Johannesburg, Jan 23, 2008 -- Business Day/All Africa Global Media

ESKOM's scramble to mitigate an electricity crisis of gargantuan proportions is likely to accelerate the diversification of the power utility's energy mix and its move towards renewable energy sources.

With the commissioning of additional coal-fired and nuclear plants several years away before they will bring relief to SA's overburdened power system, Eskom is turning to alternatives to bring more power in faster.

Rationing and voluntary target savings, by which industrial customers reduce their consumption in return for compensation at times when Eskom experiences power shortages, are two of the short-term solutions Eskom is considering.

But the power utility is also looking at the mass roll-out of solar panel heaters to alleviate the burden on the national grid, and has turned to co-generation projects as a real option to feed power into the national grid.

These projects may see the state put its hand in its pocket to help fund them with subsidies. Eskom, in partnership with Deloitte, says it is ready to start rolling out solar panel heaters.

Earthlife Africa's Richard Worthington laments the lethargic solar power roll-out plans. "Eskom announced subsidies worth R2bn last year but is not even close to implementation. They are waiting when they need to be advancing in leaps and bounds," he says, adding that SA needs a strategy on a regional, but preferably national, scale.

A study commissioned by Eskom has shown that a comprehensive solar geyser programme could remove 4747MW from winter peak load and a significant percentage of electricity load from morning and evening peaks all year round. Such a programme could also achieve annual electricity savings of 12125GWh . The programme would cost some R28bn but the study points out that this is less than the cost of building a coal-fired power station generating 1700MW at current prices.

A national solar geyser programme, the study proposes, would see 2,5-million solar geysers installed for households in the lower-middle to high income brackets.

The energy crunch seems to have also convinced the trade and industry department to extend its national industrial policy framework to renewable energy. The department could encourage the use of solar power that deals with peak load demand through industrial intervention measures. The department took flak from several sources last year for largely ignoring renewables in its industrial policy, despite the obvious benefit from introducing alternatives.

Not only would they feed much needed power into the national grid, they would also help soften SA's notorious coal-loaded carbon footprint. They could also contribute massively to job creation. It has been estimated that the large-scale roll-out of solar panel heaters could create 80000-120000 jobs and 500000 indirect jobs.

Industrial policy chief director Nimrod Zalk says the scale of the electricity crisis has made the economics of solar power more viable. Talks are in an exploratory phase, but Zalk says the rolling blackouts of the past two weeks have put the issue high on the agenda.

"Solar is something that has a lot of potential and, given the power shortages now, the economics of it is swinging much more in favour of using solar energy. It still needs careful analysis but should be done urgently."

The policy head is to meet Eskom's demand-side management team within the next two weeks to co-ordinate efforts.

Zalk is not excluding the possibility that the plan could see "state co-ordinated support", which may come in the form of fiscal interventions, or regulations requiring new houses to use solar panels, or both.

Eskom has also turned to partners in the private sector to help feed the grid with co-generation projects to up its reserve margin.

Co-generation is electricity generated from by-products, such as waste and heat from industrial processes, that can feed into the national grid.

The group's enterprises division MD, Brian Dames, says Eskom's first round of bidding for co-generation projects last year elicited 100 potential projects. If implemented, they could add 5000MW to the national grid. Eskom has generating capacity of about 38500MW, so co-generation could contribute significantly to Eskom's anaemic system.

Eskom has a separate co-generation agreement with Sasol to reduce gas flaring at its Secunda plant. This would generate about 300MW.

Interest has been so big that Eskom is considering another round of bidding for more co-generation projects.

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