“Eskom’s present generation capacity surplus will be fully utilised by about 2007,” the Department of Minerals and Energy under Penuell Maduna wrote in December 1998.
In a document entitled White Paper on the Energy Policy of the Republic of South Africa, the Department of Minerals and Energy (DME) explained this figure was based on Eskom forecasts for an assumed demand growth of 4.2%.
The document is available on the DME website.
It outlined the state of South Africa’s energy sector in 1998, warned that although 2007 seemed like a long way off, long capacity expansion lead times require plans be put in place “in the mid-term” so the needs of South Africa’s growing economy can be met.
The DME and Eskom turned out to be spot on.
By 2007, electricity demand exceeded supply and South Africa’s power utility was forced to implement load shedding to prevent a national blackout.
Yet despite clear recommendations from the DME, the government didn’t act quickly and begin building additional capacity.
“Timely steps will have to be taken to ensure that demand does not exceed available supply capacity and that appropriate strategies, including those with long lead times, are implemented in time,” the paper said.
“The next decision on supply-side investments will probably have to be taken by the end of 1999 to ensure that the electricity needs of the next decade are met.”
Sadly, the next supply-side decision was only made in 2004, and further delays at Eskom caused construction of Medupi to only begin just before South Africa’s power woes began in 2007.
Source of the delay
One of the reasons the government didn’t react quickly on Eskom’s recommendations was that it didn’t recognise the urgency of the situation.
“When Eskom said to the government, ‘We think we must invest more in terms of electricity generation’, we said, ‘no, but all you will be doing is just to build excess capacity’,” former President Thabo Mbeki said at the time.
“We said, ‘not now, later’. We were wrong. Eskom was right. We were wrong,” Mbeki said.
Another reason for the delay in construction of new high-capacity power plants was because the government wanted to break Eskom’s monopoly, the DME said.
“For many decades Eskom has carried the responsibility of supplier of last resort, effectively enjoying a de facto monopoly on the construction of new generation capacity,” it said.
It explained that the government intended to steadily increase competitive pressures in the power generation sector with the aim to improve efficiencies and reduce electricity prices.
With the benefit of hindsight it is clear now that the government’s plan to create a competitive power generation environment had the opposite effect of what it intended.
Prices went up, demand far outstrips supply, and the soonest we can hope for sufficient additional capacity to come on stream is 2017.