SOUTH AFRICA POWER MARKET OUTLOOK TO MARKET TRENDS, REGULATIONS AND COMPETITIVE LANDSCAPE

Transcription

1 REFERENCE CODE GDPE0686ICR PUBLICATION DATE AUGUST 2013 SOUTH AFRICA POWER MARKET OUTLOOK TO MARKET TRENDS, REGULATIONS AND

2 Executive Summary Thermal Power is the Dominant Source in the Power Mix The cumulative installed capacity in South Africa was estimated at XX Megawatts (MW) in Thermal power was expected to be the highest contributor, accounting for a XX% share of cumulative installed capacity, equivalent to XX MW. Between 2000 and 2012, installed thermal capacity increased at a Compound Annual Growth Rate (CAGR) of 0.XX%. Coal is the dominant source among the thermal technologies used. Thermal power will continue to be the dominant source of power generation in the future. However, due to increased regulations regarding carbon emissions and environmental protection, gas-fired power plants are expected to replace the coal-fired power plants. Renewable and nuclear power are also expected to increase their contribution to the total installed capacity of South Africa, during the forecast period. Continued Growth in Power Generation Power generation in South Africa increased from XX Gigawatt hours (GWh) in 2000 to XX GWh in 2012, at a CAGR of XX%. Thermal power contributed the highest share, with more than XX%. South Africa s economy is currently showing considerable growth, and is expected to continue to do so. As a result, electricity generation is also expected to continue increasing. Power Market, South Africa, Annual Total Generation (GWh) Annual power generation (GWh) Source: GlobalData, Power etrack, Capacity and Generation Database [Accessed on May 29, 2013] Power Market, South Africa, Cumulative Installed Capacity by Type of Power Plant (%), 2012 Nuclear Hydropower Renewable Thermal Source: GlobalData, Power etrack, Capacity and Generation Database [Accessed on May 29, 2013] 2

3 Table of Contents 1 Table of Contents 1 Table of Contents List of Tables List of Figures Introduction GlobalData Report Guidance South Africa, Snapshot of Power Market Macro Economic Factors Supply Security Generation Infrastructure Transmission Infrastructure Opportunities Challenges South Africa, Power Market Analysis South Africa, Power Market, Supply Structure South Africa, Power Market, Key Players South Africa, Power Market Financial Performance Key Financial Ratios and Inference Power Market, South Africa, Deal Volume and Value Analysis, South Africa, Power Market, Demand Structure Power Market, Power Consumption by Sector, South Africa, Power Market, Regulatory Overview The White Paper On Energy Integrated Resource Plan Renewable Energy The White Paper On Renewable Energy NERSA paper on Renewable Energy Feed-In Tariffs

4 Table of Contents Renewable Energy Independent Power Producers Procurement Program: Energy Efficiency and Demand Side Management South Africa, Power Market, Capacity and Generation Overview Installed Capacity, Breakdown by Type of Power Plant, Cumulative Installed Capacity and Annual Generation, Thermal Installed Capacity and Generation, Hydropower Installed Capacity and Generation, Renewable Power Installed Capacity and Generation, Nuclear Installed Capacity and Generation, South Africa, Power Market, Transmission and Distribution Overview South Africa, Power Market, Transmission Network Overview South Africa, Power Market, Distribution Network Overview South Africa, Transmission Network, Development Plan, Eastern Province Northern Province Western Province South Africa, Power Market, Grid Interconnection South Africa, Power Market, Import/Export Scenario South Africa, Power Market, Snapshot of Leading Power Generating Company South Africa, Power Market, Key Company: Eskom Holdings SOC Limited Company Overview Eskom Holdings SOC Limited, Business Description Eskom Holdings SOC Limited, SWOT Analysis Appendix Market Definitions Power Installed Capacity

5 Table of Contents Active Installed Capacity Electricity Generation Electricity Consumption Thermal Power Plant Hydropower Plant Nuclear Power Renewable Energy Resources Abbreviations Bibliography GlobalData s Methodology Coverage Secondary research and analysis Primary Research and Analysis Disclaimer

