptible power supply (UPS)

An uninterruptible power supply (UPS) is an electrical apparatus that provides emergency power. A UPS differs from a generator in that it will provide near-instantaneous protection from power interruptions by supplying energy stored in batteries. It is a type of continual power system.

“A UPS is typically used to protect hardware such as computers, data centers, telecommunication equipment or other electrical equipment where an unexpected power disruption could cause injuries, fatalities, serious business disruption or data loss.”

Generator

If budget allows, investing in a generator is a great way to make power outages less intrusive. “There are many different models and options to consider,” says Luis. “Entry level 2 stroke generators, such as a 950-watt unit, are unreliable if the petrol/oil mixture is not consistent, so Brights recommends starting with no lower than a 4 stroke 1200-watt generator.”

Inverters

This then introduces the question – what about people who live in complexes and housing estates that are not allowed to run a generator because of the noise pollution?

Luis says that the best option here is to purchase a pure sine wave inverter with batteries. All these units are silent except for the cooling fan which blows on the side. They also switch on automatically during load shedding.

By Khulekani Magubane for Fin24

After President Cyril Ramaphosa delivered his State of the Nation Address last week under the shadow of an under-performing economy, Members of Parliament jostled over whether he was confronted by near-impossible odds or complicit in South Africa’s economic quandary.

MPs held the first day of the SONA 2020 debate in the National Assembly on Tuesday afternoon.

Democratic Alliance leader John Steenhuisen said Ramaphosa failed to capitalise on the optimism at the beginning of his presidency, as economic growth slowed, and direct foreign investment dropped along with tax revenues and employment.

“I am not going to stand here and say that this happened on your watch, Mr President. That would be far too kind. It didn’t just happen on your watch, it happened by your own hand. You, sir, put us in this situation,” claimed Steenhuisen.

Ïn Steenhuisen’s view, most of the positive announcements Ramaphosa made during his SONA were merely DA policies that the president co-opted and appropriated as his own.

“Euthanasia is never easy, but sometimes it’s the most humane option. On Thursday night you should have switched off Eskom’s life support machine, and perhaps supported the DA’s electricity plan, which takes power from the state and gives it to the people,” Steenhuisen said.

Steenhuisen said Ramaphosa’s newly announced sovereign wealth fund was only a great idea for a nation that had a healthy budget, citing Norway and Saudi Arabia as examples.

“But we are running a budget deficit and spiralling deeper and deeper into debt. Where will the money for a sovereign wealth fund come from, Mr President? From your own bank account?” Steenhuisen asked.

Speaking after Steenhuisen, Minister in the Presidency Jackson Mthembu sprang to the president’s defence, saying that Steenhuisen could not expect the president to take his policies from the DA’s election manifesto.

Mthembu said Ramaphosa’s SONA speech focused on the energy crisis, youth unemployment, growing the economy and building a capable state.

“We welcome government’s plan to ensure that Eskom works to restore its operational capabilities, while implementing measures that will fundamentally change the trajectory of energy generation in our country such as putting in place measures to enable municipalities in good financial standing to procure their own power from independent power producers,” said Mthembu.

Mthembu added that the government was moving to respond to unemployment, which he said is high because of the “grossly imbalanced structure of the economy”.

This is exacerbated by the skills mismatch that is so prevalent in the country, he added.

By Lameez Omarjee for Fin24

A flat rate for electricity could help foster a culture of payment among Soweto residents, a local councillor told Fin24.

Soweto ANC councillor Mpho Sesedinyane believes a proposal for a R150 monthly flat rate for electricity could be a starting point to address the country’s non-payment woes. The flat-rate proposal was the brainchild of the South African National Civic Organisation – a non-political organisation which advocates on behalf of communities in engagements with government and other service providers.

Soweto owes Eskom almost R20bn – almost half of the total local municipal debt owed to the electricity utility.

Eskom has started disconnecting power to thousands of Soweto households as a consequence.

The now famous couple from the KFC proposal viral video went on their first outing to the Sowetan Derby on Saturday. (Video supplied by KFC)

Sesedinyane said the culture of non-payment dates back to apartheid when residents were told not to pay for public services as an act of resistance.

