State-owned electricity utility Eskom has signed up a total of 373 MW of private power under its medium term power purchase programme (MTPPP), which is funded through the tariff, and expects to sign up a further 3 MW in the near future, operations and planning division MD Kannan Lakmeeharan reports.

He told members of the South African National Energy Association this week that around 288 MW of that independent power producer (IPP) capacity was already “theoretically operational”, although some producers were currently experiencing primary energy supply disruptions.

Five power purchase agreements had been finalised with Sappi, which had two MTPPP deals with Eskom, Sasol, Ipsa and Tangent Mining, while a sixth was likely to be concluded soon.

The utility had also signed up 410 MW of municipal capacity with Johannesburg and Tshwane and was hoping to secure a further 260 MW ahead of winter, when demand was expected to peak at 38 000 MW.

A long-term agreement with the City of Cape Town also remained intact, and Eskom was looking to secure more than 600 MW under its revised demand market participation scheme with larger customers.

Lakmeeharan also reported that a pilot project was being initiated to secure demand reduction commitments from smaller consumers.

Through the initiative, Eskom would contract with a ‘demand aggregator’, which would act as a broker for the purchase of as much as 500 MW from small industrial and commercial entities ahead of the 2011 winter peak.

Eskom would seek to widen the incentive, again through an aggregator, over the next five years to capture as much as 2 500 MW of demand reductions, which it would regard as a “virtual power station”.

But the power balance remained “tight”, particularly following the “failure” of a 600 MW unit at Duvha, which might not be returned to service by winter.

ESKOM TO MEET LARGE USERS

Therefore, Eskom would meet with the CEOs of its largest customers next week to discuss the risks and debate possible remedies, including a the finalisation of a mandatory energy conservation scheme (ECS) for South Africa’s top 500 consumers, which together represented more than 50% of country demand.

The ECS was presented for debate at the National Economic Development and Labour Council in December and Eskom wanted it “activated, but not implemented”, ahead of winter, so as to provide a last-resort safety net in the event of a supply crisis.

About 140 large users had already voluntarily committed to savings and were currently consuming about 5% less electricity than was the case in 2007. Lakmeeharan said that the gold mines had been particularly progressive in their savings efforts.

The ECS would seek mandatory savings of 10% and the draft scheme proposed major price disincentives for those failing to meet savings targets against a 2007 consumption baseline.

But in the absence of significant savings, as well as the introduction of new IPP power, Eskom was still warning of a possible shortfall of 6 TWh this year and 9 TWh in 2012/13 – 9 TWh is equivalent to the electricity consumed by a large city such as Cape Town in a year.

Lakmeeharan promised that Eskom was moving to remove barriers to the introduction of IPPs, but stressed that, in a number of cases, government, and/or the regulator, were the key actors.

Internally, Eskom was restructuring so as to begin treating IPPs as “customers to the network”. The group also recently published a grid-readiness road map, which indicated where facilities were already in place to connect 4 159 MW of new IPP capacity by 2012.