The Challenge of South African Electricity

Electricity Abroad In the latest report in our series on international electricity markets, Vincent DeVeau looks at the unique challenges facing the electricity industry in the Republic of South Africa.

The Republic of South Africa is the continent's largest energy consumer and its second largest producer. Following the end of apartheid in 1994, the newly elected democratic government faced many challenges, none more pressing than the need to move decisively towards economic equality for South Africa's historically disadvantaged non-white majority. Huge strides have been made in education, health care, housing and many more areas of social responsibility, but income disparity has remained a pressing and intractable problem in which the electricity industry has an important role to play.

Eskom is the State-owned electricity utility of South Africa, and generates around two-thirds of the electricity produced on the whole of the continent. Eskom is extending its transmission grid north into neighbouring sub- Saharan countries, and currently supplies electrical power to Lesotho, Swaziland, Botswana, Namibia, Mozambique and Zimbabwe, in addition to serving its own domestic needs.

Eskom operates a total of 20 power stations, with a generating capacity of in excess of 35,000 megawatts, and owns and operates the national transmission grid.

Coal is the primary fuel produced and consumed in South Africa, which has the world's seventh largest amount of recoverable coal reserves - approximately 5 percent of the world's total. Thus, as you might expect, generation is primarily coal-fired, and accounts for 89 percent of Eskom's generating capacity. Eskom also operates a nuclear power station at Koeberg, two gas turbine facilities, two conventional hydroelectric plants, and two hydroelectric pumped storage stations.

The nuclear facility at Koeberg, commissioned in 1984, is Africa's only such installation. This 1,930- megawatt station is located near the major load centre of Cape Town, at the opposite end of the country from the primary coal reserves at Mpumalanga. The plant accounts for approximately 7 percent of the country's total electricity generation. Eskom are also planning the development of a smaller nuclear reactor, which uses new technology. The Pebble- Bed Modular Reactor (PBMR) will generate 110 megawatts of power while producing considerably less waste than a traditional nuclear plant of the same size.

As the South African government's white paper of 1998 pointed out, the electricity industry inherited from the apartheid government was "in many ways typical" of the overall South African economic infrastructure. "It has highly sophisticated production and distribution capabilities, developed under circumstances of economic isolation to meet the needs of the industrial sector and a privileged white minority," the white paper continued, while "the energy needs of the majority, the possibilities of regional integration, and the challenges of global competition, have only recently begun to be addressed."

At the time of the white paper, 60 percent of South Africans were without any access to electricity. At present, it is estimated that this figure has increased to 70 percent, which, although far short of the ideal, is still a dramatically different figure from that of the Southern African Development Community of which the Republic of South Africa is a member (together with Angola, Botswana, Democratic Republic of Congo, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, Swaziland, Tanzania, Zambia and Zimbabwe), where the average is only about 20 percent.

Nevertheless, nearly half of rural households in South Africa still do not have access to electric power. The National Electricity Regulator (NERSA) is charged with supervising Eskom's progress towards achieving government targets, and is also responsible for setting tariffs, which include a "poverty tariff" established in November 2001 that reduces electricity prices for the poor.

For the future, the South African Government plans to restructure Eskom in order to improve efficiency, and it is expected that most of Eskom's activities, with the exception of power transmission, will eventually be privatised. Eskom has worked towards establishing a sub-Saharan interconnected power grid - the Southern African Power Pool (SAPP). The Pool aims to promote reliability and economy by integrating planning and operation of networks in the region. The future may be looking brighter, but the challenges remain enormous. EM