Category Archives: Actors

‘Rebasing’ for lower Eskom sales to trigger 9.4% hike even before any revenue adjustment

Engineering News, 20 September, 2017.

State-owned electricity utility Eskom has sounded a warning that, even if its allowable revenue is not increased at all for the 2018/19 year, tariffs will still need to rise by 9.4% simply to accommodate a “rebasing” of electricity sales volumes when compared with those approved in the third multiyear price determination period (MYPD3).

The utility has made a single-year application to the National Energy Regulator of South Africa (Nersa) for allowable revenue of R219.5-billion, which would translate to a hike of 19.9% from April 1 for direct customers and 27.5% for municipalities from July 1.

The submission, which is available on Nersa’s website, includes a request for R13.2-billion in higher operating expenses, R11.2-billion in additional independent powerproducer (IPP) costs, a R1-billion increase in primary-energycosts and R2.8-billion for international purchases. Even after “sacrificing” R12-billion in its return-on-assets request, based on a decision to “phase-in” its weighted average cost of capital over time, and factoring a R1.8-billion reduction in the environmental levy, owing to a fall in the amount of energysent out, its submission still translates to what would be a significantly above-inflation hike from April 1.

(Ed. note: And down the slippery slope we go – the higher the electricity tariffs, the less electricity we use, the higher the electricity tariffs – until everyone who can gets off the grid and Eskom and the municipalities are left with customers who can’t pay! Time for a new business model for our electricity utilities.)

Here is the full article

Nuclear: Here we go again!

MoneyWeb, 18 September, 2017.

Energy: Necsa chair optimistic about nuclear procurement restart

(Ed. note: Well, he would be, wouldn’t he? Let’s hope the DOE and Eskom show some common sense and listen to the CSIR on energy policy)

Nuclear Energy Corporation (Necsa) chair Kelvin Kemm believes that SA could restart a procurement process for its nuclear expansion project as soon as next month. However, he noted that government still has to determine the exact timing, says a Moneyweb report. SA is planning to build several new nuclear reactors with a combined capacity of 9 600MW – one of the world’s biggest nuclear deals in decades. The plans were disrupted this year when the High Court ruled that a nuclear co-operation pact with Russia was unlawful. Kemm said SA officials have made progress on the nuclear project since the court ruling, and that Eskom and Necsa were ready to proceed. ‘All that needs to happen is for the politicians to press the restart button,’ Kemm is quoted in the report as saying. He added officials had sought Environment Ministry approval for one of the sites – at Thyspunt in the Eastern Cape – and approval could be granted in the next couple of months. The next step would probably be for SA to issue a request-for-proposal to the world’s top nuclear reactor firms, all of which had responded to the government’s previous request-for-information (RFI), he said, adding he did not see the need for a new RFI after the ruling.

Full Moneyweb report

Engineering study dispels myths on limits to renewable energy in the South African grid

Engineering News, Chris Yelland, 16 September, 2017.

A serious engineering study and report has dispelled the myths and propaganda peddled by fired former Eskom CEO Brian Molefe and suspended Eskom acting CEO Matshela Koko on the limits and costs of accommodating significant levels of variable renewable energy capacity in the South African power grid.

Note: To ensure strict technical accuracy, significant parts of the text below, particularly the results detailed, are taken directly from wording in the report.

Click here to download the full report

The study and associated report was prepared for the South African Department of Energy (DoE) and Eskom, and commissioned and funded by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) under the DoE’s South African – German Energy Programme (SAGEN).

The study was conducted by international engineering consultants Dr.-Ing. Markus Pöller and Marko Obert, of Moeller & Poeller Engineering GmbH (MPE), and was published in South Africa in September 2017.

The study report is entitled Assessing the impact of increasing shares of variable generation on system operations in South Africa – a flexibility study”.

Here is the full article.

New study points to 90% renewables mix being least cost by 2050

Engineering News, Dr Tobias Bischof-Niemz, 15 September, 2017.

ew analysis conducted using updated cost assumptions for solar photovoltaic (PV), onshore wind and batteries shows that the share of renewable energy in an electricity mix that would also be the least cost for South Africacould grow to above 90% by 2050.

