Background to energy sector


 

Figure: Eskom power plants from 1923 to 2015 [Eskom]

As a result of a relatively energy intensive economy, many industries are dependent on a reliable supply of electricity, where an industrial sector consisting of industries such as the mining and manufacturing industry contribute to 60% of the demand [Spalding-Fecher & Khorommbi, 2003]. As a result of an overinvestment in electricity in the 1970s and 1980s, which can be tracked back to the 1960s where South Africa experienced a boom in the mining and the heavy metals industry, which led to a significant increase in the energy demand. The additional supply that was built during this period forced the government to have to mothball some of the existing plants or electricity was simply sold at a cheap service charge. In a response to the oversupply, the construction of new generation came to a complete halt and where no newly constructed power stations were seen for the next two decades [Etzinger, 2013].

During the early 2000s South Africa experienced an expansion in their infrastructure development as a result of a booming economy, where the large excess supply and reserves in the energy capacity were depleted, whereby Eskom realised that additional generation capacity were required. Due to the delays in the planning and decision making process, reserve margins came to critical point after which unplanned maintenance in 2008 resulted in shedding of power on a national level. This caused severe damage to the local economy and exacerbated the effects of the global financial crisis [Davidson et al., 2010; Etzinger, 2013; EIA, 2013].  Essentially, this event may be viewed as the point in time where decades of economic growth had finally managed to consume all the surplus electricity built during the 1970s and 1980s.

References

Davidson et al. (2010)

EIA (2013)

Etzinger, A. (2013) ‘Eskom Generation and Transmission Expansion Plans’, paper presented at the Steel Future Conference, Sandton Sun Hotel Conference Centre, Johannesburg.

Spalding-Fecher R, & Khorommbi, D (2003) ‘Electricity and Externalities in South Africa’, Energy policy 31 (2003) 721:734