We are here today to mark a significant milestone in the building of the Kusile Power Station.
The boiler is the heart of the power station and the commencement of its construction is indeed a welcome event.
We have managed a delicate electricity supply and demand balance post the events of early 2008 and we have been able to avert the need for power supply interruptions, generally called load shedding, through increased vigilance and a heightened level of operational scrutiny and focus.
However, we are not out of the woods yet and we will be faced with an increasingly tight system until Medupi and Kusile, our two major base-load stations start feeding electricity into the national grid.
It will require a concerted effort from all South Africans over the next few years to use electricity efficiently and effectively to ensure we are able to maintain a secure supply.
We have persisted with the conviction that we cannot do this alone; we need the contribution and effort of every single South African, together conserving energy, using it sparingly, efficiently and effectively.
We are working closely with Eskom to explore additional interventions to release space for crucial maintenance to be done as well as to enhance our reserves during critical periods such as the one we are currently in, being summer, when planned maintenance of our power stations is ramped up to make sure we have the maximum available capacity over the winter period.
It is crucial that we ensure that South Africa’s economic growth is not constrained due to a shortage of available electricity supply as the provision of sufficient electricity is essential to support economic growth as well as the developmental imperatives of the country.
Government’s Integrated Resource Plan for Electricity, approved earlier this year forecasts that electricity demand will in fact double from current levels by 2030.
Eskom’s current approved build programme started in 2004 and is projected to deliver some 17 000 Megawatts of new generating capacity and 4 700 kilometres of new transmission lines upon its completion.
Eskom has already brought 5 381 Megawatts and 3 531 kilometres of Transmission line into service since 2004.
The build programme includes the construction of new base-load and peaking power stations as well as the return-to-service of old power stations previously mothballed, upgrades to the current fleet and the construction of new transmission lines to increase capacity and to strengthen of the existing transmission network.
The construction of Medupi and Kusile is also going to bring with it new technology to South Africa as they will be the first of our power stations to utilise supercritical power generating technology in our country and actually on the continent.
For those of you that, like me, are not engineers, it just means that the temperatures that these new boilers will run at are very much higher than our current fleet and, once again, I am told that because of that, they are much more efficient.
The current Eskom approved capacity expansion programme is a massive undertaking and is without precedent in our country’s history given its size and the magnitude of the funding required to enable its completion.
In the context of the current global economic climate and the need for Eskom to raise an estimated R300 billion in debt to fund the programme, Government has come to the party with a loan of R60 billion and a guarantee framework of R350 billion to support Eskom in securing the necessary debt funding for its build programme.
Recently, our funding plan received a boost when both the World Bank and the African Development Banks came through and provided the loans that meant that the build programme is now 74% funded, and we need about R80 billion now to have the programme fully funded.
We are confident that we will be able to acquire the full funding we need to complete the build programme.
We have also, as a country had to accept a number of steep annual increases in our electricity prices in order to ensure that what we pay for our electricity properly reflects the cost of providing that service.
Without the recent price increases, it would not have been possible for Eskom to raise the required debt nor service its debt obligations and the entire build programme would have been placed in jeopardy and in turn, our country’s security of electricity supply.
We must not lose sight as well of the additional socio-economic benefits of such a large infrastructure expansion programme.
In fact, one of the job drivers indentified in the New Growth Path is through infrastructure development.
Eskom’s three new power stations alone will create nearly 40 000 jobs directly and indirectly. If you multiply that by four for the average family, some 160 000 people are directly impacted by the Medupi, Kusile and Ingula construction projects.
In addition, the economic impact of these capital projects on the surrounding communities will be significant. For example, it is estimated that Kusile will result in a 25% increase in Gross Domestic Product for Delmas.
Thousands of engineers and artisans are also being trained by Eskom and its contractors at the various build sites, meaning that thousands of people will have employable skills when the construction projects are completed.
I would like to turn now to the issue of coal-based power generation in the face of South Africa’s commitments to reduce greenhouse gas emissions and the hot topic of the day being the COP17 about to commence shortly.
The need to diversify our electricity generating mix away from fossil fuels has been accepted and is well recognised by Government and is evidenced by the IRP2010 which advocates a reduction in the contribution to our electricity generating portfolio by coal-fired generation from over 90% today to around 60% in 2030.
Whilst committed to the energy mix diversification and the development of a green economy as indicated in various government policies, we need to be mindful that we have a large coal-fired generation fleet that will be around for many years to come.
As a country, we are blessed with a large coal resource that we should not discount out of hand, lest we inadvertently place ourselves at a competitive disadvantage to other nations.
Research and Development must therefore continue into clean coal technologies including underground coal gasification and carbon capture and storage.
We must also not lose sight of the fact that Medupi and Kusile will be endowed with the most advanced emission abatement technologies available, including Flue Gas Desulphurisation, which come at a cost.
Kusile will be one of the cleanest coal-fired power stations in the world and will have very expensive state of the art technology that will reduce and in some cases eliminate harmful emissions.
Additionally, in a water-scarce country, Kusile will use water far more sparingly than our older power stations.
The recent signing of the World Bank Loan for Eskom’s wind and solar renewable projects is another step towards the migration to a more diversified energy mix for Eskom and testament to Government’s continued commitment to this process.
As we diversify away from coal as our primary source of electricity generation, we need to ensure that we do it responsibly and that we maintain an adequate and reliable supply of base-load electricity to power our growing economy and create jobs in our country and in the Southern African region.
We also need to be careful not to introduce technologies into our generation mix on a large scale that are yet to mature in their development and place unnecessary additional upward pressure on electricity prices without the commensurate benefits to the economy in terms of industrialisation, localisation, jobs and skills.
The COP17 Conference is an exploration of how the world can cooperate to develop a more environmentally sustainable energy system.
To align with this ethic, Eskom has gone the extra mile to implement a range of energy efficiency and renewable initiatives for the Conference so that, in a small way, we can bring the future to the present.
I commend Eskom for this effort.
On Tuesday, we shall be launching our Climate Change Framework for State-Owned Companies aimed at establishing achievable goals for the SOCs in relation to the overall National Response to Climate Change while maintaining an appropriate balance between potentially competing financial, economic, developmental and environmental objectives.
The Department of Public Enterprises, Eskom and the South African Government are totally committed to make the decisive shift towards the green economy and thus become a responsible global player and partner in terms of climate change mitigation.
In closing, while we are committed to increasing the share of Renewable Energy sources and the introduction of a nuclear energy fleet as directed by IRP2010, the delivery as planned of our two new state-of-the art, coal-fired power stations, Medupi and Kusile, the largest and most technologically advanced of their kind globally, is an integral part of our long term country plan for electricity provision and will be essential in our effort to secure our country’s electricity supply now and to provide for future growth in our economy.
I congratulate all those involved in the Kusile power station project for reaching this milestone and the commencement of the boiler construction.
I urge all of you to remain committed and focused and to not lose sight of the importance of the completion of this project on time and within budget to our country, its economy and our people.
I thank you.
Issued By
Ministry of Public Enterprises
19 November 2011
Speaking notes for Minister Gigaba: Kusile Boiler Construction Commencement Function
