Eskom power purchase plan: will companies have the necessary excess capacity?

Eskom’s three-part power purchase program – aimed at securing 1,000 megawatts (MW) of power to support the currently constrained power grid – is a step in the right direction, but questions arise over whether the private sector will have the capacity to support it.

The utility’s supply plan, which it revealed on Monday, relies heavily on private companies to supply excess electricity to the grid, with the first two schemes – namely the standard supply scheme and the generator scheme emergency – seeing private companies offering Eskom both short- and long-term energy support when needed.

The standard offer program will allow Eskom to procure electricity from companies with existing generation capacity, at a pre-determined price for a period of three years. The emergency generator program will allow the utility to source power — albeit at a higher rate — from independent generators for shorter intervals.

However, while he welcomes Eskom’s decision to include the private sector in solving the country’s energy problems, independent energy analyst Roger Lilley doubts that the big companies will be able to meet the needs of the country. ‘company.

“I’m just cautious because it depends first on the private sector’s available capacity to supply Eskom in those sorts of quantities because that’s a lot of energy,” he told Moneyweb.

“A thousand megawatts is a lot of energy to have a surplus and so we’re going to be looking at very large organizations.”

Eskom noted that in its early stages the program will focus on generators capable of delivering more than 1MW to the grid.

Subsequently, the utility will begin to consider lowering the thresholds to allow small producers to contribute.

“Maybe if many of them [big companies] meet [it would be possible], but that’s not what Eskom is looking for. They are looking for contracts or agreements from one megawatt. I don’t know who’s gonna be able to come to the party with this right now, eexcept maybe some of the independent power producers who have put the infrastructure in place and who may have the surplus. So that’s probably the first place to look,” added Lilley.

SA will sign wind projects to facilitate load shedding
Eskom will procure additional emergency power to facilitate load shedding

Not an immediate solution

Eskom’s plan comes after the country was plunged into another round of crippling load shedding that subjected consumers and businesses to Stage 6 blackouts – the highest stage to be implemented until now on eight possible stages.

Stage 6 subjects the economy to between eight and 10 hours of power outages, with at least one in three sessions per day with four consecutive hours without power. According to the utility, this latest period of power outages, which saw the utility lose 6,000 MW from the grid, was necessitated by the continued failure of several generating units.

However, while the plan is a step in the right direction, it does not offer immediate relief from power outages, although the utility aims to start signing deals within this week. Analysts have warned that it could take time to get that independent power to the national grid, and likely longer for the utility to secure the 1,000 MW it needs.

Even if the utility is successful, securing the 1,000 MW will only provide enough power to reduce the intensity of the load shedding by a single step.

“It’s not going to solve our immediate load shedding issues. All it will do is give Eskom a bit of a break from some of the stressors on the network,” Lilley said.

“But that doesn’t mean they will stop load shedding immediately, at best we can hope for a step back from our schedule because one step is 1,000 MW.”

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Import Risks

The third part of Eskom’s supply plan, the bilateral electricity import programme, aims to secure electricity imports from neighboring countries. According to the utility, “several countries have expressed an interest in selling additional excess electricity to South Africa”, and this program will give Eskom the means to exploit this interest.

Eskom already imports an average of 200MW from its neighbors through the Southern African Power Pool, however, Lilley doubts the utility can get much more from its immediate neighbors and as such thinks it may need to look further.

This, however, makes the country more susceptible to geopolitical risks, much like those currently facing Europe.

“There are risks and on top of that you put yourself in the hands of foreign governments and we have seen what happens in Europe when they buy gas from Russia. Russia can just turn it off and they do.

“It’s definitely not a safe thing to do, but what else do you do when your back is against the wall?” Lilley adds.

Listen: Independent energy analyst Chris Yelland on electricity supply delays leading to escalating load shedding

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