From Iran Paper...

From Iran Paper today
http://iran-daily.com/1386/3050/html/energy.htm
Energy Crisis in S. Africa
South Africa has plenty of energy available. The problem is, it does not have enough power. Some of the country’s biggest businesses have been queuing up to sell power to Eskom( Electricity Supply Commission). The potential power on the table--all 5,000MW of it--is almost equivalent to two Koeberg-sized nuclear power stations, Mg.co.za.
To put this into context, the rolling load-shedding that has been causing so much distress to so many results from power shortages of about 3,000MW.
If you scratch the energy sector, speaking to players large and small, a picture emerges of any number of players who are keen to supply energy to Eskom from sources as diverse as hydro, diesel generators, biogas, biomass, wood and solar.
The problem, they say, is that monopolist Eskom is prepared to pay only half of what it charges for electricity.
Investors say they also need certainty. They could build capacity now at relatively high cost only to find Eskom refusing to purchase their power when the crisis eases.
These alternative sources are generally more costly than coal-fired power, but many are kinder to the environment. Another advantage is that it would be relatively quick to construct the necessary infrastructure, unlike the 10 years it takes to construct a large power station.
Much of this alternative electricity is being produced anyway, as part of industrial processes as diverse as sewage processing, sugar refining and paper-making.
It appears that much of this electricity could have been fed into the national grid by now, but this has been held up by red tape, price disputes and reluctance to sign on new providers.
Large projects involving hundreds of megawatts of electricity are under discussion.
There is also scope for relatively small-scale renewable energy projects to make a dramatic contribution to the grid. Government has been working on an approach intended to encourage small users of clean energy to supply the grid. As is the case in a host of countries internationally, suppliers of green energy are paid a special feed-in tariff (FIT) to encourage the development of new, cleaner forms of energy.
One source says about 5,000MW could be generated through the use of FITs.
There were hopes that a new dispensation to encourage FIT’s would be announced early this year and that it would contribute towards diversifying energy supply from Eskom’s clutches but, the source says, the process remains in a muddle somewhere between the regulator and Eskom head office, with signs that the provision of renewable energy may also be controlled and monopolized by Eskom.
Legally, electricity producers may only sell to Eskom or to municipalities distributing electricity.
The relatively large projects under discussion are known as co-ðgeneration. This power comes from a range of sources. Tongaat-Hulett and Illovo produce electricity from sugar bagasse, for example, while four of Sappi’s eight mills produce electricity. Methane can be collected from sewerage works, and small businesses can run diesel generators. Pooling all of these sources could potentially save the cost of a new power station.
Co-generation has been discussed for the past few years, with little progress. The sticking point until now has been the price. Although much secrecy surrounds the proposed pricing for co-generated power, the price has been based on the avoided cost to Eskom of generating coal-fired electricity. Because Eskom produced the cheapest electricity in the world, and had not invested in new stations until now, there was not much scope for private sector production, said Frost analyst Cornelis van der Waal.
But steep increases have been granted for this year and Eskom is making new investments.
But electricity regulator Thembani Bukula of Nersa says that prices agreed on for co-generation would also take into account the cost of production. The tariff Eskom is allowed to charge its consumers also includes a “reasonable return“, which is currently 8 percent, but Bukula says co-generators would be granted a higher return. At present, he said, the price of co-generation “does not look prohibitive“.
FITs, which are associated with renewable energy, are still under discussion.
Bianca Belinska, from Nersa, confirmed that the regulator is considering Eskom’s proposal whereby 50 percent of the renewable energy required by the country would be supplied by Eskom, and the remaining 50 percent would be bought from independent producers by Eskom. South Africa needs to source 10,000 gigawatt hours of electricity from renewable sources by 2013. Currently, this is being modeled on a mix of wind and concentrated solar power, she said. She said discussions were continuing between government, the regulator and Eskom on these issues and all proposals were being considered.
Electricity from co-generation projects could be added to the national grid in 2009, said Bukula, and Eskom is expecting to tie up agreements by June. So far, just one agreement has been signed, with Sasol.
An incentive program for solar water heaters could significantly reduce demand, as the equivalent of a large power station (2,000MW) is used to provide hot water to the domestic sector alone. Once the effects of co-generation, renewable power and reduced demand through solar heaters are pooled, there should be no power crisis.