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Companies planning to go off the grid

Anglo Platinum, Sibanye-Stillwater, Makro and the City of Joburg are loosening their ties to Eskom.

Forward-thinking businesses in SA are now starting to confront life without Eskom by putting plans in place to generate their own energy.

Anglo Platinum and Sibanye-Stillwater are two high profile companies at an advanced stage of planning for solar plants to generate their own electricity. The City of Joburg wants to cement a deal with Harith-owned Kelvin Power Station to purchase power as a way to prevent load shedding, which has done incalculable harm to businesses in the city.

Other companies are further advanced in their plans to reduce their dependence on Eskom power. In 2016 Makro erected solar panels on the roof of its Makro Carnival store on the East Rand to generate 60-80% of its energy needs during the day, equivalent to 30% of the store’s annual energy needs. Many smaller businesses have invested hundreds of thousands of rands in generators to serve as back-up power sources in the event of outages.

‘No plan’ from government

In his state of the city address last month, Joburg mayor Herman Mashaba said load shedding would be a reality in the coming years, and the national government had not come up with a plan to solve it. Though Eskom has attempted to block the city from sourcing electricity directly from Kelvin Power Station, Mashaba said he was looking at legal options as well as a direct approach to Kelvin over the prospect of securing a supply contract.

Kelvin has a 600 megawatt (MW) capacity, but is currently producing just 200MW, and even that will be shut down within the next two to three years. One of the options being explored is the installation of gas turbines from about 2023 onwards to ramp up output to the original design capacity of 600MW, pending the availability of a reliable gas supply. This is still just a fraction of Joburg’s total electricity consumption, but sufficient to prevent most of the outages experienced by businesses over the last six months.

The City of Joburg’s 2018 financial results show a 6% drop in electricity sales. Though some of this was due to outages, there is also evidence of businesses switching to alternative energy sources, according to Ratings Afrika’s latest Municipal Financial Sustainability Index (MFSI) for 2018.

Read: Municipal sector faces collapse – Ratings Afrika

Des Muller, MD of energy advisory group NuEnergy Developments, says there is a direct correlation between SA’s declining economic growth and the commencement of electricity blackouts starting in 2007.

“Stable and sufficient electricity supply is a precondition for any growing economy, and there is plenty evidence from around the world that those countries that can guarantee reliable power at a good price are those countries that grow the fastest,” he says. He warns that South Africa’s electricity challenges will remain in the foreseeable future and companies need to be prepared, but urges taking sound independent advice before plunging into self-generation solutions.

Aluminium businesses have already left SA

In 2012 Eskom paid energy-guzzling aluminium smelters to shut down furnaces so it could redirect power for use elsewhere in the economy. This has driven energy-intensive businesses to other countries in the Far East where power supply is stable and affordable.

As part of its medium- to long-term energy management strategy, Sibanye-Stillwater is pursuing the first 50MW phase of its solar photovoltaic (PV) project to be built on a site strategically placed between the Driefontein and Kloof mining complexes on the West Rand. “The project, originally envisioned in 2014, represents a partial solution to securing an alternative electricity supply, representing approximately 3% of our total electrical energy requirements in SA, and enables the power generated to be fed directly into the mine’s electrical reticulation while reducing our overall electricity expenditure and carbon footprint,” says the group’s head of investor relations, James Wellsted.

“We cannot disclose costs of the plant or the cost of the electricity through the PPA [power purchase agreement], however, we can state that solar PV power offers a cost-effective alternative to Eskom already.”

Sibanye-Stillwater ran a competitive tender process to appoint a developer to build, own and operate the project, and sell power back to the mining group through a PPA. This approach has a minimal upfront capital requirement for Sibanye-Stillwater and allows capital to be prioritised for core mining projects. The tender was successfully concluded in 2017, suggesting a significant forecasted return to Sibanye-Stillwater over the course of the agreement. Although several regulatory delays (including policy uncertainty and contracting issues relating to Eskom) were experienced in 2018, resolutions are expected to be reached in 2019. A decision to proceed with the PPA will then be made.

AngloPlat still to make final decision

Though Anglo Platinum has yet to make a final investment decision, it is exploring a 167 gigawatt hour (GWh) per annum solar PV plant at Mogalakwena, representing roughly 21% of its annual 777 GWh consumption.

