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South Africa Power Report Q2 2014 - New Market Study Published

New Energy market report from Business Monitor International: "South Africa Power Report Q2 2014"


Boston, MA -- (SBWIRE) -- 04/30/2014 -- South Africa's fledging power market has barely escaped the news of late as Eskom continues to struggle to supply reliable and stable power to the population and industry. Delays in bringing large-scale power capacity online and insufficient investment in the sector have left South Africa vulnerable to power shortages, evidenced by the recent rolling blackouts in March 2014. Although, the country's renewable energy industry is progressing well, the lack of inefficient base-load capacity and limited private sector involvement within the conventional power sector is likely to be a recurring problem for the country over the short- to medium term.

In 2013, electricity generation in South Africa stood at 248.97terawatt hours (TWh), representing a 1% increase on the previous year. Coal-fired sources of electricity accounted for 94.1% of this figure, and we expect that coal will continue to play a major role in electricity production during the course of our forecast period, rising by an average of2.51% to stand at 302.62TWh in 2023. Economic growth - we forecast real GDP of around 3% every year during our 10-year forecast period to 2023 - and demographics will both drive demand upwards.

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Some key trends observed in the South Africa's power market include:

- South Africa's state-owned power utility Eskom imposed rolling blackouts on March 6 2014, as according to the company, heavy rains made coal too wet to use in the country's power plants. This marked the fourth energy emergency in South Africa since the beginning of 2014, as the company called on industrial customers to decrease energy usage by at least 10% in order to avoid power cuts. - - Renewable energy is gaining popularity in the country. A number of projects have gone online over the last three months, including the 66MW Hopefield wind farm in South Africa's Western Cape, and the 50MW De Aar solar power project in the De Aar municipality. Furthermore, we have repeatedly commented on the interest the South African renewables market has generated among international renewable energy developers, something that has been absent in the conventional sector. Although the momentum behind the renewables industry is undoubtedly a positive for the country, without base-load conventional capacity in place, energy insecurity is likely to be a recurring problem. - - While we expect South Africa to remain heavily dependent on coal for electricity generation, an upside to gas-fired generation is growing as the country looks to diversify its energy mix. In particular we note that with Mozambique holding the world's fourth largest gas reserves, the prospect of South Africa building more pipeline-fuelled gas-fired capacity in order to help utility Eskom put an end to power shortages appears to have its merits, subject to heavy scrutiny of some aspects of the project.

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