If economic growth “picks up very quickly”, South Africa could run out of power by as early as 2007, a power regulation expert at the National Electricity Regulator (NER) told Parliament this week.
Wolsey Barnard told Parliament’s minerals and energy committee that demand for electricity was expected to exceed supply in four years’ time, particularly at the peak consumption times of early morning, late afternoon and in winter. This means that prices will also rise.
Currently, Eskom generates about 96% of South Africa’s electricity and can produce 42 000 megawatts of power.
Last winter peak demand hit 32 000 megawatts. But with a 4% demand growth, demand will exceed supply by 2007. A more conservative projection, based on 1,8% growth, indicates South Africa could be power-hungry by 2011.
Decisions on new capacity would have to be taken soon, Barnard said. “In the next four to eight years we must invest in peak generation … we need a three- to five-year lead-time to make a decision.”
The cost of a “big six-pack” power station would be about R35-billion, “a huge amount of money”, he said.
NER board member Anton Eberhard said the country faced “a huge requirement” for investment to keep pace with anticipated power demand. “We are regulating a price on a historically depreciated asset base … the rate of return is based on historical values.”
Asked by the Democratic Alliance’s Ian Davidson about the expected rise in the cost of electricity once aspects of the industry were privatised, Eberhard said it was not necessarily the main factor.
“The primary reason prices will increase in future … is the fact that
we must have new investment in generation capacity.”
South Africans had lived in “a highly unusual situation” where investment in new capacity had not been needed for 15 years.
Time was running out. The average “generated cost” of a unit of electricity “is under 10c a unit”. If a new coal power station were built, it would come in at a generation cost of 25c a unit.