Power crisis Q & A
Jun 27 2008 12:25PM
Fin24.com chats to energy expert, Professor Robbie Lindsay.
Lindsay lectures at the University of the Western Cape's physics department. He welcomes any comments on this article as well as contributions towards his car fund.
How did we get to this point?
Our electricity crisis is pretty much like my car situation. My 10 year-old Polo is starting to give problems. I can either live with the inconvenience of more and more frequent visits to the mechanic ("car shedding"), or buy a new car and be faced with the high monthly payments ("much higher electricity prices").
I know I should have been saving regularly during the last few years into a car-fund, but who can blame me since it's hard to live on the salary of an academic and how can you expect me to plan properly if a multi-billion rand organisation like Eskom did not plan either.
So the good times are over. The blissful time when I had paid for the capital investment in my car and the time that Eskom could rest on the laurels of their old paid-for power stations has come to an end.
How did the current power crisis come about?
I know we all want to know how our electricity problems are going to be solved, but to understand the present electricity problems, one needs to go back in time.
During the 1960's and up to the early 1970's, the use of electricity grew at a rapid rate along with the economy in SA. The oil crisis resulting from the Arab oil boycott in the early 70's caused by the Israeli/Arab war in 1973, was a major turning point in world energy use.
Eskom had been planning for continuing growth. It borrowed heavily (many of you will remember the Eskom bonds that were quoted daily as an indication of the price of borrowing money) and kept on building new power stations. The energy crisis led to the development of energy savings due to more energy efficient equipment and the slowing of economic growth in SA.
This left Eskom with a dilemma as big as the present one, namely a large oversupply of electricity.
The new power stations were mainly based on coal, with power stations built right next to coal mines in Mpumalanga: mines which also belonged to Eskom. Since it is easier and cheaper to transport electricity (via high voltage power lines) than transport coal, this was an efficient system, leading to SA generating the "cheapest electricity in the world".
In the late 80's and 90's, Eskom was then stuck with large over-capacity. It was in its interest to boost electricity use. Many readers will remember adverts on TV (I assume they are not shown any more!) enticing farmers to move to electricity.
Eskom was able to undercut any other supplier and municipalities that were still generating their own power, gave up and joined Eskom. The situation was different with Telkom. Whereas Telkom managed to dominate the market through a monopoly enforced by strict regulation, Eskom dominated by having a cheap product. Some power stations were mothballed and no new plants needed to be built.
During the 1990's, Eskom also tried to improve its political image by electrification of townships, including informal settlements. Whereas this was a great thing to do from a social responsibility and political point of view, it also had the bonus of getting rid of some of the oversupply. But, unfortunately, not by much, since most shack dwellers cannot afford the energy guzzlers such as geysers and stoves.
The more successful plan to reduce overcapacity was to entice high use electricity manufacturing to SA. This led to, for example, the Richards Bay aluminium smelter, despite the fact that bauxite, the raw material in the manufacturing of aluminium, is one of the few minerals that is not common in SA.
These smelters consume huge amounts of electricity and have been called a "way of exporting electricity". Eskom managed to get them built in Southern Africa by offering a much lower rate than consumers pay in SA - a decision that made economic sense at the time that it was done.
Eskom also decided not to make use of Cahora Bassa electricity from Mozambique, since Eskom did not need it, and rather exported electricity to neighboring countries wherever possible.
Meanwhile, the electricity demand kept on increasing. The Manuel/Mbeki policies led to sustained economic growth while the supply remained static. Something had to give.
Despite the supply still being enough to cover the use when all power stations are running, the system could not handle unforeseen shut downs caused by bolts in turbines and the like.
Where do we stand now?
So, the good times are over. We need new power stations and they will produce more expensive power than in the past and we are going to have to pay for it. Some old stations will be de-mothballed, but this also incurs considerable costs, especially to make them cless polluting. It is not logical to complain about load shedding AND the huge price increase, as do many of the callers I hear on the radio talk shows.
Nor is the problem due to the Eskom engineers that went to Perth and were replaced by affirmative action employees. In my drawer is an Eskom document from 1993 with a graph that showed that at a 5% annual growth rate, new capacity would be needed by 2008.
The problems may well have been exacerbated and brought forward by poor maintenance, lack of expertise and coal supply issues, but unless we had a major recession, the crisis was waiting to happen. The problems are made worse by the unequal use of power. Somehow none of us cook and shower at 04:00.
Part of the problem was caused by the tight supply. All these old power stations that had been ticking over merrily at 80 or 90% of their capacity, were now asked to produce 100% all of the time. The outcome was as predictable as the breakdowns that will occur if I should suddenly start driving my Polo at high speed for many hours per day.
A major complication that most commentators had not expected, was the coal problems. Just as the electricity supply started to get tight, the coal at many of the mines where the power stations were built, also started to run out.
This does not seem like a major issue, since coal is in plentiful in SA - we export huge amounts. However to get the right sort of coal to the very hungry, coal consuming power stations, is a logistical nightmare that the available trucks and roads cannot handle.
The only alternative to much higher electricity prices is for government to subsidise electricity. Then you, dear reader, will save on electricity and pay more tax. Most sane observers agree that electricity should become more expensive. That will encourage us to use less.
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