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South Africa will not privatise Eskom

Minister of Public Enterprises Lynne Brown has ruled out the privatisation of basic services, such as the provision of electricity and water, and has said load shedding will continue for three more years. Until the “end-state” of Eskom was clarified “we can’t say what parts should go where”, said Brown, who was speaking at

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a media briefing ahead of her budget vote in the National Assembly on 14 May. Reuters reported on 13 May that South Africa was considering either partially privatising Eskom or putting up some of its assets for sale in order to secure funding for the power producer and resolve an energy crisis.Quoting a statement from the National Treasury, it said South Africa was considering ring-fencing and selling stakes in the state power utility as it sought to secure funding for the power producer and resolve an energy crisis.”Given Eskom’s constrained balance sheet and government’s constrained fiscal position, there is a need to explore all options,” the Treasury said. “Consideration is being given to ring-fencing and selling stakes in Eskom’s non-core businesses or power stations as well as into Eskom’s business as a whole.”However, Brown was emphatic that she did not believe one should change the state-driven ownership model “for now… until you know what you are working towards. You can’t make a decision [about] what happens to Eskom or any of the other state-owned companies [until then]”.

My long politician’s answer

Turning to what she called “my long politician’s answer”, namely the question of what could be privatised by the state, Brown said: “Basic services must be provided by the state. How private companies and the private sector interact with that is part of what we are trying to do now. [But] we must be able to remain in charge as a state, for want of a better word.”Turning to the troubled Eskom, Brown said that even “in the deepest difficult time” – apparently referring to load shedding – Eskom had been able to connect 160 000 households with electricity.”It [Eskom] can’t be driven by capital… or profit,” she said, noting that it was the state’s responsibility – through Eskom as a commercial venture – to carry out the developmental responsibility.While acknowledging that load shedding would continue for the next three years, the minister said that some Eskom achievements “seemed to have been lost in the avalanche of publicity about other matters”.”Today, I am very pleased to announce that the ramp-up towards full output at Medupi has passed the 700MW milestone. When fully operational by the end of June 2015 as promised, it will deliver the equivalent of more than 40% of the output of the Koeberg Nuclear Power Plant.”Scheduled maintenance of Koeberg’s Unit One was well on track and was expected to bring more than 900MW back to service by the end of May.

Eskom build programme

“Looking ahead I have tasked the leadership of Eskom to accelerate the completion of the build programme, with improved project management, contracting and increase the generation capacity of the existing fleet,” Brown said.The state-owned companies under her department – Eskom, Transnet, Denel, South African Express, Safcol and Alexkor – had combined annual revenues of over R200- billion, she said, and would contribute the lion’s share of the state’s investment in infrastructure of more than R330-million a day every day over the next three years.”In conclusion, I want to say that over the next five years the highest priority goals which the department and I are required to drive are set out in the National Development Programme-rooted Medium-Term Strategic Framework. Foremost among these are critical initiatives to lower the cost of doing business to stimulate job-creating growth and to increase the efficiency of the economy:

  • First, ramp up the electricity generation reserve margin from its current levels to 19% by 2019;
  • Second, increase the tonnage moved on rail from the current 207 million tons to 330 million tons by 2019;
  • Third improve the operational performance of sea ports and inland terminals by increasing the average gross crane movements per hour by 25% by 2019; and,
  • Fourth, use the Eskom and Transnet infrastructure development and replacement investment spend to drive the overall national investment rate to 25% in a way that crowds in private sector investment and creates opportunity for new suppliers and sectors.”

Source: SAinfo 


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South Africa: How green is ‘officially’ green?

Given the threat of both an energy and water crisis, President Jacob Zuma has encouraged the private sector to “go green”, with government now looking to increase the energy efficiency incentives on offer. But how green do you have to go to be considered officially green, and how will this be measured and rated?

“Support for green initiatives was also stated in the budget speech, but I believe that businesses still find themselves in an uncertain position as to what it is they’re supposed to do,” says Brian Wilkinson, CEO of the Green Building Council of South Africa (GBCSA).

