Operating environment
The electricity supply industry in South Africa consists of the generation, transmission, distribution and sales, as well as the importing and exporting of electricity. Eskom is a key player in the industry, as its operate most of the base-load and peaking capacity. As noted earlier, the company sell electricity to a variety of customers, including to municipalities, who distribute power to end users under licence.
IPPs have been invited to participate through a renewable energy programme run by the Department of Energy (DoE). Potential players were shortlisted and successful bidders have been contracted to supply energy into the national grid owned by Eskom. All grid planning is done by the Eskom comoany, lines are constructed under specific licensing criteria and conform to a National Grid Code which is overseen and regulated by NERSA, South Africa’s energy regulator.
The Integrated Resource Plan 2010-2030 (IRP 2010) sets out South Africa’s long-term energy needs and discusses the generating capacity, technologies, timing and costs associated with meeting that need. The electricity market is regulated by NERSA in terms of the National Energy Regulatory Act, 2004. NERSA issues licences, regulates all tariff increases, provides national grid codes, etc.
“The National Nuclear Regulator (NNR) ensures that individuals, society and the environment are adequately protected against radiological hazards associated with the use of nuclear technology, and in our case, regulates Koeberg, our nuclear power station.”
The Independent System Market Operator (ISMO) Bill was a proposal to restructure the existing market, with one dominant player within a regulated market managing the overall value chain of electricity generation, transmission and the bulk sale of electric power. A proposed independent system operator, with or without transmission assets being incorporated into the structure, was considered in terms of legislation, but the ISMO Bill has since been retracted.
Eskom support Government’s proposal of drafting a new Electricity Bill, which will replace the ISMO Bill and will accommodate the entry of IPPs while allowing the System Operator to manage the current supply situation without extraneous distractions, thereby minimising potential interruptions to supply.
The Southern African Power Pool (SAPP) is made up of South Africa, Botswana, Lesotho, Mozambique, Namibia, Swaziland, Zambia and Zimbabwe, connected through an integrated grid.
Nature of Eskom Business and Customer Base
We operate as a vertically integrated company across a value chain that supplies electricity to both South Africa and the SADC region. Traditionally, as the main supplier of generation, transmission and distribution capacity, we supply to industrial, mining, commercial, agricultural and residential customers in South Africa. We also supply to redistributors (municipalities and metros), who in turn redistribute electricity to businesses and households within their areas.
We purchase electricity from local IPPs and electricity generating facilities beyond the country’s borders, in terms of various agreement schemes. We acknowledge the country’s need for electricity generation capacity from the private sector as soon as possible, in order to strengthen the system adequacy and meet the growing power demand, which is intrinsically linked to our ability to keep the lights on.
“We operate 23 power stations with a total nominal capacity of 42 090MW, comprising 35 721MW of coalfired stations, 1 860MW of nuclear power, 2 409MW of gas-fired, 600MW hydro and 1 400MW pumped storage stations, as well as the recently commissioned 100MW Sere Wind Farm. The 3MW Klipheuwel Wind Farm was impaired during the year as it had reached the end of its useful life. Although Medupi Unit 6 has been synchronised to the grid, it has not yet been commissioned and therefore not included in the total. We maintain 368 331km of power lines and substations with a cumulative capacity of 239 490MVA.
The company is also building new power stations and highvoltage power lines to meet South Africa’s growing energy demand. This capacity expansion programme is expected to be completed in 2024. To ensure that its able to meet demand and create the space for crucial infrastructure maintenance while new generating capacity is being built, we run a range of demand management and energy efficiency programmes.
During 2014/15, Eskom sold 216 274GWh of electricity to 804 municipalities in bulk, as well as to 2 773 industrial, 1 034 mining, 50 613 commercial, 83 136 agricultural, 508 rail and 11 international customers, and to 5 338 723 residential customers, which includes prepaid customers.”
