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Reworked savings model

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Reworked savings model

8th May 2015

By: Terence Creamer
Creamer Media Editor

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Demand reduction, load shifting and energy efficiency are all seen as critical near-term remedies for helping South Africa navigate its serious electricity constraints. For this reason, there was much concern in 2014/15 when Eskom terminated its demand-side management (DSM), owing to financial uncertainties.

With the backing of the electricity war room, the utility has since moved to restart its DSM programmes. But it has overhauled its approach, narrowing the focus to two main areas: a small number of large-scale industrial projects, and the mass deployment of energy- efficient light bulbs.

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A sum of R1.7-billion has been set aside for implementation, with the resources secured from the as-yet-uncommitted funds from the R5.2-billion approved for demand management by the regulator for the current tariff determination period, covering the five financial years from 2013/14 to 2017/18.

A savings target of 975 MW has been set for the coming two years and, given the current supply constraints, the intention is to front-load the expenditure, with 90% of the budget being spent in the current financial year and during 2016/17. Previously, DSM spending was supposed to peak at R1.2-billion in 2017/18.

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The industrial component of the scheme has been redesigned to focus on a small number of large projects, representing a departure from the previous standard-offer model, whereby a large number of small projects were incentivised – at peak, Eskom supported up to 7 000 projects.

A request for proposals has been issued for single-site projects of a minimum size of 500 KW.

The initial bid window is open until June 30 and Eskom reports having already registered material interest from mining and industrial companies for projects that can either reduce demand or shift consumption from peak periods.

The utility is budgeting R1.5-million for each megawatt of savings and is aiming to achieve over 500 MW of savings from such projects within six months of the conclusion of the procurement contracts.

In parallel, savings of 455 MW will be targeted through the mass replacement of household light bulbs with energy-saving bulbs.

The budget in this area is for savings to cost about R2-million per megawatt and to begin with compact fluorescent lamps (CFLs), but to progressively move towards light-emitting diode (LED) solutions.

Eskom will begin with CFLs, but plans to include pilot sites using LEDs to test customer acceptance, quality and longevity under a range of conditions. There is also potential, it believes, to increase local-content levels as the scale of the LED deployment rises.

Eskom is preparing to undertake a mass bulb procurement phase and aims to start the replacement programme in July, using, where possible, installers from the communities in which the lights are being installed.

No decision has been taken yet on what will follow once the R1.7-billion has been exhausted, with much depending on the state of the power system at that time.

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