Wilkinson adds: “The possibility of incentives for greater efficiency will certainly encourage more green buildings initiatives. But, there will need to be a clear measure of efficiencies for government to confidently and consistently award these incentives.

Businesses especially will now more than ever be looking for solutions to bring about reductions in operation and facilities management costs in light of, for example, Eskom’s recent announcement that they would be appealing for an additional 9,5% increase on electricity costs over and above the already approved 12%. Sustainable solutions are desperately sought.

“Green has become a new buzz word with many businesses and service providers claiming to be sustainable in their offering and operations. This focus on green building has demonstrated the need for a rigorous, standardised system that rates just how green projects are with tangible results to back up these claims. “

Fortunately, this system is already in place with the GBCSA’s Green Star SA rating tools.

“With these tools we can not only guarantee that businesses live up to their green building claims, but also assist with their endeavours to minimise their carbon footprint,” says Wilkinson. “With happier, healthier employees and existing of evidence significantly reduced operations and maintenance costs at greener buildings, the benefits of a Green Star SA rating are extensive.”

Building owners looking to achieve a Green Star SA rating can, together with their green building consultant, submit the necessary documentation to the GBCSA. “Independent assessors are employed to evaluate submissions and allocate points based on the green measures that have been implemented. Certification is awarded for 4-Star, 5-Star or 6-Star Green Star SA ratings,” Wilkinson explains.

Office, retail, multi-unit residential, public and education buildings, as well as existing commercial buildings are all catered for with rating tools designed specifically for the various projects. The GBCSA has also recently introduced a Green Star SA Interiors tool which focuses primarily on efficient maintenance and operations of interior fit-outs and caters for a broad range of tenancies, including office, retail and hospitality projects.

“With this tool the tenants have all the power, allowing each tenancy to have their own unique environmental design initiatives fairly and independently benchmarked. It rewards healthy, productive places to work which are less costly to operate and maintain and have a reduced environmental footprint,” he says.

For existing buildings, the Green Star SA – Existing Building Performance (EBP) tool covers the same environmental categories addressed in the Green Star SA new building tools but also places focus on the efficient operations and management of the building. This rating is only valid for a period of three years, to ensure the building is continually well operated and maintained and energy and water monitoring, management policies and plans are all required.

Wilkinson advises the most effective and simple starting point to check the performance of your building is the GBCSA’s Energy Water Performance (EWP) mini-tool. This tool benchmarks an office building’s energy and water consumption against an industry mean. So, if your asset compares poorly, you can be sure that investing in its electricity and water efficiency will bring worthwhile benefits to the building’s bottom line, attractiveness, and sustainability, and the environment too. While the EWP mini-tool makes up 40% of the EBP, it is also available as a separate certification.

“Green Star SA rating tools are comparable to those of other green building councils around the world, making them a reliable benchmark, not only across South Africa, but internationally too,” he says.

Source: African Environment


 

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SA’s long-term nuclear plan no solution to country’s short-term energy needs

South Africa’s national power grid will once again come under tremendous pressure this month as businesses and schools reopen after the holiday season, and will see electricity demands increase significantly. This follows the rolling blackouts experienced last year because of Eskom experiencing problems at its power plants and an ageing power system.
According to Vice President of Talesun Energy, Arthur Chien, the recent signing of a nuclear power cooperation deal between South Africa and Russia, which has been touted by many as a potential energy solution, is not a solution as this is a long-term strategy for the country. He says it is crucial that renewable energy projects are fast-tracked nationally, in order to counter electricity shortages in the short-term.
Chien explains that the construction of a nuclear station can take anywhere from five to seven years, whereas a wind farm takes about six months and a solar farm would take only 16 weeks from start to finish depending on its size.”South Africa’s electricity crisis was recently highlighted at the Medium Term Budget Policy Statement in October 2014 as being one of the main factors hindering growth and investments in the country and is largely the driver behind the recent signing of the nuclear power cooperation deal between South Africa and Russia to build up to eight nuclear reactors.”

