Despite negative publicity associated with load-shedding, tariff price hikes and the loss of senior management in the past couple of years, State-owned power utility Eskom might have reached a more secure state in 2016, consulting firm Frost & Sullivan asserts.
Frost & Sullivan energy and environment programme manager Johan Muller says, although Eskom has assured the public that there will be an oversupply of power over the medium term, as new projects, such as the Ingula pumped-storage scheme, are synchronised to the grid, privatising the utility could increase sustainability over the long-term.
He points out that the load-shedding situation has, to a degree, resolved itself, as not many market players have been experiencing it as much as in the past five years. This is not so much because of Eskom’s proactive activities, but rather as a result of a decline in South Africa’s economic growth from the predicted 5% to less than 1.8%.
“The current energy demanded from Eskom is below that of the 2007/8 consumption levels, resulting in a power supply equation that is unlikely to need load-shedding. Eskom has, however, played its part and new units of power stations are coming on line, which is also assisting in easing the load of demand requirements,” explains Muller.
Further, he notes that with regard to tariff price hikes, which have had a major impact on the South African economy and its global competitiveness rating, the general public now has a better understanding of the concept of cost-reflective tariffs owing to the raised level of sophistication of South African consumers compared to a decade ago.
However, price increases for the purpose of plugging financial holes arising as a result of bad decision-making on the part of the utility are unlikely to be tolerated. Therefore, it remains vital that the media continues to report objectively about the position of Eskom to keep the public informed.
Further, Muller points out that one aspect that the media has picked up on is the loss of senior management at Eskom, which can be attributed to multiple factors, from work-related pressures, as the utility is a “highly politically charged company” to the usual outflow of employees needing to retire because of long-service factors.
He points out that another matter worth mentioning is the dynamic change in consumer behaviour and the impact it has on power demand and electricity consumption. He highlights that it is worth appreciating the efforts of consumers to reduce their overall demand on the grid and adhere to the initiatives put forward by the utility.
“The drivers for this are economic and financial . . . coupled with Eskom’s ad hoc request for 10% savings, aimed at energy-intensive users during times when the network is under severe pressure,” concludes Muller.