“Our people were told not to pay for services, not to pay for electricity,” Sesedinyane said.

The ruling ANC had not come back to residents to communicate it was noble to pay for services, after taking over in 1994, he said. Some residents can afford to pay, but are stuck in the old “mentality” and are still resisting payment, he added.

“We need to bring them back and say, we have won the country now. It is us [the ANC] that are governing now, can we now start to contribute and pay Eskom,” Sesedinyane said. These views have previously been expressed by president Cyril Ramaphosa and his deputy, David Mabuza, among others.

Sesedinyane believes the introduction of a flat rate could be a starting point to create a culture of payment for services.

“We had to agree (with Sanco) to come up with this project. For Eskom to collect revenue, it is important to start somewhere,” he said. That starting point is a flat fee of R150 households should pay per month for electricity.

If a flat rate of R150 is introduced, Eskom would at least generate some kind of income, which is better than none at all, he suggested.

Sesedinyane explained that the majority of Soweto residents are unemployed, living below the poverty line and are reliant on social grants. This means they are unable to pay for electricity.

The flat rate should be set at an amount which everyone can afford, including grant beneficiaries. After three or four years the flat rate can be increased, and at that point people will be used to paying for electricity, he added.

“People will then be in a position to know it is noble to pay for services, especially electricity. And they will be used to paying at the end of the day.”

Sesedinyane said that prepaid meters will not be the solution. “Our people will start connecting themselves illegally and they will not pay for electricity.”

Not sustainable

The South African Local Government Association – an association comprised of 257 local governments – however does not think that a flat rate would work. Spokesperson Sivuyile Mbambato told Fin24 that the proposal was “unsustainable”.

“We do not have the luxury of cheap and excess electricity like we did more than 20 years ago. Everyone must pay for what they use,” he said.

Salga is supportive of a prepaid solution. “Prepaid will be the answer in Soweto and other townships but the residents still reject that. This is an indication of how deep is the culture on non-payment in our communities,” said Mbambato.

The association’s National Executive Committee met last week to discuss solutions for rising municipal debt, among other issues.

The NEC resolved that a two-phased approach be implemented to address rising debt, according to a statement issued by Salga last week.

Phase 1 puts forward stricter enforcement by municipalities on credit control measures. This means municipalities will have to target government properties and businesses, through disconnection if there is “sufficient merit” in line with their credit control policies, the statement read.

Phase 2 involves an analysis of debt to classify debt which must be written off, or is realistically collectable.

The proposal comes after a period in which Salga interacted with various parliamentary portfolio committees on matters relating to debt owed by municipalities.

Government unveils Eskom rescue plan

By Lameez Omarjee and Jan Cronje for Fin24

Eskom is aiming to have completed the unbundling of its generation, transmission and distribution operations by December 2022, according to a new policy roadmap published by Minister of Public Enterprises Pravin Gordhan.

Here is what you need to know:

‘Cost-effective power’

Gordhan repeatedly returned to the point that South Africans deserve cost-effective electricity, which Eskom is not providing at the moment. The fact that tariffs have increased by 500% over the past decade – without an associated boost in generating capacity – has put the economy under strain, and is not sustainable.

Eskom must be restructured to survive

The plan to split Eskom into three parts – generation, transmission and distribution – is going ahead. Of the three, the transmission entity will be spun out first, around March 2020.

All three entities will remain functional subsidiaries of a larger Eskom holding company.

The minister said on Tuesday that monopolies were by their nature wasteful. A large part of the restructuring plan deals with increasing competition and competitiveness within the utility to eliminate waste and inefficiencies.

In the generation space, the plan proposes that Eskom retain its existing generation fleet and each power station concludes a power purchase agreement with the transmission entity. Eskom will also be permitted to build its own renewable energy generation.

There will not be much focus on unbundling the distribution arm in the near future, due to its complexity. Municipalities currently play a key part in selling on electricity to consumers at a markup. “There is a bit more study that we need to do,” he said.

UCT professor Anton Eberhard, a member of President Cyril Ramaphosa’s task team on Eskom, tweeted that the establishment of a separate electricity transmission company would be transformational by creating a transparent platform to buying competitively priced electricity.