Talking millions and billions

However, he says that nuclear power is not economically viable due to high costs needed to construct and maintain plants. “The cost to build a nuclear power station varies in each country. In the United States for example, a nuclear reactor could cost around $10 billion and repairs can also amount to millions of dollars. At the Palo Verde Nuclear Generating Station in Arizona in the US, last year, a leak inside the reactor cost $10 million to $15 million to repair. Solar farms on the other hand, are far more economical as the cost to build ranges between $300 million and $500 million and all that is needed is a large piece of land which receives a vast amount sunlight.”

Furthermore, Chien says that the running costs of electricity generated by a nuclear power plant are far higher than electricity generated from photovoltaic solar energy, as nuclear power plants run throughout the day and night, and according to the Brookings Institution, an American research NGO, they are 75% more expensive to build and run per MW of capacity than a solar-power plant.

Therefore continuing to operate nuclear plants prevents the large-scale integration of renewable energy into the electricity grid.” Chien refers to research conducted by Greenpeace, which states that nuclear also channels investment away from renewables where investment can make a difference in fighting climate change and that renewables can replace several times more of the carbon that is leading to climate change – for the same cost as nuclear and at a far faster pace.

Health and environmental risks

Chien adds that the health and environmental risks associated with nuclear power are also extremely high, especially for those who work in and live in close proximity to plants. “Nuclear power produces toxic waste which can be detrimental to people’s health, as well as the environment. Furthermore, the risk of a nuclear accident like that of the Fukushima meltdown exists and it is crucial to consider because of the effects, including increased levels of radiation in the area and contaminated food and water.”

In addition, he points to the issue of nuclear waste, which is created from the use or reprocessing of nuclear fuel. “This is difficult to dispose of and special remote areas have to be located and designated in order to dump the waste, whereas solar panels can be recycled. The cost to recycle solar panels is often included in the overall cost of the installation of solar panels, but this is not always the case when it comes to the disposal of nuclear waste.” Further, he says that as nuclear waste is able to remain radioactive for either a few hours or thousands of years. Chien says that there’s no wonder why countries such as Sweden, Italy, Belgium and Germany have started to phase nuclear power stations out, and countries such as Austria and Spain have enacted laws to cease construction on new nuclear power stations.”The recent 2014 World Nuclear Industry Status Report notes that the use of renewable energy will increase rapidly and that investment in renewable energy will prevail and will ultimately surpass investment in fossil fuel power stations and nuclear power plants.

“An indication that South Africa is heading in the right direction to overcome the energy crisis by means of an environmentally friendly, safer and more economical way, includes the rollout of Kalkbult solar plant in the Northern Cape, a Renewable Energy Independent Power Producer Procurement Programme project, which can already produce enough electricity to be consumed by approximately 33 000 households, lessening the carbon footprint in the area,”

Source: Bizcommunity


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South Africa industry group warns energy minister of reduced mine output

JOHANNESBURG (Reuters) – A South African industry group has told the country’s energy minister that further power constraints would lead to reduced mine output and plant closures, according to minutes from the meeting seen by Reuters.

The meeting, which took place on Tuesday, was between Energy Minister Tina Joemat-Pettersson and members of the Energy Intensive User Group (EIUG), an industry body that includes major mining companies operating in South Africa such as AngloGold Ashanti and BHP Billiton.

The ministry noted the meeting in a statement on Tuesday but provided few details about it.

South Africa is currently facing its worst power crisis since 2008, when rolling power outages cost the mining industry in the world’s top platinum producer billions of dollars in lost output and brought misery to retailers and households.

South Africa‘s state-run power utility Eskom [ESCJ.UL] last Friday implemented rolling blackouts in some parts of the country, the first such power cuts this year, and has warned that more are certain as demand threatens to outstrip its capacity to keep the lights on.

Minutes from Tuesday’s meeting obtained by Reuters show the minister indicated that she was exploring the idea of getting the private sector to reboot power plants mothballed in the past, such as those owned by local municipalities.

On the subject of Eskom‘s precarious financial situation, she was quoted as saying that the utility was “burning cash faster than it is making it” and that the company needed to rein in costs.

Even with a 20 billion rand ($1.7 billion) cash injection from the government and permission to raise electricity tariffs, Eskom has said it needs more funds to ensure liquidity.

