AUW 2012: The power vs. the powerless

An hour (of three) into our Opening Ceremony at the African Utility Week 2012 - with fingers going blue and toes losing feeling from the cold - Eskom CEO Brian Dames took to the stage and entered into a cockle-warming exercise of national power utility PR as the aging power  - founded in 1923 when mining was in its infancy and manufacturing had not yet reached industrial levels locally - approaches its 90th birthday in March 2013.

The South African electricity industry diversification sees Eskom's role to ensure the first 49 chosen IPPs are connected to the grid, which Eskom controls, with the ultimate goal of easing the burden Eskom buckled under over the past 3 years to supply us with reliable electricity.

Last night, said Dames, power demand was projected to rise by 2000MW between 5-9pm alone - this is enough to power the entire Namibia, Botswana and more! Eskom sees 2012 as greatest peak shortfall. (We all know what THAT means this Winter - so best you blanket up.)

Quite rightly so, Dames reminded us that meeting capacity is not as much the problem as is maintaining reserves sufficient to deal with a massive 12% maintenance project through Winter - to ensure safety of plants & people and to improve performance of power stations. He mentioned that this was by far the biggest project in Eskom's history.

He quoted PWC's recently released "The Shape of Power to Come" Survey, which noted: World electricity demand is projected to increase from 17,200 TWh (terra-Watts)  in 2009 to over 31,700 TWh in 2035 - that is double what we use now! It will be driven by economic and population growth, as well as technological change and urbanisation, resulting in an increasing electrification of the world. More people will gain access to electricity and more activities and applications will be powered by electricity.

Back to local Eskom issues, Medupe's first unit - which was supposed to have been live by mid-2011 - will come online by the close of next year. Surprisingly, Dames blamed capacity within the local manufacturing industry (excluding the environmental concerns). He said that because the big SA manufacturing companies were struggling with capacity, Eskom had to intervene to get international companies to project-manage the local companies. Worrying...

An elderly gentlemen launched into a flurry of comments during Q&A's, accusing Eskom of selling out future generations in its projections made in the IRP 2010. He said that the discount rate of 10-12% that Eskom provided to the DoE ignores the renewable energy contributions and is much higher than the 5-6% maximum discount the US and Canada include in their long-term predictions. 

This man said that leaving the problem to future generations negated the whole idea behind the IRP 2010: sustainability. He criticised Eskom's strategy in establishing further coal mining operations in Limpopo and Mpumalanga, as this was done on prime agricultural land and would aid future food insecurity. Dames denied Eskom's direct involvement in the IRP 2010 planning process - this gentleman seemed to know better. Awkward moment.

Dames closed by saying that, in the next decade, new technologies in the utilities industry will be driven by: - energy supply concerns - climate change concerns - energy efficiency ambitions and - technological advancements.

The future, Dames said, will be characterised by 3 scenarios:

- decentralised grids (smart grids) IF we can solve the problem of storage;

- large-scale renewables (& grids) as in Europe; and

- a clean fossil world (powered by conventional technologies and large-scale nuclear).

Dames said he believes SA and Africa will have a hybrid system and, of course, that Eskom will still dominate, but this time working with private structures. Most interestingly (and perhaps an unintentional slip of the tongue by Mr Dames) was when he said: "Renewable energy grid price parity will occur as electricity prices continue to increase." Is that right?

Dames is also pro-nuclear and hydro-resource, but said SA needs a game-changer: gas (conventional / shale) and smarter grids are per-requisites to success. 

Dames rounded up his 2030 view: that all households will have electricity (as SA has evolved from less than 25% in 1999 to the 4millionth household that will be connected to the grid in early June). This in spite of the 2.5-3 million backlog, which has to be closed by 2022.

Finally, reflecting on energy poverty and climate change, Dames reminded us that he sits on UN Secretary-General Ban Ki-Moon's special "Energy for All" energy initiative and he sees great promise for Africa.

Yet sub-Saharan Africa currently has access to only 68GW of energy (less than Spain uses) - and this figure plummets to 28% if SA is excluded.

And 33 countries on this continent have a capacity of less than 5GW (less than Medupe alone can deliver). 

As a parting shot (in aid of positivity) let us rejoice that the extensive consumer-focused power-savings campaigns have, since 2008, led to 2000MW of electricity efficiency savings.

Next blog posting: Sustainability and corporate reporting - applying the journalistic 5-W principles in reporting.