Engineering News Online Audio Articles

Creamer Media's Chanel de Bruyn speaks to Engineering News Editor Terence Creamer about what led to the latest bout of load-shedding, the cost to Eskom of having to burn huge amounts of diesel at its open cycle gas turbines, the outlook for the electricity generation sector for the rest of this year and what needs to be done to help resolve the energy crisis.

Tiger Wheel & Tyre has unveiled the company’s first solar-powered store.

The automotive parts and fitment brand’s Fourways store, in Johannesburg, is the first of the family to complete the move to solar power. The system was installed by Easy Power.

Tiger Wheel & Tyre plans to have all of its stores run on solar energy within the next three years.

The company says there are various reasons for the move to renewable energy, including a responsibility to ensure a healthier future for generations to come, soaring energy prices, and the uncertainty around load-shedding.

“Society, and that includes us, our shareholders and financiers, have a duty to take active steps towards using clean renewable energy sources to lessen our impact upon the environment,” says TiAuto Investments CEO Alex Taplin.

“State-of-the-art technology that embraces sustainability is now readily available, so it would be highly remiss of us were we not to incorporate these technologies and obvious benefits into our everyday operations.

“The advantages of solar power are tangible and measurable,” says Taplin.

“By way of example, if we take just the initial Fourways store pilot project, we’re looking at a reduction of over 28 000 kg of reduced carbon dioxide (CO2) emissions a year. That’s the equivalent of 64 trees saved.

“Once we have fully executed the stores in Phase 1 to solar power, representing 16 stores, we will be reducing emissions equivalent by over 560 000 kg of CO2, as well as reducing our oil equivalent by 80 000 litres a year. That’s the same as saving 1 200 trees a year.”

Tiger Wheel & Tyre’s solar solution enables stores to continue at full operation and at normal capacity, without any reduction in the product or service offerings available to customers.

Cape Town Mayor Geordin Hill-Lewis is taking steps to protect the city from Stage 3 load-shedding by 2027 at a minimum – but preferably Stage 4 – in a move that he believes will facilitate “meaningfully faster” growth across the metropole.

“Not only is it inconvenient to have load- shedding, but right now the energy crisis is the biggest handbrake on the South African economy.”

The mistake that the City of Cape Town has made for a long time is to assume that there is a credible pathway out of load-shedding at a national level, and that the end of load-shedding is just around the corner, notes Hill-Lewis.

“I think time has shown that this is not the case, and that it is unlikely to be the case for at least the medium term, or until there is significant additional power generation capacity brought on board at a national level.

“However, taking additional capacity on board is taking so long, and there is so much resistance to doing so, that we have realised that we cannot wait for State-owned power utility Eskom or the Department of Mineral Resources and Energy for an answer, and that we must press ahead and do this ourselves,” he says.

“I think we must be really aggressive about trying to reduce our reliance on Eskom, and to bring additional capacity on line as quickly as possible.”

Hill-Lewis believes that reducing Cape Town’s reliance on Eskom should also ease pressure on the national grid, thereby lowering the likelihood of national load-shedding.

“Also, the price of Eskom power is now so high and the price of renewable power so low, that this actually is an opportunity to begin passing on savings to the consumer.”

South Africa’s electricity tariffs have increased by more than 300% over the last decade, while renewable energy is becoming more affordable, with the cost of solar dropping by 90% since 2000.

Power Through IPPs

Cape Town would primarily look to procure additional power through independent power producers (IPPs), says Hill-Lewis.

“Initially, the proportion that comes from IPPs would be so small that it won’t make a difference to the overall price.

“But, as that portion grows and the Eskom portion shrinks, we might get to a situation where you can pass on savings to consumers.”

Tenders to procure up to 300 MW of electricity from IPPs have already been published.

At this point, the city is not looking at building its own power-generation facilities, says Hill-Lewis.

“We are having this debate internally in the city’s structures. Quite a few people think we should do our own project, but I have a fairly strong preference for IPPs.

“But, I do understand that if we do a storage project aimed at load-shedding reduction, then there may – and I stress may – be a stronger argument for doing our own project, but that is still to be determined.”

IPP power generation from renewable sources (mostly solar in this case) will not stop load-shedding in itself.

“If you just have extra energy, you are lowering your load, but you don’t have spare capacity for when load-shedding hits.

