Is captive power an energy solution for the mining sector asks Webber Wentzel
Author: Webber Wentzel's Makhotso Lengane, Alessandra Pardini, Kate Collier, Garyn Rapson and Rita Spalding
The industry is faced with the effects of a growing energy deficiency as evidenced by the recent approval, by NERSA, of an Eskom tariff hike exceeding 9%, in addition to energy supply constraints to the mining industry and resulting losses in excess of R1.3 billion, as reported by Consultancy Africa Intelligence.
Mining companies are looking inwards and exploring solutions allowing for independent electricity generation in mitigation of what EY, in its 2015 – 2016 report on business risks facing mining and metals, ranks as one of the top ten business risks in the mining industry – inadequate access to energy.
South Africa’s current installed power capacity is approximately 45 000 MW and an additional 40 000 MW in new generation capacity is required by 2025, according to Eskom.
The Department of Energy (DOE), at its media round table last year, announced that since November 2011 more than 6 327 MW have been awarded in terms of its Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) and a new determination has been made for an additional 6 300 MW.
While the success of REIPPPP is indicative of government’s commitment to providing the additional capacity required, it is unclear if the DOE’s procurement programmes, which include REIPPPP, will achieve the 40 000 MW by 2025 and whether this estimated new generation capacity will indeed be sufficient.
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