Anglo Platinum says it wants to optimise the value of its overall portfolio, including improved energy management and planning for future energy sustainability in response to rising cost pressures in the mining sector. Efficiency measures have been implemented since 2013; however, this is not enough to counter the projected cost increases and the requirement for sustainable energy.

In 2017 the mining group started formalising its alternative energy strategy by transitioning to sustainable energy sources that reduce carbon emissions and provide predictable cost and energy efficiency.

Anglo Platinum is considering one of two options for the project development: the IPP option, or to self-build, own and operate.

These projects require a generation licence from the National Energy Regulator of South Africa (Nersa) and exemption from the minister of energy.

The mining group says it is currently negotiating land sites, host-community participation and Mining Charter 2018 compliance.

Based on current progress, the solar generation plant should be operational by mid-2021.

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Eskom most probly has not work this one out – if eskom’s electricity generating is unstable, unreliable and produced not at the most economical way possible (that is including cutting back on the 100% overstaffed organisation while producing less electricity than 15/20 years ago and cadre / bee deliverers sub- standard input but is paid for the real McCoy) the eskom is for sure doomed – private sector / investors simply wants stability and will find it somewhere else like generating own electricity. Worst for dear eskom is that they deliver only 1 product, electricity, and can not fall back on a 2nd or 3rd product to reduce the damage they have absolutely done to themselves and the whole south africa due to incompetency / incapacity to the core of this once proud sa organisation. I still would like every eskom’s employee’s job description and see how it is measured against his/her performance in relation to the salary earned. Doesn’t matter how you look at eskom – they have and still are costing sa dearly / a failed organisation on its way out

Quite a lot to unpack there, but I have to ask a question for my understanding: what does it mean to be 100% overstaffed? how do they get to 0% (over)staffed? By firing 100% of their staff or 50% of their staff?

If you invest a thousand rand, and make a thousand rand profit, you have made a profit of 100%.
If you have 100 workers, and you only need 50, then you are 100% overstaffed.
Simple grade 3 arithmetic.

Silly remark. It simply means they employ twice as many people as required. A 50% overstaffing would imply 50% too many personnel, etc.

Jaaa boet. Tough at the top-or is it bottom. Ask the vastly overpaid employees. Overstaffing is really called employment of ANC voters and supporters by the ANC to get votes to stay in power to steal more tax money.But now they have been too greedy and the money she is finished and country bankrupt.

Joe elze, In your example you made 100% profit on your R1000 and now you have R2000 in total. But if I ask you what percentage of your money is profit, surely the answer has to be 50%. R1000/R2000 = 50%.

In a similar way, if a company has 100 employees and 50 of them are not needed, the company is 50% overstaffed. 50/100 = 50%.

QED

@MoneyChief

The company is 100% overstaffed. 100% over the desired employee count.

50% of the current employees are over-desired-staff-count employees.

So Eskom will sell less power and then push up the cost of electricity to make up the shortfall? Then more companies and other users go of grid and electricity gets more expensive. Eskom is in a death spiral. And the whole country is falling with them.

Poor Eskom with their militant workforce. The workers are protected by the labour relations act while corrupt executives are protected by the legal system. To add insult to injury their customers don’t have to pay them. Viva ANC.

Eskom is overstaffed and overpaid. It is no secret that employees are well paid. At the beginning of 2018 the Board indicated that there was no money for salary increases, but later succumbed to the unions` wage demands resulting in a wage increase way over inflation! They need to understand and realise that no work will result in no pay and no jobs!

for the last 5 days we in NW Jhb have had ongoing outages due to cable fault resulting in no power for up to 12 hrs per day . the matter was being “sorted” by subcontractors -they were absolutely useless, worse than Citypower . if private sector gets involved they must competent and not just AA/Bbeee
choms -all this does is put more fingers in
the cookie jar.

Eskom, you deserve what you get you fat, uneconomical political tool! Your militant workers will be useless when WE DON’T NEED your overpriced power anymore. Strike all you like! We’re used to it by now. The whole country hates you already anyway! Keep pushing it! Soon you will push it over the edge and there will be no tears when you and your workers who hold us to ransom are gone for good!

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