LISTEN | SA cannot afford Eskom's plans, encouraging the purchase of power at any cost — analyst

“It can never be feasible to keep the lights on at all cost because there is a limit to the cost you will be able to bare,” says independent economic and energy analyst Tshepo Kgadima. 

While unpacking Eskom's recently announced power purchase programme strategies aimed at securing 1,000MW to bolster constrained generation capacity, Kgadima said the plan was short on details.

The plan paid scant attention to what consumers will be expected to pay for energy. Criticising Eskom's requested 32.02% electricity price increase from the National Energy Regulator of SA (Nersa), he said SA's debt will increase while trying to bail out Eskom.   

It seems Eskom expects Nersa and, by extension, consumers, to throw money they do not have at the energy crisis. 

Listen to what he had to say: 

Eskom's suggested three programmes to procure extra power for the national grid are: 

1. The standard offer programme: to procure power from companies with existing generation capacity for three years. This approach allows Eskom to purchase electricity at an established price calculated at the avoided cost of own generation, including long-term energy purchases from independent power producers. The standard offer allows for a static price which is established each year based on the regulatory approved cost recovery and covers the variable cost of generation. It also allows for a dynamic price option where the price is set for each hour of the next day, indicating the avoided cost of generation based on internal scheduling of generators.
2. The emergency generator programme: to procure more expensive power during periods when the grid is significantly constrained. The programme allows for independent generators to provide energy daily to compete with the Eskom generators in the internal market. The independent generators will supply into the grid based on the offer price and availability provided.
3. The bilateral power import programme: to secure imports of power from neighbouring countries. Several countries have expressed an interest in selling surplus power to SA. The programme will provide a mechanism to access such opportunities. Eskom is already importing electricity from neighbours via the Southern African Power Pool, an average 200MW used to augment Eskom generation capacity when the grid is constrained.

For more episodes, click here.

Subscribe for free episodes: iono.fm | Spotify | Apple Podcast | Pocket Casts | Player.fm

Support independent journalism by subscribing to the Sunday Times. Just R20 for the first month.