The minister also said the high cost of diesel to run Eskom‘s open cycle gas turbines was unsustainable.

An Eskom spokesman said last week that if the cash-strapped utility was unable to purchase diesel supplies, it would lose 5 percent of its capacity and blackouts would then occur on an almost daily basis until the end of March.

Controlled power cuts are used to prevent a total collapse of the grid.

Source: Reuters Africa


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Thirsty SA on brink of water crisis

Durban – South Africans use 235 litres of water each a day compared to the international average of 173 litres – which is pushing the country into a water crisis that will, within a decade, rival the electricity catastrophe.

This is coupled with ageing infrastructure and a backlog of water delivery to communities because not enough money is being pumped into infrastructure.

This is the picture painted by the Institute of Security Studies in a report called “Parched Prospects: The emerging water crisis in South Africa” which was released last year.

The ISS focuses on all aspects of human security including poverty, development and resources.

The report said high use, coupled with waste, poor planning, abuse, and looming climate change, was creating the predicament.

In an interview Dr Jakkie Cilliers, a co-author of the report, told The Mercury that 60% of the 223 river ecosystems were threatened and 25% were critical.

“If we don’t start dealing with the water problem, we are going to get into a situation where the margins are going to get really tight and water restrictions will be severe.”

Cilliers said water management needed to be made a priority as there was insufficient capacity to build enough dams.

“Low and unpredictable supply coupled with high (and growing) demand and poor use of existing water resources make South Africa a water constrained country.”

With evaporation levels that are three times more that the low annual rainfall, South Africa is already the 30th driest country in the world.

He was doubtful about the policy interventions proposed in the latest National Water Resource Strategy. These included improving planning and management and increasing supply to meet growing demand.

“Unfortunately the government’s current plans to address our water inefficiency are not sufficient. There’s strong evidence of years of underinvestment in water infrastructure. As a result there is a backlog of communities who don’t have access to clean water coupled with the issue of ageing infrastructure,” said Cilliers.

Environmentalist Di Jones said the target for all South Africans to have access to clean water by 2030 would only be realised if water management was made a priority.

“I’m not against desalination and building of new dams, but I think we should first look at less costly measures to stretch the litres that we already have, and consumers must start saving water in their homes.”

Jones said upgrading the ageing infrastructure had to be a priority as it crippled the economy with millions of litres lost through leaks.

“Our dams need to be desludged to maximise capacity… Hazelmere Dam is said to be 37% full, but that’s not true because about 15% is sludge,” said Jones.

She suggested that industries and agriculture start using grey water instead of potable water.

A decline in demand is expected after 2035, but only in industry, thanks to the onset of renewable energy production which does not require water for cooling.

The municipal and agricultural sectors would increase demand because of rural-urban migration and the government’s plan to increase irrigated land by 33%.

To mitigate the strain on water systems, Umgeni Water has budgeted R5 billion for the next five years for six augmentation projects including raising Hazelmere Dam’s wall.

Also under construction is the R2bn Lower Thukela Bulk Water Supply Scheme.

“We are also looking into desalination, and feasibility studies have been conducted for two sites, in Lovu and Seatides (Tongaat),” said Umgeni’s Shami Harichunder.

Cilliers said desalination was costly at first and probably less viable because of the energy crisis. However, it would be beneficial to coastal areas and less expensive with new technology in renewable energy in the future.

Angela Masefield of the Department of Water Affairs and Sanitation conceded that some river systems were under strain.

“We are constantly monitoring demand to ensure that we can give citizens, industries and agriculture assurances that they will have water in the future.”

Besides climate change, Masefield’s other concern was the high level of non-revenue water lost through leaks, waste and theft.

In 2013 the WRC released a report on a study, conducted on 132 municipalities, which said about 36.8% of water use brought in no revenue. Of this, 25.4% was lost to leaks. This was similar to the estimated world average of 36.6% but was high in comparison to other developing countries.

“We sometimes find that even those who can afford to pay for water choose not to pay and then there are those who are ‘luxurious’ with water, resulting in the household usage being higher than it should be. This, coupled with illegal connections, results in the system being unstable,” said Masefield.

Source: IOL News