Wednesday, September 3, 2008

SA needs to invest R1-trillion in energy

By Anél Powell, September 03 2008

It will take an investment of at least R1-trillion to prevent South Africa from becoming an energy-scarce country, says public enterprises minister Alec Erwin.

And the wholesale price of energy is expected to double in the next two to three years, meaning that consumers can expect to pay more for their electricity.

"The price of energy is inescapably rising and it won't come down," said Erwin.

Speaking at a Cape Times/ Safmarine Business Breakfast briefing on Tuesday, Erwin made a strong call for greater energy-saving initiatives. These were "the only" solution to the growing need for supply and increasing costs of energy, he said.

"There is no quick fix, but we can alleviate the problem with energy efficiency."

Erwin acknowledged that the recent supply problems and load-shedding disruptions had become familiar challenges in South Africa.

But he said the energy crisis was a global challenge. Many countries were struggling to attract investment for renewable energy and there was a global shortage of equipment for energy generation.

Erwin admitted that the government had not taken into account the costs and problems of not having an excess capacity of power. When faced with a greater demand than it could supply, Eskom struggled to supply consumers with sufficient electricity.

But the government had learned from these challenges. Lessons included the importance of cost-effective energy costs in line with inflation, and the need for a greater co-generation of electricity to alleviate the pressure on Eskom's power grid. Erwin said there needed to be more long-term investment in energy.

The focus in the next few decades would be on strengthening the system to improve distribution capacity and on the diversification of energy sources. "Solar energy will play an important role, but wind will play a lesser role," he said.

The government would continue to increase its nuclear capacity. "We have little option but to go this route,"

Erwin said the debate about the benefits and risks of nuclear energy was an ongoing one.

"But we must not debate too long. Everyone is doing it."

He said there was an international race for equipment needed for nuclear power. A delay could result in a 10-year wait for new equipment.

Short-term solutions in the next two years would be to improve energy efficiency and add capacity.

"If we can effect a 10 percent saving target, the reserve margin will be above 15 percent by the end of next year," said Erwin. The reserve margin is now about 4 percent.

He said the City of Cape Town had managed to maintain a 10 percent saving for at least a year. A low reserve margin of energy placed a strain on ageing equipment that was already susceptible to technical problems.

Erwin said the main energy saving was coming from the industrial sector.

This article was originally published on page 4 of The Mercury on September 03, 2008