“The trick is to combine that with some method of storage. Contracting IPPs is the easy part of this process. Figuring out storage is the real conundrum.”

At this stage, however, the City of Cape Town is going to market to secure IPP renewable generators first, with storage projects to follow at a later stage.

“There are various options available to us,” explains Hill-Lewis.

While the cost of battery storage is falling, it remains high, so Cape Town is also considering other options, including pumped storage.

“We can expand the Steenbras pumped- storage hydroelectricity scheme, but that is very capital intensive. So there are lot of options, but that will follow at a later stage.”

IPP Timelines

“We have very specific timelines for IPPs, at between 40 and 50 months from now to the completion of the projects and for all of the planned power to be available.

“We are not necessarily setting a cap at 300 MW, but I suspect we’ll end up around there. To do co...

The City of Cape Town is at the preliminary stages of assessing the business case for the deployment of battery energy storage systems (BESS) as part of its evolving strategy to eliminate the threat of load-shedding for its residents.

The city is already moving ahead with plans to procure 300 MW of renewables generation from independent power producers and generation development manager Shane Prins reports that BESS is also on the city’s radar.

Speaking during a RES4Africa event on the role of BESS in South Africa’s electricity market, Prins said the combination of falling technology costs and the prospect of pairing battery storage with renewables to improve security of supply made the solution potentially attractive.

In addition, the economics of installations were likely to be further enhanced through “stacking”, which involves using single BESS systems to provide multiple electrical services.

Various use cases were being assessed, including grid balancing, energy arbitrage, back-up power, ancillary services and deploying BESS in such a way as to allow for a deferral of distribution and transmission network investments.

“The City of Cape Town is still investigating the optimal manner and phasing of launching utility scale BESS,” Prins stressed, while providing no firm timeframe for when such an investigation might be finalised.

He indicated that there were several supportive factors driving a possible future deployment across the city’s network, including ongoing steep Eskom tariff increases and the utility’s declining technical performance.

In addition, the cost of BESS was falling internationally as research, development and commercialisation intensified.

Municipalities were also now empowered to procure their own electricity and BESS had received an allocation, albeit modest, in the Integrated Resource Plan of 2019 (IRP 2019) – regulatory factors that had hitherto constrained deployments at a local government level.

Nevertheless, a study being compiled by PwC South Africa points to ongoing policy and regulatory uncertainties that are hindering investment across the market, including municipal markets.

Speaking on the same platform, PwC South Africa energy strategy manager Roelof van Huyssteen said the regulatory frameworks were still vague on which use cases would be allowed and how BESS should be procured.

He said the multi-market design outlined in the Electricity Regulation Amendment Bill, which is currently out for comment, appeared supportive of higher levels of BESS investment in future, but use-case, procurement and remuneration uncertainties persisted.

The small IRP 2019 allocation and the fact that BESS investments could proceed only after the publication, by the Minister, of a Section 34 determination under the Electricity Regulation Act remained major impediments.

Van Huyssteen said these should be neutralised through a higher allocation and an amendment to the legislation with regard to Section 34.

Isuzu Motors South Africa (IMSA) will be implementing a dual-product strategy by retaining production of a number of key models from the current Isuzu D-Max line-up.

This is a similar strategy to Volkswagen Polo Vivo production and Nissan NP 300 assembly where the previous model is retained as a lower-cost option to the newcomer model.

The news comes as Isuzu celebrates the introduction of the new, seventh-generation D-Max bakkie for South African and other export markets across the continent.

Going forward, both bakkie ranges will be produced at Isuzu’s assembly plant in Gqeberha, where the local arm of the Japanese company now manufacturers the sixth-generation D-Max, the incoming seventh-generation D-Max, and Isuzu trucks.

“Our strategy is to support Isuzu’s objectives by retaining Gen 6 models which have performed very well in the workhorse segment of the market,” says IMSA technical operations senior VP Dominic Rimmer.

“In addition to boosting our fleet business, we intend to increase light commercial vehicle exports into key left- and right-hand-drive markets within the rest of Africa.

The sixth-generation D-Max ,which is now known as Gen 6, will be offered “with five competitively priced models” in South Africa, four models in right-hand-drive export markets, and three models in left-hand-drive export markets.

