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Production and Investment Forecasts in the South African Power Generation Industry
Frost & Sullivan, April 2011, Pages: 122
This study covers the state of the South African power generation industry, examining drivers and restraints for growth, as well as analyzing trends in production, demand, pricing and investment. Following from these, production and market growth are forecasted. An electricity pricing outlook is also provided. In addition, the study carries out a detailed analysis of capacity expansion projects within the power generation industry. Snapshots of the 13 base-load power stations within South Africa are included. The base year is for the study is 2009 with forecasts running through 2016. The key market segments for the power generation industry include industrial, residential and commercial end users.
This research service titled Production and Investment Forecasts in the South African Power Generation Industry provides a comprehensive analysis of the South African power generation industry from 2003 to 2016. The research service provides a detailed analysis of industry fundamentals that impact on production and influence strategic planning and investment.
Investment in Capacity Expansion by Eskom to Ease Future Power Supply Concerns
The lack of investment in power generation within South Africa impacted severely on the economy as load shedding was implemented in 2007 and 2008. However, public utility Eskom’s planned construction of the Medupi and Kusile power stations is set to contribute significantly to its ability to meet growing demand for electricity. “As the South African economy continues to recover, buoyed by growth in the manufacturing and mining sectors, it is expected that demand for electricity will increase from 2010 to 2016,” notes the analyst of this research. “Eskom’s capacity expansion programme is therefore critical in ensuring that electricity demand is met over this period.”
The manufacturing and mining sectors consume approximately 54 per cent of power generated in South Africa. As manufacturing recovers from the recession, with year-on-year growth in January 2010 reported at 3.7 per cent, rising commodity prices boosting the mining industry, demand for electricity in these sectors is expected to rise. Going forward, Eskom’s investment in capacity expansion will be key to meeting the burgeoning demand for electricity.
Depleting Coal Reserves at Existing Power Stations Pose Challenge
As Eskom invests in capacity expansion, the state utility should be mindful of diminishing coal reserves at its existing power stations. While the Witbank and Ermelo coal fields in Mpumalanga have been the mainstay of the South African mining industry, they are, nevertheless, likely to be depleted in the next 10-15 years. Most of the collieries in the Mpumalanga region are currently characterised by low coal recovery grades, high operating costs and declining production volumes. It is estimated that by 2020, most of the current coal mines in the Witbank, Ermelo and Highveld coal basins will be closed. Eskom’s coal-fired power stations are predominantly located in Mpumalanga and will thus be constrained severely by the depletion of coal resources.
“South Africa is estimated to hold close to 45 billion tonnes of coal reserves with the bulk of these deposits being located in the Waterberg coal basin in the Limpopo Province,” concludes the analyst. “Construction of new power stations should shift to the Waterberg basin where coal resources will be abundant for use in power generation.”
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