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Eskom and the national grid

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Eskom is the South African electricity public utility, established in 1923. The utility is the largest producer of electricity in Africa and generates approximately 95% of South Africa’s electricity. South Africa’s electricity network is made up of more than 300,000 kilometres of power lines, 27,000 kilometres of which constitute the country’s national transmission grid.

By early 2008, South Africa’s strong economic growth, rapid industrialisation and a mass electrification programme led to demand for power outstripping supply. The government’s plan to bring South Africa’s electricity supply and distribution system back into balance included a massive Eskom programme to upgrade and expand the country’s infrastructure, introducing “load shedding” or planned rolling blackouts in periods when short supply threatened the integrity of the grid, pricing electricity correctly, promoting energy efficiency, deterring energy inefficiency and fast-tracking electricity projects by independent power producers.

South Africa uses coal, its major indigenous energy resource, to generate most of its electricity. Because of this, South Africa is the 14th highest emitter of greenhouse gases. However, the country is committed to reducing emissions, and is a signatory to the UN Framework Convention on Climate Change and the Kyoto Protocol. Eskom is committed to reducing coal’s current 88% share of South Africa’s primary energy mix to 70% by 2025.

The power supply crisis has accelerated the need to diversify Eskom’s energy mix and its move towards alternative energy sources and various forms of renewable energy, including wind energy.

Electricity supply in the BHB area is unstable as it lies at the edge of the Eskom and NMBM grids and is remote from centralised power generation facilities. Electricity generated by the wind farm will boost the NMBM grid, improve the quality, reliability and sustainability of supply, eliminating or greatly reducing the black outs the area has long suffered from. In addition, some 300 beneficiary families have also been identified for first-time electrification.

The wind farm project will generate some 80 million kWh each year which will be fed into the metro grid to supply the surrounding area with clean, sustainable, renewable electricity for 20 years. This will lower the cost of the national grid’s electricity generation, as it lowers the portfolio risk (and hence the cost of capital) and as the lower marginal cost of electricity displaces the most expensive electricity units in the system. Ultimately, the electricity consumer will benefit, as Eskom’s costs are rescued or maintained.