Energy matters
Energy in South Africa and your operation
By AskGareth About Energy
The purpose of this article is to share insight on the less known facts about the South African energy sector . This is the first of a series of articles that will build your knowledge and give you decision making power by providing broader insight than mere kWh ( kilowatt electricity unit ) and fixed charge calculations .
The key input before making any electricity investment decision has to do with knowledge of the surrounding environment and options at your disposal . One will need to consider and understand three important areas ;
Rising Cost of Electricity
Reliability of Supply ( consistency )
Level of Control
Let ’ s consider the context !
Rising Cost of Electricity vs . Inflation
Rising Cost of Electricity
Rising cost , the cost of electricity per kWh ( unit ) is increasing every year and will continually outperform inflation ( in the -ve ). Resulting in unbudgeted cash outflow in your farming operation .
Have you considered the negative impact of this cash outflow on cost per tonne ?
Reliability of Supply ( consistency ) Reliability is either related to load shedding ( that we have all become accustomed to since 2008 ) or technical maintenance issues that have the same downstream effect . When measuring reliability of supply one will need to consider generation ( power station ) and transmission / distribution ( moving units of electricity from point A to B ). There are several Eskom programmes underway to upgrade and establish new lines in areas that have not been serviced or are insufficiently serviced at present . This Cost of Service / Cost of Supply impacts heavily on your fixed connection charge ( availability at point of access ) and variable cost ( electricity units consumed ), in turn pushing your cost per tonne up exponentially . One of your greatest hurdles is the consumer ’ s ability ( farmer ) to calculate the cost of electricity in three to five years ’ time .
Have you considered the cost of a lost day of irrigation ?
Level of Control All these roads lead to the question of control ? Are you able to plan for unforeseen maintenance issues ( risk of not having supply ) or rising cost ? The power situation in
South Africa leaves the electricity off-taker ( farmer ) with limited options that impacts directly on the sustainability of the operation .
Would decentralized energy generation promote control ?
This specifically refers to on-site generation where your farming operation has its own generation on-siteoffering cost stability , resolved supply risk and puts you back in control ?
PARTIAL GRID RELIANCE
Grid remains part of the energy supply .
Model 1 allows for the use of alternative energy generation options that may , for e . g . include photovoltaic ( Solar PV ). This is typically limited to daylight hours between 9am and 15:00
PARTIAL GRID RELIANCE
Grid remains part of the energy supply , role shifts to a backup strategy .
Model 2 allows for increased use of alternative energy generation with energy storage ( batteries ) and strategically using the grid as a dynamic back-up to the on-site generation .
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SABI | FEBRUARY / MARCH 2017