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State-owned utility Eskom, which supplies 95% of power in South Africa, has been forced to implement controlled blackouts to avoid a total collapse of the national grid due to its ageing, deteriorating and under-serviced power plants that are struggling to meet demand. This is costing the country between R8n and R20bn every month, depending on the frequency and severity of the “load shedding.”
Eskom continues to face cost pressures and according to the National Treasury, is owed R9bn by municipalities throughout the country. The utility has had to spend R1bn a month on emergency diesel supplies to help keep the country’s lights on and this has already depleted the R8bn profit Eskom announced in its interim financials at the end of 2014. Delays in construction and rising labour costs have meant that the cost of two new power stations, Medupi and Kusile originally estimated at R69bn and R80bn respectively, has increased to at least R154bn for Medupi and R172bn for Kusile. These financial woes have resulted in Eskom applying to the National Energy Regulator (Nersa) for a 2015/16 increase of 25.3%, inclusive of the 12.69% already granted for the current 2014/15 financial year.
Hope is being pinned on the generation of energy through renewable sources with the government planning to bring online 17,800MW from renewable sources by 2030. Through the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), a total of 79 projects with a capacity of 5,243MW have been approved to date, representing an investment of R168bn.
This report describes the current situation in the country, government’s attempts to ensure the reliable generation of electricity and factors influencing the sector’s success. The report also profiles 20 industry players, ranging from state-owned enterprise Eskom to small enterprises, Solarzone (Pty) Ltd and Darling Wind Power (Pty) Ltd, which are both involved in the renewable energy sector and employ ten people.