Eskom's Future Plans for Solving the Power Supply Problem

Eskom's Future plans for solving the power supply problem

Eskom, the public utility corporation, is the supplier of 95% of South Africa's energy has initiated a multitude of large scale investment plans, strategies and capacity increasing projects that will hopefully increase our countries' overall electrical capacity. One of Eskom's objectives are to have accessible electricity for the whole nation by 2012 (Oxford Business Group, 2008:84).

At the moment South Africa is in a position which is similar to that which we were in before the recession, it is expected that the growth of demand will remain 4% for the near future; if this is to be the case then an additional 2000MW of energy will have to be supplied per year and capacity would have to be doubled by 2025 to 80000MW. In the case of demand rising at a more drastic rate, or similar to the increase in growth of the economy, the overall capacity will be required to triple (Oxford Business Group, 2008:84).

Eskom currently has 13 coal-fired power stations generating a total sum of 32000MW of energy for South Africa, this is roughly 90% of the country's total energy that is supplied (Oxford Business Group, 2008:85). To deal with the power crisis at hand it is necessary to increase the capacity by a great deal, otherwise a decommission of a part of the country's capacity will have to take place. By 2025 Eskom would like to have taken 5000MW of the demanded energy out of the system – thus decreasing the load on the generation of energy supply, as the country is going to be in a very vulnerable position of power outages occurring for the next few years (Oxford Business Group, 2008:86).

Coal-fired power stations

Eskom has investigated a wide variety of possible solutions for the power crisis in which we find ourselves at this moment, and has in most cases already started implementing these strategies. Firstly it is important to keep in mind that power stations do not last forever and that physical depreciation does occur, therefore it is inevitable that older power stations will have to be maintained and replaced. During the 1980's 3 power stations (Camden, Grootvlei and Komati) were closed, these power stations are in the process of coming back online again. In the next year these will be back in production and will add 3600MW to the capacity of the country (Oxford Business Group, 2008:84).

Investment projects have already been started by Eskom to increase the capacity of South Africa, an estimated R150 billion is said to be invested into these projects over the next 5 years. According to NERSA (National Energy Regulator of South Africa) the system is in need of roughly R1 billion's worth of investments annually. Of these coal and nuclear project investments will offer the largest fraction of the new capacity and it will be supplemented by renewable factors such as hydroelectric energy. A large motion to establish new coal-fired power stations and to expand the nuclear energy industry, has already occurred and these projects are already in progress. Although solutions are already being implemented, Eskom might be forced to make different negotiations with or completely withdraw the regional supply agreements that it has with consumers in our neighbouring countries, Zimbabwe, Mozambique and Namibia. At this stage the main objective is to be able to provide sufficiently for our own country, South Africa (Oxford Business Group, 2008:84).

To deal with the increase in demand for energy it is necessary for new power stations to be established, as previously mentioned this is already underway; it has been planned that a new coal-fired capacity of 10000MW must be added. Presently Medupi, a new coal-fired power plant is being built in the Limpopo Province near Lephalale (Oxford Business Group, 2008:85). Medupi will be supplied with coal by the only large mine in the region of Grootegeluk by Exxaro. It is the first new coal-fired power plant being built by Eskom in roughly 20 years. Medupi will make use of super vital boilers, leading to operation at higher temperatures and better and more efficient power generation, the plant will be dry-cooled. It promises to add 4500MW of energy to the capacity and should be completed by 2015 (Shona Kohler, 2008).

"Eskom will not solve the county's electricity crisis by itself, Xstrata's Mick Davis told an audience at the Wits Business School" (Kevin Davie et al.,2010).

Another project which is underway under management of Eskom is the building of yet another coal-fired power plant, Kusile. Eskom and the government (its shareholder in these projects) have run into financial problems and have a shortage of finances for the completion of the Medupi and Kusile power stations (Kevin Davie et al.,2010). The debt which has been incurred was supposed