News analysis: South Africa's power problems to persist in short term: experts

With South African industries and schools reopening this week after a festive season break, the country braces for renewed power outages.

Energy experts said due to constraint generation capacity of the monopoly power utility Eskom and delay in construction of new power stations, power shortage will persist in South Africa in the foreseeable future.

Eskom spokesperson Andrew Etzinger said recently the country's "power system remains vulnerable" and urged South Africans to "pull together over the next few months and use electricity sparingly at all times."

South African energy expert Chris Yelland said in an interview with Xinhua that the week would be "testing" and any further generation failures could be disastrous.

Analysts said South Africa's electricity supply problems, which are inhibiting economic growth and disrupting daily lives, can be traced to a government decision in the 1990s not to build more power stations. Eskom has also been dogged by a maintenance backlog, skills shortages and financial difficulties.

In addition, an ambitious, multi-billion dollars building program, which belatedly began in 2007, is behind schedule and over-budget, prompting analysts such as Yelland to predict an unstable power supply for up to four years.

Eskom's financial problems are compounded by the need to run expensive, diesel-powered turbines as emergency back-up for faltering coal-fired power stations. Etzinger told a Johannesburg radio station in December that diesel was costing 2 billion South African rands (173 million U.S. dollars) a month, equal to Eskom's annual budget for diesel. In addition, Eskom is compelled to sell electricity at prices below its operational and capital costs.

Yet South African consumers have been resistant to a spate of tariff increases, which have all been well above the inflation rate of 6 percent.

Yelland told Xinhua that this meant Eskom's financial outlook was harmed by declining sales and increasing costs.

Inadequate maintenance of existing plants has led to breakdowns, resulting in power outages which have seen electricity-dependent industries curtail their operations or delay expansion plans. Sectors most affected include South Africa's mining industry, which suffered heavy losses in 2008, during the country's most severe blackout.

Since November 2014, South Africans have been subjected to regular warnings about "load shedding," whereby power supplies to certain areas are switched off for a set number of hours, in accordance with schedules published on websites. However, there are regular complaints that the published schedules, which vary according to the severity of the threat to the national grid, do not coincide with actual power cuts.

Thus the planning of business and domestic routines is disrupted. Traffic, which in most South African cities is controlled by electric-powered signals, is also affected.

Hopes for relief from the crisis are pinned on the construction of two huge coal-fired power stations, which are both behind schedule. Other plans include international deals for nuclear power stations, the introduction of significant independent power producers, and greater use of renewable energy sources such as solar power and wind turbines.

However, for the foreseeable future, South Africa will continue to rely primarily on coal for its electricity supply, according to Yelland.

While 80 percent of South Africa's electricity is derived from coal, the country also has two nuclear reactors at Koeberg near Cape Town, generating about 5 percent of the nation's supply. In several speeches during 2014, the South African government indicated it intended to make greater use of nuclear reactors.

Preliminary cooperation agreements have been signed with entities in China, Russia, the U.S., France and South Korea, regarding the provision of nuclear power. A similar agreement with Japan is pending, according to the World Nuclear Association. Yelland described this initial phase as a "beauty parade," a prelude to any serious negotiations.

The South Africa government has declined to indicate who the favored contractors might be, or how a nuclear building program would be financed.

Eskom is in poor financial health and could not afford to build nuclear power stations, Yelland told Xinhua.

South African Public Enterprises Minister Lynne Brown told the country's Mail & Guardian newspaper on Friday there was "pressure on the company's liquidity position."

"Eskom will run out of money by the end of January," she said.

South African economist Dennis Dykes, said on Sunday that the economic effect of South Africa's electricity problems will be worse in 2015 than in previous years. In 2014, Eskom's woes slashed South Africa's growth rate down to 1.4 percent.

"This year it's a different situation. It's negatively affecting the retail sector, it's much more across the board and it's much more immediate," Dykes said.

Earlier economists had predicted the South African economy could grow by 2.5 percent in 2015. However, Dykes said the Eskom crisis "certainly has the potential of hurting growth, anything between half a percent to one percent of GDP."

The Medupi power station, which is under construction at Lephalale, in the country's Limpopo Province, will consist of six boilers, each powering an 800 megawatt (MW) turbine, thus producing 4800 MW, about 12 percent South Africa's power. Synchronization of the first unit (unit six) at Medupi was at one point supposed to occur in December 2013. However, several delays over contractual problems, labor issues and quality standards have seen that date pushed to mid-2015.

Another large power station, Kusile, which is being built in Nkangala District of South Africa's Mpumalanga province, will also consist of six 800MW units. While it is scheduled to come on stream in 2018, Yelland said this too was doubtful.

Yelland said there were no short-term solutions to South Africa's energy problems. The overall construction of the Medupi and Kusile power stations was running in effect 10 years late.

With a current net maximum self-generated capacity of 41,194 megawatts, Eskom claims to be one of the world's top 20 utilities in terms of generation capacity. The utility generates approximately 95 percent of the electricity used in South Africa and approximately 45 percent of the electricity used in Africa.

Eskom supplies neighboring countries Namibia, Swaziland, Zimbabwe, Lesotho and occasionally Botswana. They too are affected at different times by power supply difficulties in South Africa. Endi