6 Table of Contents 1.1 List of Tables Table 1: Power Market, South Africa, Trends in GDP at constant prices ($bn), Population (million) and Annual Power Consumption (GWh), Table 2: Power Market, South Africa, Installed Capacity Share of Top Players (%), Table 3: Power Market, Africa, Key Financial Ratios of Leading Power Generating Companies, Table 4: Power Market, South Africa, Deal Value ($m) and Deal Volume, Table 5: Power Market, South Africa, Annual Power Consumption (GWh), Table 6: Power Market, South Africa, Estimated Breakdown of Electricity Consumption, by Sector (%), Table 7: Power Market, South Africa, Cumulative Installed Capacity by Type of Power Plant (%), Table 8: Power Market, South Africa, Cumulative Installed Capacity (MW) and Annual Power Generation (GWh), Table 8: Power Market, South Africa Leading Thermal Power Plants Table 9: Power Market, South Africa, Cumulative Thermal Installed Capacity (MW) and Annual Power Generation (GWh), Table 10: Power Market, South Africa, Leading Hydropower Plants, Table 11: Table 12: Power Market, South Africa, Cumulative Hydropower Installed Capacity (MW) and Annual Power Generation (GWh), Power Market, South Africa, Cumulative Renewable Installed Capacity (MW) and Annual Power Generation (GWh), Table 13: Power Market, South Africa, Upcoming Nuclear Power Plants Table 14: Power Market, South Africa, Cumulative Nuclear Installed Capacity (MW) and Annual Power Generation (GWh), Table 15: Power Market, South Africa, Length of Transmission Network by Voltage (Ckm), Table 16: Power Market, South Africa, Length of Distribution Network by Voltage (Ckm), Table 17: Power Market, South Africa, Transmission Development Plan, Table 18: Power Market, South Africa, Eastern Province, Grid Major New Assets, Table 19: Power Market, South Africa, Northern Province, Grid Major New Assets, Table 20: Power Market, South Africa, West Province, Grid Major New Assets, Table 21: Power Market, South Africa, Total Annual Imports and Exports (GWh), Table 22: Abbreviations

7 Table of Contents 1.2 List of Figures Figure 1: Power Market, South Africa, Trends in GDP at constant prices ($bn), Population (million) and Annual Power Consumption (GWh), Figure 2: Power Market, South Africa, Deal Value ($m) and Deal Volume, Figure 3: Power Market, South Africa, Annual Power Consumption (GWh), Figure 4: Power Market, South Africa, Estimated Breakdown of Electricity Consumption, by Sector (%), Figure 5: Power Market, South Africa, Cumulative Installed Capacity by Type of Power Plant (%), Figure 6: Figure 7: Figure 8: Figure 9: Power Market, South Africa, Cumulative Installed Capacity (MW) and Annual Power Generation (GWh), Power Market, South Africa, Cumulative Thermal Installed Capacity (MW) and Annual Power Generation (GWh), Power Market, South Africa, Cumulative Hydropower Installed Capacity (MW) and Annual Power Generation (GWh), Power Market, South Africa, Cumulative Renewable Installed Capacity (MW) and Annual Power Generation (GWh), Figure 10: Power Market, South Africa, Cumulative Nuclear Installed Capacity (MW) and Annual Power Generation (GWh), Figure 11: Power Market, South Africa, Total Annual Imports and Exports (GWh),

8 Introduction 2 Introduction South Africa is a country with a well-developed infrastructure and financial and legal system. It has a republican form of government, in which the people elect a representative leader and hold the power. It is a member of international organizations such as the United Nations, the G-20, the Nuclear Suppliers Group and the United Nations Industrial Development Organization. South Africa s economy is liberalized and attracts a large amount of Foreign Direct Investments (FDIs). In 2012, its FDI inflow increased by XX%. It is the leading African country in terms of attracting FDI investments. Of the total XX upcoming foreign projects in the continent of Africa, XX were gained by South Africa. In 2012, South Africa achieved an estimated Gross Domestic Product (GDP) of $XX billion at current prices, and is expected to register a GDP growth rate of around XX% for the same year. The services sector is estimated to have contributed the majority share of 2012 GDP, with XX%, followed by the industrial sector with XX%, and the agricultural sector with XX%. South Africa is the largest economy in Africa and has been following a conservative fiscal policy to control inflation and attain a budget surplus. South Africa witnessed growth until 2008, when demand outstripped the supply of power for the first time as a result of the rapid industrialization and mass-electrification program carried out in the last decade. The government responded with a plan to build new power plants, as well as importing power from neighboring countries. However, because of the lack of available installed capacity, South Africa could suffer another power crisis, similar to the one in South Africa has a huge amount of indigenous coal reserves and is among the leading coal exporters. It is not import dependent and almost XX% of its energy demand is met through coal. However, excessive use of coal makes South Africa a leading carbon emitter. The power sector of South Africa as a whole is mainly government controlled. The main regulator, National Energy Regulator of South Africa (NERSA), is a government-owned body functioning under the Department of Energy. Though the power generation sector has been deregulated, allowing Independent Power Producers (IPPs) to operate, the major share of this market is held by Eskom Holdings Limited (Eskom), a government-owned utility. Transmission and distribution is also controlled by Eskom. 9