IMSA believes buyers of Gen 6 models will benefit from ten years of improvement that Isuzu engineers have put into the development of the vehicle during its lifecycle.

“The D-Max is engineered for the best performance in our unique local conditions, and these Gen 6 models remain a valuable proposition for fleet operators who place great importance on running costs and minimum downtime,” says Rimmer.

Gen 6 continues with two of Isuzu’s current diesel engines, namely the 2.5-l Leed and 2.5-l high-output engines.

All Isuzu D-Max bakkies come standard with Isuzu Complete Care, comprising a five-year/120 000 km bumper-to-bumper warranty and Isuzu Roadside Assistance.

A five-year/unlimited kilometre anticorrosion warranty and a five-year/90 000 km service plan are also included. Service intervals are every 15 000 km/12 months.

Pricing for the Gen 6 range starts at R328 400.

The South African National Roads Agency Limited (Sanral) says it is dealing with a “significant backlog in procurement”.

There are a number of reasons for this, including a process between the agency and National Treasury to seek clarification on the 30% subcontracting clause, which took 18 months to complete, as well as the interpretation of the term ‘local’, which led to the stalling of 64 Sanral projects, caused by community disruptions, says the agency.

Another reason is the rollout of supply chain management (SCM) reform to comply with Treasury regulations on procurement, issued under the Public Finance Management Act, as well as Covid-19 lockdown which required changes to tender procedures.

“All the above conspired to create a significant backlog, which resulted in 258 projects (to the value of R31.7-billion), planned to be awarded in 2020/21, being rolled over to the current annual procurement plan of 2021/22,” states the agency.

“The 2021/22 plan include a further 312 projects (R30-billion) to commence with the procurement process in this financial year.

“To provide perspective on the impact the SCM reform has on the administrative processes that must be concluded, it is noteworthy that in 2020/21, 212 contracts were awarded,” explains Sanral.

“This represents 4 180 tender submissions, which had to be checked for compliance in terms of eligibility criteria and regulations, before they could be evaluated for functionality, price and preference.

“One must bear in mind that any administrative error will result in the award being declared irregular.”

Sanral says it can confirm that the delay is not owing to a lack of funding, as projects will not be planned until funding is secured.

Between April 1, 2021, and February 28, 2022, the agency awarded 267 contracts, which represented R33-billion of work.

“Some 69 contracts have been evaluated, and are in various stages of adjudication/award.

“A further 148 projects are currently under evaluation, of which 35 closed more than six months ago.

“Of the total of 570 listed in the annual procurement plan for 2021/22, 256 advertisements have closed and 16 are currently advertised.

“It must also be indicated that the majority of projects are not delayed between adjudication and award, but rather between closing of advertisement and completing of the evaluations.”

For 2021/22, 267 awards have already been made, says Sanral.

State-owned electricity producer Eskom says it is in the final stages of pre-contract discussions for the first phase of its much-anticipated battery energy storage system (BESS) deployment, which will involve investments valued at about R5-billion.

During Phase 1, the utility aims to introduce 199 MW/832 MWh of BESS capacity across eight sites, including:

80 MW at Skaapvlei, 20 MW at Hex, 9.5 MW at Paleisheuwel and 5 MW at Graafwater, all in the Western Cape;

35 MW at Melkhout, in the Eastern Cape;

40 MW at Pongola and 8 MW at Elandskop, in KwaZulu-Natal; and

1.54 MW plus 2.04 MW of solar photovoltaic at Rietfontein, in the Northern Cape.

Eskom tells Engineering News that the sites were chosen to maximise the benefits of BESS on the local and national networks as well as to optimise renewables integration.

“The primary use will be for national peak shaving purposes for four hours a day, [while] the secondary use case will be for ancillary services and local network support,” Eskom said in response to questions.

Earlier this year, CEO Andre de Ruyter indicated that he had been impressed by the quality of the bids for Phase 1 and said he looked forward to the BESS projects being integrated into the network to help strengthen the grid and to help the utility manage “peaks and troughs”.

De Ruyter was in Washington DC this week where he had meetings with the World Bank, one of the funders of the BESS project.

Eskom tells Engineering News that Phase 1 is being funded by the Clean Technology Fund with the World Bank as the implementing entity, the Clean Technology Fund with the African Development Bank as implementing entity, as well as by the Brics bloc’s New Development Bank.

