SA’s electricity crisis requires urgent resolution through an energy summit, says the South African Chamber of Commerce and Industry. This dovetails with calls for an economic Codesa by the nation’s construction and engineering sectors. All parties are desperate for the government to start spending faster on infrastructure.
To this end, the plunge in oil prices, along with those of other commodities such as steel, copper, iron ore and coal, provides SA with an opportunity to begin implementing the National Development Plan in earnest. Input costs for power, transport and manufacturing get cheaper by the day. Demand will initially slacken, but a bounce-back is inevitable, allowing for judicious and timely borrowing and action.
Offers of cheap money globally mean there are potentially green shoots in SA. The tightrope is still narrow, and the government, labour and business need to tread carefully and look long-term, while taking advantage of monetary and fiscal loosening in the US and Europe. SA also needs to accept that using local content in manufacturing and infrastructure is a process as much as a goal.
By targeting priority infrastructure projects, finishing Eskom’s new power stations, and geographically clustering the rapid development of human settlements, the government can use its longer-term sovereign borrowing status to drive broad economies of scale and develop roads, water, sewerage and electricity infrastructure for homes, schools, clinics and municipal buildings through the private sector.
When it comes to renewable energy, each megawatt added to the 40,000MW that Eskom is able to generate is a boon to the impoverished grid. French company EDF Energies Nouvelles is commissioning its first wind farm in SA. The R1bn facility at PPC Cement’s Grassridge quarry in Port Elizabeth comprises 20 turbines generating 61.5MW of power. This can light up 40,000 houses a year — equal to a town such as Potchefstroom.
PPC has committed itself to becoming greener by procuring power from such renewable sources. This will help drive its backroom office functions, leaving more baseload energy for heavy industrial processes.
But the argument that SA needs more base-load electricity is valid. This means that large and established industries in the private sector must be allowed to provide independent baseload power to themselves, one another and Eskom. Companies such as Sasol and forestry firms Mondi and Sappi already co-generate electricity, using natural gas and the byproducts of their industrial processes.
However, Sasol’s monopoly over piped gas from Mozambique’s huge oil and gas reserves will have to end. Pooled skills and capital from large South African industries can use this energy source to fuel domestic manufacturing and light cities and towns across eastern parts of SA.
The country’s renewable energy independent power producer procurement programme targets 3,725MW of renewable energy capacity by 2016. Along with peaking power projects in Port Elizabeth and Durban, Eskom’s delayed Medupi and Kusile coal-fired stations, and its Ingula hydropower project in KwaZulu-Natal, will fairly soon add more than 11,000MW of electricity to the national grid.
But this is just a part of SA’s future energy needs. It is private-sector power projects such as Sasol’s 140MW gas engine plant in Sasolburg that became operational in mid-2013 that will make the difference to the nation’s industries.
The R1.5bn project has seen Sasol achieve 60% of self-generated power capacity, easing its reliance on the national grid. Sasol says gas-powered plants take 20-30 months to install rather than the 40-50 months needed for coal-fired plants and the 60-80 months for nuclear. They are also much cheaper.
Sibanye Gold says its Beatrix mine has taken a small step towards self-sustaining clean energy generation by joining with global temporary power solutions firm Aggreko. They are tapping methane gas found underground to add 2MW of power to mining operations, using a naturally occurring fuel that was previously flared and wasted.