9 Introduction 2.1 GlobalData Report Guidance The report opens with an executive summary capturing key growth trends in South Africa s power market. Chapter three provides a snapshot of South Africa s power market. Chapter four provides a market analysis, including the supply and demand structure of South Africa s power market. Chapter five provides a brief description of the prominent policies influencing the future of the power market. Chapter six provides information regarding cumulative capacity and power generation information, as well as segmentation according to source of energy from 2000 to 2012, with forecasts to It also includes details of leading active and upcoming power plants, differentiated according to source of energy Chapter seven provides information on the power infrastructure in South Africa, as well as existing and planned developments in transmission and distribution infrastructure, and crosscountry interconnections. Chapter eight provides complete descriptions and SWOT analyses of the leading power generating companies. Note: From 2012 onwards this report provides actual or estimated data depending upon information available at the time of writing the report. 10

10 South Africa, Power Market Analysis 4.5 South Africa, Power Market, Demand Structure South Africa s steady economic growth, improved standard of living and increased industrial development have led to a growth in the consumption of electricity. However, during 2008 the country for the first time faced the situation whereby power demand exceeded supply. In 2012 South Africa again faced a power supply crunch, due to which it urged power consumers to reduce consumption in order to avoid power shortages. Electricity consumption in South Africa was estimated to be XX GWh in 2012, compared with XX GWh in 2000, growing at a CAGR of XX%. However, during the forecast period 2013 to 2030, electricity consumption is expected to, increasing from XX GWh to XX GWh at a CAGR of XX%. Figure 3: Power Market, South Africa, Annual Power Consumption (GWh), Annual power consumption (GWh) Source: GlobalData, Power etrack, Consumption Database [Accessed on March 22, 2013] 23

11 South Africa, Power Market Analysis Table 5: Power Market, South Africa, Annual Power Consumption (GWh), Year Source: GlobalData, Power etrack, Consumption Database [Accessed on March 22, 2013] Annual power consumption (GWh) 24

12 South Africa, Power Market Analysis Power Market, Power Consumption by Sector, 2012 In 2012, industry was estimated to have the largest share of total power consumption at XX%, followed by the mining sector with XX%. The residential and commercial sectors were estimated to contribute XX% and XX% of the consumption share, respectively. Other sectors accounted for XX% of the total share. Figure 4: Power Market, South Africa, Estimated Breakdown of Electricity Consumption, by Sector (%), 2012 Commercial Others Residential Industry Mining Source: GlobalData; Eskom, 2013d Table 6: Power Market, South Africa, Estimated Breakdown of Electricity Consumption, by Sector (%), 2012 Sectors Percentage (%) Industry Mining Commercial Residential Others Source: GlobalData; Eskom, 2013d 25

13 Appendix 9 Appendix 9.1 Market Definitions The geographical coverage of the report is South Africa. The report covers market segments related to installed electricity capacity, generation, consumption, power infrastructure and power regulations. The report covers the whole of South Africa for a quantitative and qualitative assessment of its power market Power The rate of production, transfer, or energy use, usually related to electricity. Measured in watts and often expressed in kilowatts (kw) or Megawatts (MW), it is also known as real or active power Installed Capacity Installed capacity refers to the generator s nameplate capacity as stated by the manufacturer, or the maximum rated output of a generator under given conditions. Installed capacity is given in Megawatts (MW) on a nameplate physically fixed onto the generator Active Installed Capacity Active installed capacity refers to that component of electric power that actually performs work. It is given in Kilowatts (kw) or Megawatts (MW) Electricity Generation The production of electric energy by transforming other forms of energy. Also refers to the amount of electric energy produced, expressed in Gigawatt hours (GWh) Electricity Consumption Consumption of electricity calculated as: generation, plus imports, minus exports, minus transmission and distribution losses. Measured in Gigawatt hours (GWh) Thermal Power Plant A plant in which turbine generators are driven by burning fossil fuels Hydropower Plant A plant in which turbine generators are driven by falling water. 64

14 Appendix Nuclear Power The electricity generated by the use of the thermal energy released from the fission of nuclear fuel in a reactor Renewable Energy Resources Naturally replenishing energy resources limited in the amount of energy that is available per unit of time. For example, biomass, geothermal, solar and wind can all be termed as renewable resources. 9.2 Abbreviations Table 23: Abbreviations Full Form Compound Annual Growth Rate Circuit kilometres Department of Minerals and Energy Demand Side Management Eskom Holdings Limited Foreign Direct Investments Feed-In Tariffs Gross Domestic Product Gigawatt hours High Voltage Integrated Energy Plan Independent Power Producers Integrated Resource Plan Kilometres kilovolt kilowatt hours Low Voltage Medium Voltage Mega Volt Ampere Megawatt National Electricity Regulator National Energy Regulator of South Africa National Integrated Resource Plan Regional Electricity Distributors Abbreviations CAGR Ckm DME DSM Eskom FDI FITs GDP GWh HV IEP IPP IRP km kv kwh LV MV MVA MW NER NERSA NIRP REDs 65