Cost savings

Eskom has only been functioning in recent times due to lifelines from the state, as it does not make enough revenue from selling electricity to cover the cost of the interest on its debt. Treasury in February allocated Eskom R23bn each year for the next three years for a total of R69bn. The National Assembly, meanwhile, recently agreed to a special appropriation to grant Eskom R59bn over the next two years – over and above the allocated R69bn – to pay interest on debt.

To save costs, Eskom would be reviewing coal contracts, and government intends to meet with suppliers to review the cost structure, returns and fair price of coal.

Other measures include a review of employee benefits and alternatives to retrenchment, consequences for non-payment of electricity to recoup some of the R25bn it is owed by municipalities, talks with the energy regulator about pricing, and new procurement approach. The financial turnaround also includes a review of independent power producer contracts, and the disposal of non-core assets to raise cash.

State capture

The minister said that the damage caused by state capture was “huge” and “systemic”. Skilled people were “chased out” the company. All these factors had a negative impact on Eskom’s finances, he told journalists. He added that “‘trolls’ would claim that Eskom was to be privatised, but said this was ‘fake news'”.

Just transition

The plan acknowledges the need for a sustainable approach to be adopted for workers and communities impacted by the decommissioning of coal power stations. Alternative economic developments must be considered for affected communities and the state will be obligated to make sure affected communities can adapt to new opportunities. Gordhan said that labour unions and affected stakeholders are being engaged to understand the importance of changes to Eskom’s future structure.

New CEO

Eskom has been without a permanent CEO since May 2019, when Phakamani Hadebe announced his sudden resignation due to the ‘unimaginable demands’ impacting his health.

Despite speculation that he might, Gordhan did not announce a new chief executive, saying the utility’s new head would be announced next week. This would also be accompanied by board and management changes to account for Eskom’s changed structures.

“We have a bright future for Eskom. It still has a few clouds around it now,” Gordhan said.

How Eskom maimed SA’s economy

By Michael Cohen and Paul Vecchiatto for Bloomberg 

It isn’t difficult to find the main culprit behind South Africa’s biggest economic contraction in a decade: Eskom Holdings SOC Ltd., the state-monopoly power provider.

Gross domestic product slumped an annualized 3.2% in the first quarter, after expanding 1.4% in the prior three months, as a series of power cuts — courtesy of Eskom — hammered manufacturing, mining and agricultural output. The utility provides about 95% of the electricity used in Africa’s most industrialized economy.

”Eskom has a grip on the South African economy that is unlikely to be seen anywhere else in the world,” Kevin Lings, chief economist at Stanlib Asset Management Ltd. in Johannesburg, said by phone. “Eskom powers all tiers of the economy right down to the households, and so when it cannot supply electricity all sectors suffer. It is unlikely to change because there is currently no well-articulated plan to cure its problems.”

Driving downward
Eskom, which is buckling under the weight of more than $30 billion in debt, staged days of rolling blackouts, mostly in March, to prevent a collapse of the national grid as its fleet of poorly maintained power plants struggled to keep pace with demand. The outlook looks more promising for the second quarter: The power cuts have abated and the authorities have given assurances that there will be sufficient supply for the winter.

Even so, the economy’s shock performance, which far exceeded the 1.6% median contraction forecast of 16 economists, illustrates the urgency of the need for the government to diversify the power supply. The International Monetary Fund Monday said Eskom was a “major downside risk” to South African economic growth.

A program to purchase green energy from independent producers is in limbo. And little visible progress has been made in implementing President Cyril Ramaphosa’s plan to split Eskom into generation, distribution and transmission units. The proposal, designed to make it easier for other producers to supply the grid, is opposed by labor unions.

The bleak prospects of a speedy resolution to South Africa’s energy crisis are reflected in GDP forecasts for the rest of the year: The central bank anticipates an expansion of just 1% in 2019, the government 1.5% and Bloomberg Economics less than 1%. That’s well below the 3% Ramaphosa was targeting before he took power in February last year, and is a huge obstacle in way of his drive to attract $100 billion in new investment and tackle a 27.6% unemployment rate.

