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Released June 19, 2014 | JOHANNESBURG
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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--In his State of the Nation speech to South Africa's Parliament on Tuesday, President Jacob Zuma outlined his ideas for South Africa's base-load energy future. He was emphatic that plans for 9,000 megawatts (MW) would proceed and that nuclear generation projects would be fast-tracked.
"We need to respond decisively to the country's energy constraints in order to create a conducive environment for growth," he said.
Zuma's insistence that nuclear energy plans should be prioritized flies in the face of strong doubts expressed about the nuclear build program from top market and political players, such as the Department of Energy and the National Planning Commission.
The specter of cost-creep on nuclear projects--as well as the project management and technical problems in the development of the two mega, state-of-the-art coal-fired power stations, Medupi and Kusile--provide an opportunity for reconsideration. Set against this is the government's predilection for high-tech, high-budget projects, in association with international players.
The nuclear bet may be on now, but will it come off in the future?
Zuma called for a radical transformation of the energy sector to develop a sustainable energy mix that includes coal, solar, wind, hydro gas and nuclear. He said that this will require structural changes in the manner in which government departments, affected state-owned companies like Eskom, and the industry as a whole address the energy challenges.
In another categorical statement of support for an energy source, which has been the topic of fierce debate in the country, Zuma endorsed the development of shale gas, which he said would be a "game changer" for the economy.
One of the key changes in the energy landscape he announced was a restructuring of the industry that was first recommended in the "Independent System Market Operator" bill, which was tabled in parliament in 2013 and then withdrawn without explanation. The bill aimed to separate the generation and transmission responsibilities of Eskom and may sit uncomfortably with the wing of the ruling African National Congress party, which values and defends monolithic, state-run monopolies.
There will be new roles for state-owned companies, including Eskom, the South African Nuclear Energy Corporation (SANEC) and the Central Energy Fund (CEF). Fast-track procurement and delivery by the government in the energy sector will be targeted.
A cabinet committee will be responsible for the oversight, coordination and direction of activities in the energy sector and will ensure Eskom has the required support to achieve its goals and targets.
Another major project endorsed by the president was a proposed mega coal-fired power station, presently identified as Coal 3. He said that funding for this would be accelerated so that procurement for the project could begin.
There will be a fourth round of the renewable energy independent power producers (IPPs) program, to continue the success of the first three bidding rounds, which will support rural development and local component manufacturing.
The Grand Inga hydropower project on the Congo River, for which an agreement was signed by the governments of South Africa and the Democratic Republic of Congo (DRC) in 2013, also will continue to receive support. The "grand plan" envisages South Africa receiving a significant volume of the 40,000 MW to be generated for the Southern African region. In the first, less-ambitious phase, 4,800 MW will be available to the two countries and the region.
Overall, the president's address assumed that there was the capacity available to execute multiple projects. There were indications, couched in careful political terms, that the private sector with funding capital and expertise, will be welcome to engage in the new push for South Africa's future energy security.
For related information, see June 4, 2014, article - South Africa's Renewable Independent Power Producer Pipeline Reaches Strong Operational Phase; March 10, 2014, article - South Africa Nears Decision on $100 Billion Nuclear Program; and December 9, 2013, article - African Development Bank to Fund Initial 'Nuts and Bolts' Phase of Congo River Project.
View Project Report - 85000283 85000293
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
"We need to respond decisively to the country's energy constraints in order to create a conducive environment for growth," he said.
Zuma's insistence that nuclear energy plans should be prioritized flies in the face of strong doubts expressed about the nuclear build program from top market and political players, such as the Department of Energy and the National Planning Commission.
The specter of cost-creep on nuclear projects--as well as the project management and technical problems in the development of the two mega, state-of-the-art coal-fired power stations, Medupi and Kusile--provide an opportunity for reconsideration. Set against this is the government's predilection for high-tech, high-budget projects, in association with international players.
The nuclear bet may be on now, but will it come off in the future?
Zuma called for a radical transformation of the energy sector to develop a sustainable energy mix that includes coal, solar, wind, hydro gas and nuclear. He said that this will require structural changes in the manner in which government departments, affected state-owned companies like Eskom, and the industry as a whole address the energy challenges.
In another categorical statement of support for an energy source, which has been the topic of fierce debate in the country, Zuma endorsed the development of shale gas, which he said would be a "game changer" for the economy.
One of the key changes in the energy landscape he announced was a restructuring of the industry that was first recommended in the "Independent System Market Operator" bill, which was tabled in parliament in 2013 and then withdrawn without explanation. The bill aimed to separate the generation and transmission responsibilities of Eskom and may sit uncomfortably with the wing of the ruling African National Congress party, which values and defends monolithic, state-run monopolies.
There will be new roles for state-owned companies, including Eskom, the South African Nuclear Energy Corporation (SANEC) and the Central Energy Fund (CEF). Fast-track procurement and delivery by the government in the energy sector will be targeted.
A cabinet committee will be responsible for the oversight, coordination and direction of activities in the energy sector and will ensure Eskom has the required support to achieve its goals and targets.
Another major project endorsed by the president was a proposed mega coal-fired power station, presently identified as Coal 3. He said that funding for this would be accelerated so that procurement for the project could begin.
There will be a fourth round of the renewable energy independent power producers (IPPs) program, to continue the success of the first three bidding rounds, which will support rural development and local component manufacturing.
The Grand Inga hydropower project on the Congo River, for which an agreement was signed by the governments of South Africa and the Democratic Republic of Congo (DRC) in 2013, also will continue to receive support. The "grand plan" envisages South Africa receiving a significant volume of the 40,000 MW to be generated for the Southern African region. In the first, less-ambitious phase, 4,800 MW will be available to the two countries and the region.
Overall, the president's address assumed that there was the capacity available to execute multiple projects. There were indications, couched in careful political terms, that the private sector with funding capital and expertise, will be welcome to engage in the new push for South Africa's future energy security.
For related information, see June 4, 2014, article - South Africa's Renewable Independent Power Producer Pipeline Reaches Strong Operational Phase; March 10, 2014, article - South Africa Nears Decision on $100 Billion Nuclear Program; and December 9, 2013, article - African Development Bank to Fund Initial 'Nuts and Bolts' Phase of Congo River Project.
View Project Report - 85000283 85000293
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
