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Generation of Electricity
BY Yasmin Mahomedy
South Africa
18 October 2017
R 14 400.00 (ZAR)  
estimated $ 1 127.52 (USD) *
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The Generation of Electricity


State-owned utility Eskom, which supplies 95% of the country’s power, has been plagued with negative publicity relating to increasing electricity costs, corruption and mismanagement. Credit ratings downgrades, financial instability and declining electricity sales have made the utility heavily reliant on government funding and despite the high upfront capital costs of nuclear projects, government plans to go ahead with the nuclear build programme.


Difficult Times


Although Eskom reported in July 2017 that its total revenue increased 7.9% to R177bn for the year ended March 2017, the utility’s profit declined drastically by 85%, from R8bn to R1bn. Net finance costs increased 82%, from R8bn to R14bn, over the year and the amount of money owed to Eskom increased from about R1.2bn in 2012 to R11.3bn in 2016. Overall electricity sales declined 0.2% with large decreases in the industrial and agricultural sectors of 3.7% and 5.7% respectively.


Progress in the Renewable Energy Sector


Despite delays in the awarding of contracts to Independent Power Producers (IPPs), the Renewable Energy Independent Power Producer Programme (REIPPPP) has to date attracted more than R195bn in private investment. In 2016 a record 161GW of newly installed renewable power capacity was added, an increase of almost 9% compared to 2015. Solar PV accounted for approximately 47% of the total additions, with the equivalent of more than 31,000 panels installed hourly. Wind power accounted for 34% and hydropower 15.5% of the total.


Report Coverage


The report on the Electricity sector examines current conditions and describes the developments in the generation of electricity in South Africa. Profiles for 13 companies are provided, ranging from state-owned companies Eskom and the Central Energy Fund to small renewable producers such as Avon Peaking Power (RF) (Pty) Ltd which focuses on thermal energy, and Cennergi (Pty) Ltd, active in the solar sector.


Page
1. INTRODUCTION 1
2. DESCRIPTION OF THE INDUSTRY 1
2.1. Industry Value Chain 4
2.2. Geographic Position 5
3. SIZE OF THE INDUSTRY 6
4. STATE OF THE INDUSTRY 9
4.1. Local 9
4.1.1. Corporate Actions 17
4.1.2. Regulations 18
4.1.3. Enterprise Development and Social Economic Development 19
4.2. Continental 20
4.3. International 22
5. INFLUENCING FACTORS 23
5.1. Economic Environment 23
5.2. Rising Operating Costs 24
5.3. Corruption and Mismanagement 25
5.4. Labour 26
5.5. Electricity Theft 28
5.6. Technology, Research and Development (R&D) and Innovation 28
5.7. Environmental Concerns 29
6. COMPETITION 30
6.1. Barriers to Entry 31
7. SWOT ANALYSIS 31
8. OUTLOOK 32
9. INDUSTRY ASSOCIATIONS 33
10. REFERENCES 33
10.1. Publications 33
10.2. Websites 33
APPENDIX 1: 35
Eskom Power Capabilities as at 1 September 2017 35
APPENDIX 2: 37
REIPPPP Capacity, Tariff and Investment Outcomes per Technology and Bid Window 37
COMPANY PROFILES 38
ACWA POWER SOLAFRICA BOKPOORT CSP POWER PLANT (RF) (PTY) LTD 38
ASSOCIATED ENERGY SERVICES (PTY) LTD 40
AVON PEAKING POWER (RF) (PTY) LTD 42
CEF (SOC) LTD 44
CENNERGI (PTY) LTD 48
CORIA (PKF) INVESTMENTS 28 (RF) (PTY) LTD 51
DEDISA PEAKING POWER (RF) (PTY) LTD 53
ESKOM HOLDINGS SOC LTD 55
HOPEFIELD WIND FARM LOCAL COMMUNITY COMPANY 59
KELVIN POWER (PTY) LTD 60
NATIONAL ENERGY REGULATOR OF SOUTH AFRICA 62
PHELAN ENERGY GROUP (PTY) LTD 64
ROSATOM CENTRAL AND SOUTHERN AFRICA (PTY) LTD 66