The South African utility will fully own the assets, but there will be a fixed operating and maintenance period of five years with the successful vendors after the start of commercial operation.

The project execution periods vary from seven to 12 months, Eskom reports.

The roll-out forms part of a larger 360 MW/1 440 MWh deployment, which will see Eskom invest some R11-billion in BESS, largely as a replacement for the 100 MW Kiwano concentrated solar power project initially included, but later abandoned, as part of the $3.75-billion World Bank loan of 2010.

The utility could not be drawn on when the project will begin, saying only that deployment would follow on from the award of the contracts and was also subject to the receipt of a licence from the National Energy Regulator of South Africa (Nersa).

The projects have been included in Eskom’s fifth multiyear price determination revenue application as capital expenditure, “in accordance with the expected concurrence of Nersa of the Integrated Resource Plan determination”.

The costs associated with operationalisation have not yet been included in its revenue application, however.

On whether there is sufficient energy available in load-shedding-prone South Africa to charge the batteries, Eskom said that charging would be conducted during off-peak periods, or when the network conditions permit.

The Rand Merchant Bank (RMB)/Bureau for Economic Research Business Confidence Index (BCI) has increased to 46 in the first quarter of this year, after remaining flat at 43 points in the fourth quarter of last year.

Although the reading remains below the neutral 50-point mark, RMB says it is, nonetheless, encouraging given the index grew from a record low of five points at the height of the Covid-19 outbreak in 2020.

Notably, the survey timeframe fell before the Ukraine invasion started and that event may have an impact on the next quarter’s BCI, given that the conflict is causing a surge in the oil price past $120/bl.

Of the three sectors that showed an increase in confidence in the first quarter of the year, new-vehicle dealers had the biggest improvement. Sentiment from these respondents recovered to 54 in the first quarter of this year, compared with a level of 41 in the fourth quarter of last year.

RMB explains that improved supply made for increased sales, but dealers could still not fully satisfy demand.

Wholesale confidence edged higher to 57 as a result of favourable conditions in the agricultural and mining sectors leading to strong machinery and chemical sales, but sales of consumer goods weakened.

Manufacturing also showed an improvement in the first quarter, jumping to 43 from 38 in the fourth quarter of last year, which RMB attributes to strong domestic sales and exports, despite supply chain bottlenecks and shortages of key inputs constraining activity. If not for these factors, production would have increased more.

As for the remaining sectors making up the BCI, retailer sentiment fell from 52 to 49 quarter-on-quarter and building contractor confidence fell by five points to 25.

Unpacking this, RMB says retailers of non-durable goods saw the biggest deterioration in confidence as sales subsided alongside rising food price inflation, and an apparent ongoing shift by higher-income earners towards greater spending on take-outs and dining out, than on food and groceries for at-home consumption and entertainment – a trend that noticeably benefitted non-durable retailers during Covid-19 lockdown periods.

Sales of durable goods such as hardware and building materials, which were, until now, driven by work-from-home additions and renovations, have seemingly peaked, while that of furniture, appliances and electronic equipment continued to perform strongly.

Sales of semi-durable goods, such as clothing and footwear, are making a comeback of sorts.

Confidence among building contractors retreated to 25 in the first quarter, on the back of excess supply of office, and in some instances, retail space; delays in building plan approvals; delays and even suspensions of tenders; and weak demand for new standalone houses.

RMB says new standalone houses have become increasingly costly against existing houses, the latter of which continue to see subdued price inflation. This leads to limited work being available for main contractors.

By contrast, subcontractors, which are not included in the BCI, continued to benefit from office buildings being refurbished and/or converted into multi-use precincts.

RMB says the economy is starting to show meaningful growth, particularly after a strike in the metal sector, bouts of load-shedding in the fourth quarter last year and the presence of the Omicron variant; however, stagflationary shocks brought about by Russia’s invasion of Ukraine have triggered a large degree of uncertainty around global and South African gross domestic product growth prospects.

It remains to be seen what the full impact of this uncertainty will be on business confidence in coming months.

Eskom has again issued a warning over the supply and pricing of diesel, which it has been consuming at extreme levels in recent days to cover for its underperforming coal fleet, the energy availability factor (EAF) of which has now slumped to below 60%.

