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Electricity in South Africa a Mess – 25% Price Hike Each Year, Electricty Blackouts, Renewable Energy focus as 90% Coal Dependence

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South Africa the most economically developed country in the African continent is also is one of the most dependent countries on Coal Energy.Almost 90% of the country’s  requirements of Electrcity comes from GHG emitting dirty Thermal Power Plants.Sasol which is a leading energy provider in South Africa is the global leader in Coal to Liquid and Coal to Gas Technologies.In fact most of the Fuel Production in South Africa comes from Sasol plants built long time ago to take advantage of the country’s mineral rices and avoid the oil embargo placed on the country during apartheid.The country’s electricity situation is massively mismanaged with Eskom a monopoly producer and supplier of electricity hardly adding any capacity.This is due to low prices of electricity which now is being added suddenly at 25% each year.This comes after huge shortages slowing down the economy. South Africa has also come up with new Energy Plan which will largely replace Coal Energy by Nuclear and Renewable Sources of Energy.Note South Africa had been in talks to establish a massive solar plants with funding from China which would have used Suntech Solar Panels.

According to REVE,South Africa proposes to build 42 GW in new electricty capacity by 2030 and have a target of 42% from Green Energy sources.Out of the 42 GW only 15% will be new Thermal Power Plant capacity while 23% will be Nuclear Energy and the rest from Wind,Solar,Biomass and Hydro Electricity.Note South Africa has been facing major electricity shortages resulting in heavy use of high cost and high polluting diesel power.

South Africa faced massive blackouts in 2008 leading to shutting down of mines and factores.The country is facing a huge surge in electricty demand even as supply addition is limited.The country is facing the same situation again in 2010 with the country’s monopoly power supplier Eskom urging saving of electricity.There also has been a sharp price hike in electricity.

Electricity price hike in South Africa

Eskom generates about 95 percent of the electricity used in South Africa. The company has been battling with electricity shortage since January 2008, but its problems date a decade earlier and are due to lack of investment in new capacities and in updating the existing power stations. Last year, Eskom increased its tariffs by 31 percent and asked for 35 to 45 percent annual increases for three years in order to scrape together about R400 billion needed to build new power plants.

However, in February 2010 the National Energy Regulator of South Africa (Nersa) approved lower increases:

  • 24.8 percent for 2010/11 financial year, which will bring the average Eskom electricity price to 41.31c per kWh;
  • 25.8 percent for 2011/12, bringing the average Eskom electricity price 51.68 c per kWh; and
  • 25.9 percent in 2012/13, making the average Eskom electricity price 65.06c per kWh.

It is expected that Eskom will sign a cogeneration agreement with other power producers in March 2010, adding about one thousand megawatts to the national power grid. According to the data from January 2008, South Africa’s peak demand has reached 36,700MW, while Eskom is able to supply 38,500MW. The provider has to have reserve energy supply. International best practice dictates that power companies must have the capacity to generate 15 percent over and above what is actually needed.


Abhishek Shah

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