15 Appendix Renewable Energy Feed In Tariffs Renewable Energy Independent Power Producers Procurement Programme South Africa Power Pool Terawatt hours Transmission and Distribution Source: GlobalData REFIT REIPPP SAPP TWh T&D 9.3 Bibliography EIA (2012a). South Africa Total Electricity Imports [database]. Energy Information Administration. Available from: eyid=2011&unit=bkwh [Accessed on January 30, 2013] EIA, (2012b). South Africa Total Electricity Exports [database]. Energy information Administration. Available from: eyid=2011&unit=bkwh [Accessed on January 30, 2013] EIA (2012c). South Africa- Overview. Energy information Administration. Available from: [Accessed on May 29, 2013] Eskom (2013a). Electricity Technologies-coal. Eskom Holdings Limited. Available from: [Accessed on May 29, 2013] Eskom (2013b). Eskom- Directors Report. Eskom Holdings Limited. Available from: [Accessed on May 29, 2013] Eskom (2013c). Eskom-Capacity Expansion. Eskom Holdings Limited. Available from: [Accessed on May 29, 2013] 66

16 Appendix Eskom (2013d). Demand Side Management Implementation in South Africa. Eskom Holdings Limited. Available from: [Accessed on May 29, 2013] Eskom (2013e). Electricity Technologies-How electricity is transmitted?. Eskom Holdings Limited. Available from: [Accessed on May 29, 2013] Eskom (2013f). Transmission 10 year development plan Eskom Holdings Limited. Available from: [Accessed on May 29, 2013] Eskom (2013g). Electricity Technologies-How electricity is distributed?. Eskom Holdings Limited. Available from: [Accessed on May 29, 2013] ET (2012). Eskom reduces T&D losses to below 10% below on efficiency initiatives. The Economic Times, August 26, Available from: [Accessed on May 29, 2013] IMF (2013). World Economic Outlook Database October 2012 Turkey. International Monetary Fund. Available from: [Accessed on July 25, 2013 Viser, J. (2013). Biggest Crisis Since 2008 looms Over South Africa Mines: Energy. Bloomberg, March 22, Available from: [Accessed on May 29, 2013] 67

17 Appendix World Bank (2012). The Worldwide Governance Indicators, 2012 Update. The World Bank Group. Available from: [Accessed on January 30, 2013] World Bank (2013). Doing Business Economy Rankings. The World Bank. Available from: [Accessed on January 30, 2013] 9.4 GlobalData s Methodology GlobalData s dedicated research and analysis teams consist of experienced professionals with backgrounds in marketing, market research and consulting in the power industry, and advanced statistical expertise. GlobalData adheres to the codes of practice of the Market Research Society ( and the Strategic and Competitive Intelligence Professionals ( The following research methodology is followed for all country outlook reports Coverage This report gives detailed information on South Africa s power market. It examines the country s power market s structure and provides historical numbers and forecast numbers on power generation, capacity and consumption up to The report provides insight on the market s regulatory structure, import and export trends, competitive landscape and leading active and upcoming power projects. The report also provides a snapshot of the country s power sector, analyzing this on six broad parameters: macro economic factors, supply security, generation infrastructure, transmission infrastructure, degree of competition, regulatory scenario and potential. Each parameter has a weight assigned, and a weighted average score is calculated to obtain the country s ranking in the region. 68

18 Appendix Secondary research and analysis The capacity, generation and consumption data is collected and validated using a number of secondary resources including but not limited to: Government agencies, ministerial websites, industry associations, the World Bank, statistical databases Company websites, annual reports, financial reports, broker reports and investor presentations Industry trade journals, market reports and other literature Globaldata s proprietary databases like the Capacity and Generation Database, Power Plant Database and Transmission and Distribution Database. Further to this, the following secondary information is collected and analyzed to project the country s power market scenario through to 2030, analyzing factors such as the following: The country s macro-economic scenario Government regulations, policies and targets Government and private sector investments Contract and deal announcements Utility expansion plans The sector s historic track record Other qualitative insights built through secondary research and analysis of company websites, annual reports, investor presentations, industry and trade journals, and data from industry associations. 69

19 Appendix Primary Research and Analysis Secondary research is further complemented through primary interviews with industry participants to verify and fine-tune the market numbers obtained through secondary research and get first-hand information on industry trends. The participants are drawn from a diverse set of backgrounds, including equipment manufacturers, industry associations, government bodies, utilities, distributors, and academia. The participants include, but are not limited to, C-level executives, industry consultants, academic experts, business development and sales managers, purchasing managers, plant managers, government officials, and industry spokespeople. 9.5 Disclaimer All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, GlobalData. 70