SA blackouts may cut growth close to zero

By Rene Vollgraaff and Londell Phumi Ramalepe for Bloomberg/Fin24

South Africa’s power cuts could bring economic growth for the year close to zero if they continue at the same severity seen in March, the central bank said.

The wave of rolling blackouts that started in November and are among the worst the country has yet experienced could knock 1.1 percentage point off economic growth, the Reserve Bank said in its Monetary Policy Review released Wednesday in Pretoria, the capital.

Expansion of close to zero would be the worst outcome since 2009, when former President Jacob Zuma came to power.

The nation’s embattled power utility, Eskom, implemented so-called stage 4 load-shedding, which removed about 10% from the grid, last month as ageing plants were offline. The company is battling with high debt levels and declining revenue after years of financial mismanagement. It was at the center of alleged looting under the previous administration that’s referred to locally as state capture.

“It has become clearer, however, that the legacy of state capture of which load shedding is one symptom will constrain growth for a longer period,” the Reserve Bank said. “The damage done by state capture is worse than previously understood.”

The country’s economy went through a recession last year and hasn’t expanded at more than 2% annually since 2013. Growth will only pick up once domestic constraints are dealt with, Deputy Governor Kuben Naidoo said in a presentation after the release of the Monetary Policy Review. Gross domestic product increased 0.8% in 2018.

The central bank pointed out that its estimates, which also show 125 000 jobs could be lost, assume load shedding will persist at high levels throughout the year, and don’t incorporate longer-term costs such as forfeited investment.

“It’s unclear to what extent firms and household have now made their own plans to manage or avoid their reliance on Eskom, which could mitigate growth costs,” the Reserve Bank said.

How to choose a UPS for your needs

Judging by the state of Eskom, loadshedding is here to stay. So what is the best solution to get you through the average 4-hour load shedding schedule? A generator, or a UPS with long life batteries?

It really all depends on your circumstances.

If your business or home is located in a low noise area, such as office blocks, flats or apartments, then a silent UPS solution is probably the best way to go, even though the initial capital investment may be three or more times that of a generator.

Of course, the new type inverter type generators are more silent, but the cost is more than double that of conventional generators of the same size.

What most people don’t realise is that even though the upfront cost of a generator may seem an attractive proposition, there are associated hidden costs in the form of fuel costs, maintenance costs and spare parts. If the generator is a “cheapie” from China without local support from an official distributor, then beware. You could be forced to dump it after only a few months.

Installation costs of a generator may also be slightly more than that of a UPS, as you would have to install a manual changeover switch, to switch to either generator power or to grid power, depending on the situation.

With most UPS systems, changeover is an automatic process; when Eskom or City Power fails, the system automatically switches to battery power through an inverter.

Yes, it is true that a generator can be fitted with an automatic change over switch, but with costs exceeding R15 000 to R20 000, you may as well go the UPS route.

With a UPS there are no fuel or maintenance costs. Reputable UPS systems have intelligent battery chargers that ensure maximum battery efficiency for long life. Yes, depending on the type of deep cycle battery used (5 or 10 year lifespan), as well as the frequency of re-charges, one would have to plan ahead to replace batteries when they reach end of life. The benefits however will far outweigh the costs.

A pure sinewave UPS offers seamless, clean and stable power during load shedding, enabling you to power sensitive devices such as computers and modems.

To cut down the initial investment of a UPS, consider a system with fewer batteries.
Do you really need 6-8 hours backup, or will 3-4 hours do? Remember that during load shedding you can extend the length of the rated backup by simply connecting the bare minimum equipment.

For example, in a home environment, lights, TV/DSTV and Internet; or in an office environment, lights, the telephone system, computers and Internet. Most of this can be achieved with a 2-3KVA UPS or generator.

Insistence on buying large generators, far exceeding power requirements during a power outage, results in fuel going to waste.

A generator is only a true necessity if the power outages in your area are over 8 hours or longer.
In those cases, the cost of a UPS with backup batteries would become prohibitive – unless of course, it has a solar power option that would deal with daytime power outages.

Choose wisely and never over-capitalise if the main focus is to simply get through the load shedding sessions.

By Henri Pereira for FocalCom

 

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