Are Power Cuts Looming?
It’s getting cold at night in South Africa, and power utility Eskom has a monumental task in keeping the power flowing. There is a tiny margin between peak demand and peak supply, and so ZA Confidential asked three of our leading commentators for their views on whether or not we will soon be enduring power cuts. Unfortunately, it seems it’s not a matter of if, but when, the lights will go out.
1. Mike Schussler from Economists.co.za:
Having had my own power out for four days, I must say that yes there will be power cuts – and the question is “how big and how many”, rather than “if”. I believe it will happen but not as bad as, say, in 2008 – and it should not take much of GDP away. But it will be a major hassle factor for households with more expenditure going to batteries, generators etc. I suspect though that, along with labour issues, this will be one of the two big internal brakes on the SA economy.
2. Dawie Roodt from the Efficient Group:
I am afraid I think we will have blackouts this winter. The reserve margin at Eskom is simply too small and a small hiccup will result in a power cut. Furthermore, I also think that the current projects are unlikely to come on stream on time -which means that blackouts are likely to be with us for at least two years more.
3. Chris Gilmour from ABSA Investments:
Let me begin by stating that I believe that Eskom CEO Brian Dames and CEO Paul O’Flaherty (if he stays) will do their utmost to ensure that the lights do stay on this winter and that we, the citizens of SA, are not subjected to rolling blackouts. But this winter, for the first time ever, we face a real and perhaps intractable problem. The combination of an extremely low (virtually zero) reserve margin, a maintenance schedule on our ageing power stations extending well into the winter season and the likelihood of a very cold winter could easily result in a situation where Eskom is forced to ration electricity via rolling blackouts (or in politically correct Eskomspeak…”load shedding”). It’s not something that Eskom will want to happen but unfortunately, due to a confluence of events largely beyond their control, the situation is dire. I hasten to point out that it is not as dire as it was in January 2008, when unscheduled and widespread rolling blackouts were the order of the day. Back in those days, what little coal that was left in the power stations was mainly a black slurry of coal dust and fine rock particles. Stocks had been driven down to an average of a few days due to a combination of cost-cutting and incompetence. But today at least we have plenty of coal – this season’s possible crisis will be caused not by Eskom’s incompetence but by bigger factors, such as not making the decision to build (new power stations) Medupi and Kusile until well into last decade – and by persistent quality problems and industrial action at both of these new stations. Medupi should have had its first generator up and running in May last year. Had that happened, the power station would now be adding around 1.6 Gw into the national grid and we wouldn’t be staring down the barrel of the power outage gun. But unfortunately, Medupi’s first generator will only begin producing in December this year, far too late to make any difference to this winter’s situation. Provided Medupi does indeed come on stream in Dec 2013, that should relieve the situation to an extent next winter but in reality, we will need to have at least half of the generators working and producing a combined 2.4Gw before we can even think about relaxing a little. Kusile’s first generator should start contributing to the grid from about 2015 and by then the immediate threat of power cuts should be lessened to virtually zero probability. I’m not a betting man but in the absence of a very mild winter and/or divine intervention, my money would be on there being at least some rolling blackouts this winter.
It is time to stock up on candles, get spare batteries for the torch, and load the flashlight app into your smart phone. I just hope we will all be happy having to watch our evening TV shows in the dark (bad joke I stole from Glen Campbell).
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