We are happy to brief you again on the State of the System as we usher in the Summer Season.
The provision of adequate and reliable electricity remains an essential element of supporting the growth of our economy so that we may meet our developmental imperatives.
Until such time that Medupi and Kusile power stations come online, concerted efforts must continue to be directed at ensuring that the necessary maintenance at Eskom’s power stations is carried out whilst also securing the necessary demand and supply side levers to keep the lights on.
The key consideration in approving the “Keeping the Lights On Strategy” was to avoid any rotational load-shedding during this capacity constrained environment.
In this regard, significant progress has been made as Eskom’s efforts with the assistance from industry and customers, households and communities have been successful to avoid load shedding.
In the previous briefing, we had asked the country to do their part, together with us, in ensuring that the efforts to keep the lights on are realised.
We have implemented a public outreach campaign – the 49m campaign – in five provinces thus far and are encouraged about the way the public has been responding to our message, including the Power Alert messages we flight on television and adverts on radio.
We had a cold winter, including some severe snowstorms in August, which impacted on customers in parts of KwaZulu-Natal and Eastern Cape.
But Eskom was well prepared, and we thank the teams who worked around the clock in gruelling conditions to restore supply quickly.
Winter usually means that Eskom has to limit the amount of maintenance that can be done at power stations as demand for electricity is increased.
However, as we had committed during the State of the Briefing in July this year, as winter commenced, that contrary to the previous times when we did not perform any maintenance in winter, we were this winter going to perform limited maintenance to ensure that we reduce the maintenance backlog as we seek to eliminate the maintenance backlog by the end of 2013.
Despite this, significant progress has been achieved in the execution of the planned maintenance over the last quarter including the timely return of units to operation post maintenance as Eskom works on improving its maintenance practices.
The improvement of Eskom’s maintenance practices is a step in the right direction and this will go a long way in ensuring reduction of the maintenance backlog eventually ensuring long term security of reliable electricity supply, particularly given that our power stations are ageing, with a lifespan of between 30 and 49 years.
The backlog has been reduced from 36 units early last year to 20 and the target is to eliminate the backlog by the end of 2013.
We have given Eskom a clear mandate to keep the lights on – to avoid going back to the load shedding of 2008.
And Eskom is succeeding in delivering on our expectations despite the challenges.
Challenges with the system
The power system has experienced several challenges since the last briefing.
The performance of the power stations deteriorated quite significantly particularly during September.
This can be seen in higher rates of “unplanned outages” – that is, when power station units trip or perform at well under their expected capacity.
There have been a variety of causes but the root cause is that there still is not enough space to do the kind of maintenance which is required to make old plants more reliable.
The reduction in capacity of about reduction 900MW from 1550MW imported from Cahora Bassa due to a technical failure at the Songo substation in Mozambique and the scheduled refuelling of one of the Koeberg units, put added strain on the coal-fired power stations.
So too is the prevailing poor coal quality at some of the power station, particularly Tutuka, which has resulted in huge load losses.
To ensure that continuity of the progress made to date is sustained, the department will continue to monitor the implementation of keeping the lights on strategy on a weekly basis with the aim of assessing progress in terms of the procurement of additional initiatives and assisting with the reduction of the backlog.
As in the past, the support of big business remains a key lever in ensuring uninterrupted electricity supply, and as the department we will make sure that Eskom continues dialogue with big business as key stakeholders whilst not forgetting households and other electricity users in the process.
With the support of the department, Eskom continues to secure the Supply and Demand side levers to be used to meet and maintain system stability whilst performing the necessary maintenance.
These levers include:
- Extending some of the municipal generator contracts up to December 2013;
- A cross-border arrangement for 100MW that was concluded in the quarter;
- The 49M, 5-9 and Operation Khanyisa campaigns continue to raise awareness of the state of the system, and to encourage the efficient use of energy; and
- The continued campaign against illegal connections as well as electricity and cable theft.
Build Programme and Medupi industrial action
My department continues to monitor Eskom’s new build projects very closely.
Medupi, Kusile and Ingula are delivering very significant economic and social benefits for the communities in which they operate and for the country as a whole.
We noted the recent violent protest action by a small group of workers at the Medupi power station project that interrupted production and construction for about a week.
Within a week everyone was back at work and the site is back to normal.
Eskom is working with the contractors to make up for lost time and engaging both organised labour and contractors to address the concerns.
The support of local leadership and labour federations representatives has been important in ensuring a safe and orderly return to work.
There are 17 000 people on site at Medupi and almost half of them are from the local area.
The project has been very important in creating jobs and skills, and it will be important to ensure we as a country can capture the benefits of those skills in the future public infrastructure projects which are in the drawing board.
In addition, the department, together with the Presidential Infrastructure Coordinating Commission (PICC), will be embarking on a project that will result in strengthened oversight of large infrastructure projects and avoid past delays and mitigate risks.
This exercise will undoubtedly improve the monitoring of the current and future build projects under the Integrated Resource Plan.
The recent strike in the transport sector puts added risk to the system as it hampers the delivery of primary energy, particularly coal at the power stations.
Plans have been made and are being implemented to mitigate this risk.
However, I am deeply concerned about the industrial action that has kicked off in the coal mines which if it is allowed to go on longer, it will have a severe impact on the security of supply as well as commodity prices.
The sustainable price and supply of coal over the next five years is critical and has been cited as pivotal for the management of electricity prices going forward.
We urge the mining sector should demonstrate collective wisdom and leadership by resolving the workers’ concerns as matter of urgency bearing in mind the immediate impact they will have on productivity, the employment situation and the quality of life in South Africa as a whole.
This economy grew on the back of this sector which remains the highest contributor to the South African GDP.
It is important that the sector demonstrates commitment to the principle of distributive justice through an equitable and fair wage system.
It important that the industry places value to the national interest as this will have a serious impact on our economy through the transfer of prices of electricity to households and consumers.
Our economy cannot bear these costs.
I am deeply concerned about this
The above notwithstanding, I would like to urge the country to continue to support our efforts to keep the lights on, especially as we go into summer which will be even more challenging as it is maintenance season, when the demand for electricity is lower because of the warm weather, and Eskom must take advantage of that to take power station units out of service to do planned maintenance.
Without that regular service, the stations may not be reliable, especially, as we have earlier stated it, as the stations are older and will need more and more work done to keep them performing well.
In conclusion, the system remains very tight up to December 2013 in particular until Medupi and Kusile Power plants are fully delivered.
To abate the challenges facing the power system during this period, there is a need for cooperation amongst all stakeholders to ensure reliable electricity supply.
On our part, we shall continue to do all we can to ensure the country navigates through this period as carefully and successfully as we can.
I thank you.
