New Energy market report from Business Monitor International: "South Africa Power Report Q3 2013"

Boston, MA -- (SBWire) -- 08/06/2013 --South Africa's heading for a short-term power crunch, one that is going to have a negative impact on key industries as Eskom cuts off, or reduces, their electricity supply as part of a series of planned outages. The problems stem from South Africa's ageing power infrastructure. Typically, Eskom has held off on maintenance works during the winter months because domestic demand increases. However, in April 2013 Eskom announced that it could not put off improvements any longer - claiming that almost two-thirds of its power stations are past the half-way point of their operating lives - and it is calling on users to keep electricity consumption to a minimum during peak hours to reduce blackouts. On a longer timescale, Eskom is keen to fill the gaps in domestic electricity production capacity with power sourced from renewable, coal gasification technology and new nuclear power stations.

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South Africa saw its electricity generation potential fall in 2012, by 0.78%, with total electricity generated standing at TWh241.52. These losses were due to a drop in production from thermal sources, as nuclear, hydroelectric and renewable electricity generation all climbed during the period. Economic growth - we forecast real GDP of above 3% every year during our 10-year forecast period to 2022 - and demographics will both drive demand upwards however, and we calculate that electricity generation will climb by CAGR of 2.62% between 2013 and 2022. We forecast that South Africa will be a net exporter of electricity during this period.

Developments in South Africa's power market this quarter include:

- Eskom's Medupi power station - which has been subject to continual setbacks creating delays of around 33 months - faced a new blow in June 2013 when construction and civil engineering group Basil Read terminated its contract with engineering firm GAST, reportedly because of it had not completed work within the defined timescale.
- Eskom announced in June 2013 that it plans to invest ZAR1bn over the next five years in research into underground coal gasification (UCG) research projects. This forms part of Eskom's plans to diversify its electricity mix, with the goal of converting poor quality coal reserves into gas. Its commercial use is not expected before 2020.
- Eskom launched a campaign encouraging electricity users to 'beat the peak' during the winter months, in an attempt to reduce the incidence of planned and unplanned outages as it undertakes maintenance work on its power stations. Eskom has also revealed it has invoked its right to disrupt the supply of electricity to BHP Billiton's aluminium smelters, in case the electricity is needed for domestic use.

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