/ 13 May 2011

Eskom feels the cold

South Africans must gird their loins for a tough, electricity-fraught winter.

South Africans must gird their loins for a tough, electricity-fraught winter. The country has entered an early chilly season with peak electricity demand reaching 35 000MW on Tuesday evening this week, according to Eskom.

Morning peaks are already reaching 32 000MW. This is just short of Eskom’s total installed capacity of 40 000MW and the real cold of June and July has yet to set in.

But installed capacity is not generating capacity — at any time some of Eskom’s generators are undergoing repairs or maintenance. This means that, although South Africa’s reserve margin is at a comfortable 14,8%, Eskom’s energy availability factor is 84%, taking into account both planned and unplanned outages. It is aiming to increase this figure to more than 85%.

The power utility has assured the public it is working on managing the tight system and doing all it can to avoid the possibility of load shedding — while trying to see its new-build programme completed in time to alleviate the ever-increasing strain on the national power grid.

But it is being hampered by labour disputes at its new-build projects, Medupi and Kusile, which are both currently frozen until the issues are resolved. Accidents such as that at its Duvha power station have taken much-needed capacity out of the system, about 600MW in all, and the repairs will be expensive and could take more than two years.

These, and increasing demands, are playing havoc with Eskom’s maintenance schedule and it is having to run its relatively old generation plants for longer periods and at a higher intensity.

Improving the reliability of the current generation plants is critical to mitigating the strain on the grid in the short to medium term until new capacity comes on line, and Eskom has significantly curtailed the number of planned outages it requires to carry out maintenance. It has a backlog of 14 major planned outages, said Eskom spokesperson Hilary Joffe, but she stressed that ideally it seeks the space to have many more to ensure optimum maintenance.

The ideal maintenance ratio is in the region of 10% of installed capacity offline for improvement work. Eskom is currently operating in the region of 7%.

Interruptibility clauses
The power utility is also utilising what’s known as interruptibility clauses with large aluminium smelters run by BHP Billiton. Enormous amounts of electricity are used in their processing operations. The clauses allow Eskom to cut supply to smelters for two hours in a 72-hour period, making the energy immediately available to the grid. During the crisis period of 2008, when the country experienced rolling blackouts, the smelters operated extensively on interrupted power.

Joffe said that the creation of space to do maintenance and the extremes of peaking demand were serious concerns. The current difference between morning and evening peaks was the equivalent of the output of a large power station and much of the demand appeared to be coming from residential users.

Buffers to mitigate against the rising demand, such as making use of the interruptibility clauses, have already kicked in. Others include running Eskom’s open-cycle gas turbines more frequently — they are used only during high demand periods because they are fuelled by diesel, which is extremely expensive. Increasing their use even marginally could add over R2-billion to Eskom’s costs.

Joffe said the utility had also worked with more than 130 of its largest customers who committed themselves to voluntary energy conservation measures, though it was now trying to extend this to the 500 largest consumers.

But many of them were commercial operations in the country’s large metros and cities, which required the co-operation and support of local authorities to replicate Eskom’s measures and sell the voluntary conservation measures to their largest customers, said Joffe.

Failing this, Eskom has already said it would prefer to see the introduction of a mandatory power conservation project, which could result in the implementation of penalty tariffs on consumption exceeding individual customers’ predetermined demand levels.

According to Joffe, Eskom has also instituted demand market participation with some of its largest customers, which will make at least an additional 550MW available to the grid. This involves steps such as the customers agreeing to cut back on their electricity where they are able to. But the introduction of tough conservation measures in particular is unpopular with large industry, which views them as an additional cost.

An industry insider who did not want to be named said many of the largest energy users had already taken on all the energy efficiency measures they could and further aggressive energy savings would “take productive capacity out of the economy”. “Where we are saving energy instead of increasing production will hit our GDP,” he said.

As we head into winter, large industry is worried that the country has not made sufficient progress on its Medium Term Risk Mitigation Plan, which outlined steps that needed implementing immediately to alleviate power shortages over the next two years.

Increasing the reliability of the current fleet is not at the level required, with the ever reducing time to do maintenance becoming a real worry, explained Mike Rossouw, head of the energy intensive users group.
Non-Eskom generators of power have not been introduced into the market as at the rate required, as the process remains constrained by slow policy formulation and implementation he pointed out. The country is still without standardised power purchase agreements for instance, which would allow independent power producers to sell their power to Eskom.

There is also concern that getting the country’s metros to convince their largest customers to buy into the voluntary power conservation programme is not taking place with the urgency that is required.

Finally there are policy constraints when it comes to demand market participation — particularly the framework under which Eskom can contract with customers, as well as the question of how these measures are financed.

Demand response initiatives can take two forms. Firstly Eskom can reimburse large users who agree to reduce their demand during peak hours.

Secondly Eskom can contract with certain customers who have to their own independent electricity supply such as emergency generators, to use these supplies during peak hours, taking strain off the grid. Again Eskom reimburses its customers. “The bottom line is things remain very tight,” said Rossouw.