The country's energy industry, and in particular the electricity sector, came under scrutiny recently, with the staging in Sandton of South Africa's first energy summit, a gathering of state officials, industrialists and experts. Many of the messages at the summit were, if not entirely bleak, then certainly a clarion call to arms.
Buyelwa Sonjica, minister of minerals and energy, told the September 25 summit that increasing demand is reaching the point where supplies might no longer meet the calls being made on it.
"In the face of dwindling electricity capacity, new investments are necessary," Sonjica said.
At present, state electricity producer Eskom has only an 8% reserve capacity to cover surges in demand, well below the international best practice standard of between 20% and 25%.
To meet the demands created by a growing population and an expanding economy, South Africa will have to invest as much as $143bn in its energy sector over the next two decades, resulting in a doubling of electricity output by 2030, according to Portia Molefe, director general of the public enterprises department.
While part of this funding will come from the state and Eskom, with the utility announcing it plans to invest $28bn in the next five years to boost generation capacity along with its transmission and distribution networks, the government has said it wants to see the private sector participate in the development of additional electricity production.
The state has laid out plans for investors to buy into the industry, setting a target of having independent producers provide 30% of the country's new electricity capacity by 2030, selling their entire output to Eskom.
Most of the new private sector generating capacity would come from coal-fired power stations, Molefe told the summit. At present, some 75% of South Africa's electricity is generated from coal, well above the global average of 40%.
To meet some of the immediate needs, Eskom is re-commissioning and modernising three old power stations closed in the 1980s, and has already started work on a new $11.4m coal-fired power station, with another on the drawing broad.
Another plan already underway is a scheme to provide assistance to local renewable energy projects. On September 25, the department of minerals and energy announced it has a programme up and running to provide subsidies to such projects, with $430,000 having been given to support a hydro-electricity project in the Free State and a scheme to produce electricity from biogas in the Western Cape.
Currently, just 1.2% of South Africa's electricity needs are met through renewable energy production. Sonjica said the new subsidy programme would help the private sector with the start-up costs of such projects.
The need for increased investment in renewable energy was given a further push in early August, when Norman Ndaba, an expert with international auditing firm Ernst & Young's energy department, said South Africa was facing hard decisions as a direct result of steep economic growth and the subsequent unforeseen demand for electrical power.
"South Africa and its energy utility Eskom must face hard realities; the most pressing of which is the need for rapid improvement to the generation capacity," he said.
While this meant the country had to make the best use of its most readily available source of fuel, coal, it should also focus on renewable energy resources, such as wind power, which Ndaba said was feasible in the South African environment.
However, even with the new support programme, renewable energy does not play a major role in South Africa's plans for the future of electricity production. Bringing old power stations back on line would contribute 8% to the electricity supply, with coal fired stations adding 27%, nuclear plants adding 46% and 12% coming from pump storage schemes and 7% from gas, Molefe said.
Nuclear energy is being looked on as the way forward, with as many as six new facilities proposed by 2025, to add to the single reactor already in operation. However, unlike conventional power, the government has said nuclear energy will strictly remain within state control, with no private investment being considered.
One other intended spin off from the planned massive investment programme will be a boost to local industry, with the state looking to local manufacturers to supply the equipment and technology needed to support the expansion campaign.
While South Africa has an abundance of coal and uranium, the two fuels intended to keep the lights burning for the foreseeable future, it will still have to spend big on projects to ensure electricity supply, and to make the idea of participating in the expansion programme attractive to the private sector.