Such a portfolio, the study indicates, will be 30% cheaper than the generation mix currently outlined in the Draft Integrated Resource Plan (IRP) Base Case, published by the Department of Energy (DoE) in November 2016.

The analysis represents an update of the least-cost mix presented in March by the Council for Scientific and Industrial Research (CSIR) in response to the DoE’s call for public comment on the IRP Base Case.

In the March response document, the science council argued that the least-cost mix to meet a projected 2050 demand of 522 TWh would comprise more than 70% renewables, with the balance of the energy arising from coalgas and hydro. Such a mix was calculated to be R75-billion a year cheaper than the one proposed in the Base Case and included no nuclear, which made up 28% in the Base Case.

(Ed. note: What will prevail in our energy decisions – corruption and vested interests, or common sense?).

Here is the full article.

EDITORIAL: Kubayi turns off energy future

BusinessDay, 7 September, 2017.

(Ed.note: The next capture, or misinformed, or something else is going on? Eskom’s obstruction HAS GOT TO BE STOPPED!!!)

SA’s world-feted renewable energy independent power producer programme, which attracted investments of R201bn in five years, looks like it is over as we knew it.

The programme was run as a competitive bid process, and over the four bid windows prices for renewable energy dropped dramatically, with wind power falling 55% and solar photovoltaic 76%. For bidders, which included the world’s big energy firms, the attraction lay in the certainty and comfort of investing in an environment in which there was a clear line of sight of the risks and the returns.

Bloomberg ranked SA in the top 10 destinations for renewable energy investment.

That all changed for good on Friday when Energy Minister Mmamoloko Kubayi kicked bid windows 3.5 and 4 – which have been in limbo for the past two years – even further into the future. While these bids will be signed by the end of October, they will not be commissioned until 2021.

An additional round of bids — known as the expedited round, which included the best projects from previous rounds that had not been selected – has been put off indefinitely.

More damaging than the delay was the fact that the minister slapped a price ceiling of 77c/kWh on bid windows 3.5 and 4. In doing so, she undermined the integrity of the competitive bidding process, which had already determined the power purchase price for each project, and hung a large question mark over any further bid rounds that might be held.

The investment certainty that had been the hallmark of the programme evaporated in an instant.

Investors will now be assessing what to do. Half of the wind projects in round 4 were below 77c/kWh, so these bids are still possible. For the solar photovoltaic projects a delay is not such a bad thing as they will get the advantage of hardware prices that are trending downwards.

So, while many of the projects could still go ahead, firms will think hard about participating in the future.

For makers of wind towers and solar panels, the situation is less easy to salvage. By putting off future rounds that had been envisaged just two years back, the outlook for manufacturers is bleak. Several have closed shop in SA during the impasse and more will follow.

Eskom’s argument against signing the outstanding power purchase agreements with successful renewable energy producers has been that it has an oversupply of energy. As economic growth has slowed and people and industry have migrated from the grid, demand has shrunk and excess supply has grown.

With its mountain of debt, Eskom needs to sell more electricity if it is to find some stability and sustainability. This is particularly so as new assets are completed and come on stream. But these dynamics have made it impossible.

Eskom has succeeded in stalling the independent power producer programme, but it will be unable to halt the energy revolution that is leading to the death of conventional power utilities all over the world.

Without the government programme, producers are still able to form direct supply relationships with customers, such as mines and big industry. Increasingly, they are doing so.

The cities also want to buy renewable energy directly from producers, reducing their reliance on Eskom and finding sources of energy that are cleaner and cheaper than coal. The City of Cape Town is in the lead and has taken the energy minister to court to compel her to provide it with the permission to do so.

No amount of anticompetitive or errant behaviour on the part of Eskom will be able to stop this movement.

The problem is not, and has never been, the independent power producers; the problem is Eskom.

Here is the sad and scary article