The State-owned utility deployed its open cycle gas turbine (OCGT) plants well beyond the peak periods for which they are designed on Monday and Tuesday, partly to replenish the upper dams at its pumped-storage schemes.

The OCGT plants were switched off only after midnight on Wednesday and resumed output again three hours later, largely because the coal EAF had fallen to about 58% and there were 16 coal units currently “at risk” of breaking down.

Early on Wednesday morning, Eskom decided to intensify load-shedding to Stage 4, or 4 000 MW of simultaneous cuts, as well as to extend its duration, largely to preserve diesel reserves in a context of persistent breakdowns of more than 15 000 MW and planned maintenance of about 5 500 MW.

COO Jan Oberholzer reported that Eskom had been consuming nine-million litres of diesel a day at its Ankerlig plant, which has nine units, and Gourikwa, which has five units.

It was also buying electricity from the two private OCGT facilities, Avon and Dedisa, which meant that, for extended period on Monday and Tuesday, Eskom has been relying on the full 20-unit OCGT fleet, which has a collective capacity of 3 000 MW.

At Ankerlig, diesel supply was being met through 100 road-tankers, which could supply four-million litres daily, while the Gourikwa plant was being supplied by pipeline by PetroSA.

“Should we run out of diesel at these power stations, this capacity would not be available to the supply the demand, which would necessitate a further three stages of load-shedding [in addition to whatever stage was being implemented at the time],” Oberholzer explained, adding that any depletion of its 2 700 MW of pumped storage reserves, would represent a similar load-shedding risk.

“The combined effect would be a further six stages of load-shedding.

“So, it is critically important to balance these emergency resources to ensure we manage the power systems safely, while keeping the stage of load-shedding as low as possible.”

DIESEL TRADE-OFFS

Eskom insisted that it would continue, when adequate diesel reserves were available, to deploy the OCGT plants in preference to load-shedding, despite the "financial bloody nose" that implied. However, it again underlined its liquidity constraints, particularly in light of the surging price of diesel in response to the Ukraine conflict.

Eskom’s OCGT units consumed 14 litres a second when operating and, at current prices, it was costing R700 000 to produce a unit of electricity for an hour.

CFO Calib Cassim reiterated that Eskom was likely to spent about R6-billion on diesel for the year to March 31, 2022, having been allocated R1-billion in the regulated tariff.

Prior to Russia’s invasion of Ukraine, the utility was assuming that it would spend a similar amount on diesel in 2022/23 against an allocation in the tariff of about R3-billion.

“At the end of the day, it gets to a point that we only have so much liquidity to meet all our other operating, as well as debt-service, commitments.

“So, there will have to be trade-offs,” Cassim said.

GAS CONVERSION AMBITIONS

Oberholzer also described Eskom’s current diesel burn as “unsustainable” and confirmed that the utility would be seeking to introduce gas at the OCGT facilities, as well as to repower some of its decommissioned coal plants.

He acknowledged that the gas infrastructure was currently lacking for such a switch, despite the fact that the units at the OCGT plants had already been modified as dual-fuel units.

The utility would approach the market with its gas volume and quality requirements, but it was not yet clear that these could be met affordably given the infrastructure constraints.

Mineral Resources and Energy Minister Gwede Mantashe said recently that he expecte...

Telecommunications groups Telkom and rain have become the first winners among operators bidding to secure high demand spectrum as the Independent Communications Authority of South Africa (Icasa) starts its spectrum auction.

Icasa, on March 8, started the opt-in phase of the auction process with three operators, namely Telkom, Cell C and rain, submitting their bids.

The bid evaluations were carried out in front of all authorised representatives following the close of the bids’ submission window.

Rain secured two by 10 MHz in the 700 MHz band and 10 MHz in the 2 600 MHz band for R1.15-billion, while Telkom secured two by 10 MHz in the 800 MHz band for R1.5-billion.

“History has been made this morning and we are highly grateful to the participants during this phase. As stated in the Invitation To Apply, there can only be two winners this time around, and we encourage those who did not make it to continue supporting this process as it is only meant to benefit the country and its citizens,” said Icasa chairperson Dr Keabetswe Modimoeng.

The main auction stage will start on March 10 using an online auction platform.

All six qualified bidders will be eligible to bid for spectrum in this stage between 09h00 and 17h00 during business days until the main auction stage concludes.