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Projects and Energy Weekly Snippets

11 November 2014

Delay in renewables programme
The Department of Energy announced this week that it is unlikely that the 24 November 2014 financial close deadline for the third-bid-window projects will be met.

The delay is largely due to Eskom's financial situation as connection and grid access is costly. Eskom's financial situation may also affect the Round 4 bid window.

In response to the concerns of the effect of this delay on investor confidence, the Department indicated that it is currently looking at how the Medium Term Budget Framework's rescue package and other possible financial solutions could be used to assist in overcoming delays.

Notwithstanding, the Department has reassured investors that it is still committed to supporting small independent power producers through a special fund established by a collaboration between the South African and German governments. 

4 November 2014 - Engineering News  

Load shedding
This week's load shedding, experienced throughout the country, occurred as a result of the collapse of one the storage silo's at Eskom's Majuba coal power station causing a drastic drop of power output from 3 600 MW to a mere 600 MW. 

This drastic drop in power output is due to the fact that the three coal conveyors (which operate six units) at Majuba are fed from one access point. The collapse occurred at the main feeder, which cut supply from the three coal conveyors and breaking the supply to the silos. The rubble from the collapse fell onto a coal conveyor, which in turn prevented access to two silos.

To counter the damage and improve power output, Eskom has instructed its engineers to conduct inspections of the silos at all of its coal-fired power stations to prevent future occurrence. Further, they have employed mobile feeders at a rate of 16 trucks an hour and four per minute to feed coal into the operating silos.

The cause of the collapse has not been confirmed but is likely to be as a result of corrosion of the concrete.

Eskom has appealed to the public to reduce electricity consumption.

4 November 2014 - Business Day

NPC plans to resolve energy crisis
In the coming months, the National Planning Commission (NPC) is aiming to organise a series of meetings between public and private stakeholders in the energy sector in order to alleviate the current obstacles that the market is facing and to increase private sector investment. 
NPC plans for energy sector future
Three commissioners from the NPC as well as representatives from the South African National Energy Association (SANEA) who together brought executives from all facets of the energy industry, including senior managers from Eskom.  The meeting was as a result of the load shedding incident on 2 November 2014 following the dramatic loss of output power at Majuba power station.
One of the key highlights of the meeting was the need for industry and institutional reform in light of the stalled legislative process designed to level the playing field between Eskom and independent power producers (IPPs) through the introduction of an Independent System and Market Operator outside of Eskom.
MD of SANEA, Brian Day, said the idea would be to canvass these issues with government in an effort to come up with collective actions to deal with the immediate crisis and set up action-oriented process for addressing some of the longer-term structural problems.
It is hoped that the initial meetings would be held either before the end of the year or early in 2015.
7 November 2014 - Engineering News

SA signs another nuclear deal
On Friday 7 November 2014, the Minister of Energy, Tina-Joemat-Pettersson, signed an Inter-Governmental Framework Agreement on Nuclear Cooperation with China's National Energy Admninistration director Wu Xinxiong.
The Department of Energy said the agreement formed part of a preparatory phase for a possible use of Chinese nuclear technology in South Africa, which was considering the introduction of up to 9 600 MW of new nuclear generation.
7 November 2014 - Engineering News

Baseload Coal IPP procurement programme to begins this month
National Treasury senior project advisor Karen Breytenbach confirmed that that the coal and cogeneration programmes are expected to commence bidding this month and in early 2015 respectively. This is as a result of the Medium-Term Budget Policy Statement address to Parliament in October where Minister Nene revealed that the IPP programme would be extended to include 2 500 MW of coal projects and 800 MW of cogeneration.
Breytenbach reported that the IPP office had been working with Eskom to understand the connection constraints and that there was now fairly good visibility of which areas could, or could not be easily connected. She indicated that government was keen to find a way of sharing the information so as to ensure that IPPs did not bid on projects that had little prospect of being connected to the grid in the short term.
7 November 2014 - Engineering News

The above reflects a summary of certain news articles published during the preceding week. It is not an expression of opinion in respect of each matter, nor may it be considered as a disclosure of advice by any employee of Hogan Lovells. 


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