‘Billions added to economy’


The renewable energy programme has played a positive role in the reduction of load shedding and in turn benefited the South African economy, Eskom says.

The programme “added billions to the economy”, the power company said.

The Council for Scientific and Industrial Research (CSIR) has developed a methodology quantifying the net economic benefit of renewables, which includes solar photovoltaic (PV) and wind. This is achieved by calculating the benefits of reduced unserved energy (load shedding), as well as cost savings to Eskom through avoided coal and diesel burn.

These benefits are then offset against the total tariff paid to the renewable energy independent power producers (REIPPs), resulting in a net economic benefit or loss.

For the first six months of 2015, Eskom purchased 2.0 terawatt hours (TWh) of wind and solar photovoltaic (PV). The CSIR calculated a total financial benefit of R8.2bn. This was offset against the R4.3bn renewable energy tariff cost, resulting in a net economic benefit of just under R4bn.

Last year from January to December Eskom purchased 6TWh of renewable energy from solar PV and wind. Using the same methodology, Eskom calculated the total financial benefits, which amounted to R3.2bn. This was offset against the renewable energy tariff cost of R12.2bn, resulting in a net loss of R9bn to the economy.

This net loss to the economy will continue for as long as there is surplus capacity.

Eskom now has surplus capacity until 2021 and can meet any increase in demand.

The company has added a total of 5 568MW, adding an additional 15% capacity to the grid in the last two years. Additional capacity was added by improving performance and the commissioning of new build plant.

In the next five years, Eskom will add a further 8 304MW capacity through the new build programme.

Last year, rating agency Moody’s said: “The group’s financial ratios remain very weak as a result of rising operating costs, primarily driven by higher, primary energy costs and ongoing growth in power purchase agreements with IPPs, as well as the continued roll out of its large capex (where the benefit lasts longer) programme.”

Eskom said that it is committed to working with the government to address all issues highlighted by Moody’s.